Official Report 200KB pdf
Our next item of business is a debate on motion S7M-01395, in the name of Jenny Gilruth, on Scotland’s priorities for the United Kingdom budget. Members who wish to speak in the debate should press their request-to-speak button now.
14:30
Managing public finances responsibly is one of the most important responsibilities of any Government. The choices that we make about public money are not abstract. Decisions taken here directly affect all our constituents—in our schools, in our hospitals, in our communities and in households across the country. Delivering a budget for all of Scotland really matters.
In a Parliament of minorities, but particularly in this Parliament, achieving a broad consensus is a necessity. In just 27 days’ time, the Chancellor of the Exchequer will deliver his first budget. We will have just a few short weeks to reflect on the impact of the chancellor’s programme, after which I will present my first budget to this Parliament on 3 December.
The new Prime Minister has said that he is a willing advocate for devolution. Although we may disagree on the destination, the Labour Party will always find a willing partner in the Scottish National Party when it comes to more democracy for Scotland and for our communities. As we look ahead to the UK budget later this month, I welcome the opportunity to speak about the action that the UK Government needs to take on the cost of living and to provide the vital funding that our public services need.
A month ago, we set out the Scottish Government’s priorities through our programme for government. Those priorities are clear: to grow Scotland’s economy, to eradicate child poverty, to tackle the climate emergency and to deliver the high-quality public services on which our people rely.
Yesterday, in the Government’s amendment to the Conservatives’ motion, it said that it had no plans to raise income tax in this parliamentary session. Will the Government now confirm that having no such plans means that there will be no tax increases in Scotland in the next five years?
I can confirm to Mr Hoy that, as is set out in our manifesto—I am glad that he has engaged so much with the SNP’s manifesto on these matters—that is not the SNP’s intention, as was confirmed in yesterday’s debate.
It is not your intention, but do you rule it out?
I hear Mr Hoy debating with me from a sedentary position, Presiding Officer. I can give him an assurance that, as per the SNP’s manifesto, we do not intend to increase income tax or the number of bands during this parliamentary session. In fact, there is an interesting SNP manifesto commitment to simplify the number of bands. I would have thought that Mr Hoy might have been interested in engaging with the Government on those matters, and I look forward to engaging with him as we approach the budget process more fully.
If I may return to the priorities of this Government, as colleagues will accept, this will be a very challenging budget. The choices made by the UK Government will obviously be crucial in enabling us to deliver on those priorities.
As we know, the conflict in the middle east is pushing up global energy prices, which increases costs for households and businesses and for all our constituents. Higher energy bills continue to cause misery for people across the country in energy-rich Scotland. From today, maximum energy rates will rise by 4 per cent for an average household and, from January, the price cap could rise to as much as £1,999 per year, up from £1,723 this month.
When the Labour Party came into office, it promised to cut people’s energy bills by £300 a year, but today’s price cap means that bills will be around £300 higher, which means that bills will need to go down by £600 to meet that promise. We also know that inflationary pressures are rising; inflation is expected to reach 3.75 per cent this year, compared with the Office for Budget Responsibility’s assumption earlier this year of around 2 per cent.
Meanwhile, spending pressures grow from funding the defence investment plan and from the cost of living. We also continue to be dogged by the impacts of Brexit—the single biggest drag on the economy—although there is an opportunity in this country to reset through rejoining. Scotland was pulled out of the European Union against our will, and rejoining remains in all our best interests.
Will the cabinet secretary take an intervention?
I am happy to do so.
In the Brexit debate, more than a million Scots voted for Brexit. Can the cabinet secretary remind me how many people voted for the SNP in May?
Every single local authority area in Scotland rejected Brexit, and we know that the economic damage from Brexit continues, to this day, to cost Scotland around £130 billion a year. We are poorer as a result of a Brexit that the people of this country did not vote for. That is the cost of the misinformation from those on the Reform benches, who led the leave campaign.
Although Scotland’s economy is resilient in that context, no country can be immune from wider global shifts. We have families trying to pay bills and make ends meet, businesses struggling to have the confidence that is needed to invest, and increases in the cost of delivering the public services on which people rely, all while the need for and expectations on those public services are growing.
Against that backdrop, the challenge facing Scotland’s public finances is clear. Current projections tell us that UK Government decisions will result in a reduction of Scotland’s block grant in real terms. The resource block grant is due to fall by 1 per cent in real terms next year. That is austerity—
Will the cabinet secretary take an intervention?
I have taken a number of interventions already; I would like to make some progress.
In addition, we estimate that our capital block grant will reduce by at least 3.2 per cent through the funding in the UK’s defence investment plan. That could yet see the capital position worsen further. Coupled with that, the UK Government already spends more on debt interest—as I discussed with the Finance and Public Administration Committee only yesterday morning—than other European countries with similar levels of debt—[Interruption.]
I hear Mr Langan speaking from a sedentary position. Would he like to intervene?
I will continue. That is money that could be invested back into our public services.
As the funding that we get from Westminster is set to go down, inflation is pushing costs up. That position is not set to improve—we know that, in real terms, the resource block grant is broadly flat over the remainder of the spending review period.
In that context, however, I do not want today’s debate to be a depressing one that is devoid of hope. Our people are really struggling, and the new Chancellor of the Exchequer has a unique opportunity to change that and turn the situation around. John Healey can choose to reverse the projected real-terms reduction in Scotland’s block grant and give the people of Scotland a fair funding settlement that includes the funding that we all know is badly needed to invest in our public services and our economy—
Will the cabinet secretary take an intervention?
I will give way to Julie MacDougall.
Does the cabinet secretary agree that, as the Treasury says that public spending in Scotland was almost £2,500 a head higher than in England in 2024-25, the problem is not how much Scotland actually gets but what the Government here is spending the money on?
I hate to say this to Julie MacDougall, but I am not going to make any apologies for investing in our public services. We pay our nurses and our teachers better in Scotland, and we should be proud of that investment, regardless of our party.
Demand on our public services continues to grow. As we know, more people are relying on our national health service, which, incidentally, is exactly why we need to invest in our public services.
Will the cabinet secretary take an intervention?
I would like to make some progress; I have taken a number of interventions.
We know that more families are needing support, and the cost of delivering public services remains significantly higher than it was only a few years ago. In Scotland, the Government is taking a number of direct actions to support households and businesses, but we also need to see wider action from the UK Government. I hope that colleagues will use the opportunities provided by today’s debate to share their views on where the UK Government might be able to ameliorate the challenges that we are currently experiencing.
A key ask—[Interruption.] A key ask from the devolved Governments—[Interruption.]
Can members please refrain from barracking whoever has the floor and the microphone? Thank you.
A key ask from the devolved Governments at the recent finance interministerial meeting was for an end to the policies associated with a period of austerity.
We know that the Government in Scotland is having to mitigate the effects of a number of welfare policies, when we would ordinarily use that finance to reinvest in our public services. In 2026-27 alone, we are investing around £160 million just to mitigate policies such as the bedroom tax. That could pay for an extra 2,000 teachers in our schools, for example.
The UK Government needs to end the wider policies that are actively pushing families into poverty and hardship. That means ending the freeze on the local housing allowance rates, which sees people being unable to meet their rent and so becoming homeless. It means scrapping the bedroom tax, which affects almost 90,000 Scottish households, including almost 19,000 children. Of course, the funding that we are using to mitigate that—to the tune of £83 million—could be used to invest back into our public services. It means removing the benefits cap, which unfairly restricts the amount of money a household can receive through the benefits system, regardless of need, and the young parent penalty, which unfairly reduces the level of support for those under 25 who receive that support through universal credit.
We have led the way in tackling child poverty, keeping 50,000 children out of relative poverty this year through the Scottish child payment, which will increase to £40 a week during 2027-28. That is part of our national mission to end child poverty, and the UK Government should follow our lead. If not, it should give us the necessary powers to better support the people we all represent.
The cost of living affects all of us, which is why Scotland continues to provide the most comprehensive cost of living support package in the United Kingdom, including free bus travel for young people and older people, and free school meals. It is also why we believe that the UK Government must take action across the cost of living crisis, including on energy and fuel bills. Although the removal of VAT on domestic electricity bills was welcome, the benefit will more or less be offset by the increase in bills that consumers will experience with the introduction of the new price cap, which kicks in today. As a result, many households will continue to face significant pressure on their finances. In Scotland, our grants, loans and advice have already helped thousands of households to save up to £500 a year, but further action is needed from the chancellor to support families with energy costs and provide greater protection for those who are most vulnerable to future price increases. That is why we have repeatedly called for the introduction of a social tariff, which would save 660,000 Scottish households an estimated £700 per year on their fuel bills.
In order to tackle poverty and raise wider living standards, we also need to support economic growth. That includes making tax fairer, which we debated only yesterday. This Government believes that those with the broadest shoulders should make a fair contribution to supporting the running of public services. We can go only so far with the powers that we currently have. For example, the powers retained by the UK Government mean that it could take a very different approach to taxing wealth. For example, in July last year, a House of Commons committee report said that
“HMRC does not know how many billionaires pay tax in the UK”.
As Labour MP Lloyd Hatton observed at the time,
“Our report shows that, however you slice it, there is a lot of money being left on the table. HMRC must … begin collecting the correct amount of tax from the very wealthiest—and this must include wealth that is currently squirrelled away in tax havens. There is certainly room for improvement.”
Does Ms Gilruth agree that one thing that Scotland has a disproportionate amount of, relative to its population, is land? Land cannot be offshored, and it is a ready-made opportunity for us to explore growing the tax base with a land value tax.
I am actually very sympathetic to the point that Paul Sweeney makes. At the SNP’s upcoming conference, Ms Goodlad and I will be taking a motion on that subject. We are a broad church, and Mr Sweeney would be more than welcome to come along and debate the merits of introducing a land tax to Scotland.
A wealth tax on the super-rich would be real progress. The UK has one of the highest levels of economic inequality in the developed world, according to the Organisation for Economic Co-operation and Development. Earlier this year, it was reported that the average healthy UK life expectancy had dropped by around two years for men and women. Inequality is not good for economic growth, and neither is uncertainty. Across Scotland, our businesses have been impacted by the hike to employers’ national insurance contributions. That, combined with high energy costs, is making things much more challenging for businesses. The chancellor has a real opportunity to reset that approach.
I am mindful of the time, but it would be remiss of me not to talk briefly about the devolution agenda that is being pursued by the new Prime Minister Andy Burnham. We have shown that we can use the power that we have in Scotland to help support our communities. With more powers for Scotland, we can do so much more, but with more powers must flow commensurate funding. Therefore, I was disappointed to see every party—with the exception of the Green Party—look to delete that ask through their amendments to the Scottish Government’s motion.
As I narrated to the Finance and Public Administration Committee yesterday, there is an inherent opportunity for Scotland through further devolution. Although my party does not agree with Labour on the constitution, I hope that we can find common ground through public service reform and a renewed devolution agenda. In the First Minister’s meeting with Andy Burnham, he was very clear that he was not going to bypass this Parliament. That is welcome progress. Of course, the UK Government could go much further in improving intergovernmental relations by removing the United Kingdom Internal Market Act 2020 in its entirety. That would be real progress.
The choices made by the UK Government have real consequences for households, communities and public services all over Scotland. Therefore, the UK budget on 28 October represents an important opportunity to take action on the cost of living and child poverty; to provide greater support for public services and infrastructure; and to support economic growth across Scotland. This Government is determined to secure those opportunities for Scotland now and in the future.
I move,
That the Parliament welcomes the new Prime Minister’s approach to further devolution for Scotland; calls for commensurate funding to support the transfer of further powers and for the UK Government to end the era of austerity by increasing the Scottish Government’s budget in real terms; demands that the UK Government take action to address the cost of living crisis, including immediate action on energy and fuel bills; suggests that the UK Government should improve wealth taxation to support the public finances and devolve a greater range of powers, including fiscal powers, to Scotland, to aid investment and growth.
The rest of this Official Report will be published progressively as soon as the text is available.
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