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.
14:45
The motion calls for further devolution, further powers with commensurate funding and an end to the era of austerity. Well, well—let us put the spotlight on those demands and examine those statements a little more thoroughly.
The existing devolution settlement is set out clearly every year in the “Government Expenditure and Revenue Scotland” report—a report that Alex Salmond, Nicola Sturgeon and John Swinney have all agreed is an accurate reflection of the finances in Scotland. The summary is simple: it costs £125 billion to run Scotland and Scotland raises taxes of £100 billion. The gap is £25 billion. That is paid for on the basis that the Treasury stands in that place.
Will Malcolm Offord take an intervention?
I will. Perhaps the minister can explain to me whether she would run her household on the basis that she earned £750 a month and spent £1,000 a month.
It is my intervention, not Mr Offord’s. If Scotland is such a burden, why does he want so badly to keep us?
The reason is that every time a Scotsman moves to England, the IQ of both countries goes up. England needs us as much as we need it. That is why, together, we are a good union.
No household would run on such a deficit—£750 of earnings a month while spending £1,000. If we look at the deficit of £25 billion as a percentage of gross domestic product, it is 11 per cent. I know that the SNP loves the EU. There are some wee rules around that for how a country gets into the EU. It needs to have a maximum deficit of 3 per cent—11 per cent is slightly far away from 3 per cent and, frankly, is for the birds. In fact, of the 27 EU countries, the one with the highest deficit is Romania, at 8 per cent. Scotland’s 11 per cent is not great in comparison, is it?
Who pays the £25 billion? His Majesty’s Treasury pays that money through the block grant with no strings attached. Jim Sillars, who is perhaps the living grandfather of the SNP, would ask why on earth you would swap the yoke of London for the yoke of Brussels. If you want to be independent, do it on your own. Why on earth do we think that people in Germany would be nicer to us than people in London, when we get a £25 billion block grant? We should recognise that we already have a comprehensive funding package in the devolution settlement.
Holyrood controls 60 per cent of the money that is spent in Scotland—that is £72 billion—and all that it has to do is balance the books. That should not be a difficult exercise. The Government has a £72 billion budget and, by law, it must balance the books. If you have a £25 billion budget deficit, folks, go figure—it is because of your spending choices and what you have decided to do. It is because of SNP choices on welfare and health. The highest spending department in the past 10 years under the SNP has been welfare—[Interruption.]
Will Mr Offord take an intervention?
Yes.
Before I bring Mr Linden in, I ask that members respect whoever has the microphone.
I am grateful to his noble lordship for taking the intervention. He will understand that social security spending involves roughly £6.5 billion of expenditure and is demand led. Given that the outturn showed that we came within 0.3 per cent of the figure forecasted, it strikes me that that spend is not at all unsustainable. Can he tell me what the outturn was for social security spending for the rest of the UK in 2023-24, when he was last in the Conservative Government?
We have a set of numbers—and Mr Linden can track this—that show that, through the devolved social security spending in Scotland, we are now running ahead, at £700 a person higher than in England. That is because of choices made by the SNP—not choices made in Westminster. The SNP has to own the choices that it has made.
Will the member take an intervention?
I am going to keep moving.
The current devolution settlement basically gives all the powers to allow the SNP Government to make Scotland the most successful part of the UK, if that was its intention. So, why would it not do that, instead of blaming Westminster and blaming austerity, if the SNP wants to end the era of austerity?
Let me give members a couple more wee numbers. When the Parliament was set up in 1999, the total budget for Scotland was £35 billion. Today, it is £125 billion. That is a compound annual growth rate of about 5 per cent per annum. A 5 per cent per annum growth rate is not austerity. Westminster has not starved this country of money. In 1999, the total state spend in Scotland was 43 per cent of GDP. Today, it is 55 per cent of GDP.
Now, here are the exam questions. Are our schools better?
Members: No.
Are our hospitals better?
Members: No.
Are our roads better?
Members: No.
Is our police service better?
Members: No.
Those in the chamber might not like to hear it, but there has been no austerity from Westminster. The deficit here was made in Scotland by the SNP.
Does the member recognise that about £3.3 billion has been taken from public revenue as a result of the loss in economic growth from Brexit, which his Government presided over? Does he also recognise the economic damage, which we are still recovering from, caused by Liz Truss—who was the shortest-running Prime Minister in history, I think? We are dealing with economic damage that has been caused by Westminster time after time.
I am glad that Alex Kerr mentioned a figure of £3 billion, because in the SNP’s £72 billion budget, that is what it spends on net stupid zero—and energy is a reserved matter. If it wants to save £3 billion, maybe the SNP will want to stop its nonsense policies.
Let us turn to energy, as that is part of the motion. The SNP says that we need cheaper energy, so maybe we can find some alignment on that. We want to get the price of energy down, too. Energy policy is reserved to Westminster—there is no question about that. Now, our energy in the UK—[Interruption.]
Members, you know how to make an intervention if you wish to contribute to the debate. Please refrain from barracking whoever has the microphone.
Our energy costs four times what it does in the United States and seven times what it costs in China, which is why we are deindustrialising, but we produce less than 1 per cent of annual emissions. China produces 30 per cent of the world’s annual emissions and the US produces 13 per cent of them. To get itself to about 30 per cent, China used coal as a transition fuel—cheap coal. China opens one coal-fired power station per week. We got rid of coal 30 years ago. America uses shale gas for the same purpose. We need a transition fuel for an affordable energy solution, and our transition fuel is North Sea gas.
We are floating on a sea of oil and gas. We are bringing all this gas in from Norway, even though the Norwegian energy minister thinks that it is daft and that it is time that we got our own domestic supply. Let us get our own domestic supply into the UK, like the Americans did. Twenty years ago, America was a net importer of energy. Today, it is a net exporter. Twenty years ago, it brought in shale gas on a licence for use only for domestic consumption.
We can do the same in the UK—make it domestic. It does not need to go on the international gas market. We can bring it in as a domestic product and give ourselves cheap energy, which will allow us to make a transition to renewables.
Does Mr Offord recognise that the figures from the North Sea Transition Authority show that, even if new fields are developed, we will still be more than 90 per cent dependent on imports, which is exactly the opposite of what he has just told the chamber?
I sat on the North Sea transition forum. It would say that what we have done is complete ideology. In fact, Simone Rossi, of EDF Energy, said that we have put ideology above practicality and above economics. That is also what the North Sea transition forum says.
Yes, energy is a reserved matter, but by God, the Scottish Government could help. It could help by ending the presumption against oil and gas and by stopping the presumption against nuclear. [Interruption.]
Please sit down, Mr Offord. Members, I do not want to name people in the chamber, but we are getting close to that point. Please allow Mr Offord to be heard.
The reason why I am referring to energy is that it is in the SNP motion that it wants the UK Government to address the cost of energy. That is why I am referring to energy.
The Government motion also refers to wealth taxes. The top 1 per cent already pay 30 per cent of all taxes in the UK and the top 10 per cent are already paying 50 per cent. Wealth taxes have been tried around the world, folks. Sweden, Norway and Holland had them but got rid of them because they do not collect any money. Sweden actually cut its tax take from 51 per cent to 43 per cent of GDP and has collected an extra 20 billion a year. The Laffer curve is never wrong: if you raise tax rates, you collect less tax; if you reduce tax rates, you collect more tax.
I will finish by talking about the one thing that we do not want from the UK Government, which is a return to the European Union. When my parents voted to join what was then the Common Market, Europe accounted for 30 per cent of global trade. When we left in 2019, that figure was 20 per cent of global trade and the OECD now says that, in 2050, it will be 10 per cent of global trade. Why on earth would we want to limit ourselves to that market?
Does Mr Offord accept the fundamental principle that the biggest determinant of trade intensity is geographical proximity, and that putting in place barriers to that trading activity is detrimental to our economy?
Please conclude, Mr Offord.
I was the export minister and can categorically refute that. We should bear in mind that 80 per cent of our economy is services and 20 per cent is goods and that our exports are 50 per cent goods and 50 per cent services. Services travel digitally across the world and our services exports are going gangbusters. We now have real-time evidence that demonstrates that the biggest impact on our exports between 2018 and 2023 came from Covid, not Brexit. Whatever the question is, the EU is not the answer.
I will conclude with this: the devolution settlement that we got was one of the most generous in the world, with £25 billion being sent from His Majesty’s Treasury to Edinburgh with no strings attached. My advice to the Scottish Government is to get on with the day job and invest that money wisely to improve the lives of ordinary Scots. Two million of them did not vote in the recent election and the only way in which we can restore their faith in Holyrood is to demonstrate that this Parliament is laser focused on improving their day-to-day lives.
I move amendment S7M-01395.2, to leave out from “for Scotland” to end and insert:
“across the UK as a whole; believes however that Scotland already has the most generous devolution settlement and that the Scottish Government must maximise the powers that it already has before asking for more; further believes that, despite extensive devolution already and total state spending being 26% higher per capita than England, many Scottish public services have worse outcomes than in England; calls on the Scottish Government to take action to address the cost of living crisis, on the basis that the most impactful immediate action it could take would be to reduce energy and fuel bills, and notes that Parliament already has the power to assist with this by ending the ban on nuclear energy development and opposition to new oil and gas.”
14:57
Before I make my substantive contribution, a number of the points that have just been made must be looked at.
First, I was amused that Malcolm Offord was at times keen to remind us that he had been a Government minister but was, at other times, keen for us to forget that he had anything to do with the previous Tory Government.
On a more critical point, Lloyd Melville was absolutely right to intervene. Even if we do not want to accept the numbers from the North Sea Transition Authority, it would require a four to fivefold increase in gas extraction for us to return to a point where we were self-sufficient. While Malcolm Offord accuses others of dogma, he is exercising something akin to fantasy.
The OBR says that there is only 5 billion barrels’ worth of oil left; the industry says that there is at least 12 billion barrels left and, in the past 12 months, Norway has been exploring 47 fields and we have explored none. Go figure.
“Go figure”? Well, that is my argument destroyed.
Even if there are 12 billion barrels, Malcolm Offord knows that that is a fraction of what there was at the point of peak oil, which occurred in 1999. That is the stark geological reality which, among other things, is driving the transition.
To return to today’s debate, I am, in a sense, pleased that the Government has lodged a motion about where power is exercised and about fiscal sustainability, because that is important. However, I say gently to the Scottish Government that it should stop looking elsewhere and should start at home. The reality is that, since the Labour Government came to power, £12 billion of additional expenditure has been available in Scotland.
Will the member give way?
I will, in a moment.
Furthermore, spending per person in Scotland is £2,700 higher than it is in the UK, so, if we want to make progress, we must look at how power is exercised and tax money is spent here in Scotland.
I am happy to give way to Mr Hoy.
I hope that Daniel Johnson will agree with my point that we could be using the time for this debate better—although that is not to diss his contribution. Back in March, the Government said that it would not publish a medium-term financial strategy for this year. Yesterday, the Cabinet Secretary for Finance and Local Government said that today’s debate would not amount to the fiscal statement to Parliament that she had promised, which has now been withdrawn.
Does Daniel Johnson share my concern that, while we are debating the issues today, Rome is burning, because the underlying figures—which we cannot get, because of the Government’s lack of transparency—are very concerning?
I very much agree with what the member has just said. Although the cabinet secretary is right to point to the significant fiscal headwinds that exist, for the UK Government and for the Scottish Government, we can get started only if we have a clear view of what the plan is and how we need to make progress.
It is regrettable that a medium-term financial strategy is not to be published, and it is regrettable that the Government’s motion does not even reference such things, let alone the specific issues. I will come on to that later in my contribution.
I want to start with devolution. I think that regional devolution is really important. In fact, I was pleasantly surprised by the programme for government, because I do not recall regional devolution appearing at all in the Scottish National Party’s manifesto. However, it was included in our manifesto. The reason why that is so important is that, in 2016, Greater Manchester’s GDP per capita was £1,782 lower than Scotland’s, but, in 2022, it overtook Scotland’s for the first time. To put it another way, although, since 2009, Scotland’s productivity has grown by 13 per cent whereas the north-west’s has grown by 11 per cent, 12 per cent of that 13 per cent growth in Scotland happened in the first decade—in other words, Scotland’s productivity has grown by only 1 per cent since 2019. In the north-west, 10 per cent of the region’s 11 per cent productivity growth has taken place since 2020.
There is a very real danger that Scotland is falling behind, and there is an even greater danger that the Scottish Government misunderstands devolution, because its devolution plans are about consolidating power at a different level. When it talks about devolution, the Government’s focus is always on gaining powers from elsewhere, rather than on pushing powers down.
Will Daniel Johnson take an intervention?
I will, in a moment.
The devolution agenda that has been pursued south of the border, which has enabled much of the acceleration of productivity growth to which I have referred, has been conducted in a very different way. Combined authorities are about co-ordinating power between existing local authorities; they are not about creating new tiers or sucking powers up.
I am interested in Mr Johnson’s comparing of Scotland with Manchester, which is an area in England—he has compared a nation with a region in England. Scotland’s GDP per head was the third highest in the UK every year from 2006 to 2024. North-west England is ranked as sixth in that respect. Scotland’s GDP per head has been higher than north-west England’s in every year since records began, and our GDP per head is £2,500 higher than it is in the north-west of England. Does he accept that Manchester is just catching up with Scotland and that, in fact, further devolution would be good for Scotland and for Manchester and would provide a wider opportunity to develop and grow the economy of Scotland, which he should welcome?
One needs to look at figures very carefully. The point is that, in the north-west, GDP per head is growing at three times the rate at which it is growing in Scotland. I would be happy to share figures, but, according to my figures, Greater Manchester’s GDP per head overtook Scotland’s in 2022.
As well as looking at what type of devolution we need—I have referred to the need for co-ordination and the need to focus on a plan, instead of creating additional tiers of government—fundamentally, devolution must be about pushing powers down, not drawing them up. What we have seen in Scotland is in defiance of that.
Not only have we not had a regional tier or focus of government since devolution occurred; every time that the SNP has sought to reorganise, it has been to concentrate power at the centre, rather than pushing it down. Unless we are going to continue to repeat that error, we must consider the propositions that the Government has put before us very carefully. We need to take a much closer look at how we devolve economic policy levers down.
My firm belief is that we build economies from the regional tier up—at the level at which people live, in the areas within which they travel to work and in the areas in which businesses conduct business with other businesses. That is the sphere and the scope in which it is sensible to plan roads, education services, skills deployment and business support. Those are the sorts of powers that we should be seeking to push down to a regional level.
We must consider the fiscal position. Indeed, I believe that this is the first fiscal debate that we have had since considering the programme for government. It is a debate not about the challenges facing the Scottish Government but about its seeking to look elsewhere. That compounds the cabinet secretary quietly dropping her commitment to bring forward the medium-term financial statement. That is deeply concerning, because of the scale of the Government’s troubling fiscal position. The Scottish Government faces a spending gap of £4.7 billion by 2030 unless it takes proactive steps. There are serious challenges, for which the Government is responsible. As the Scottish Fiscal Commission has pointed out, we have an £800 million performance gap compared with the rest of the UK, due to slower earnings growth, a £1.5 billion and growing spend over and above the block grant on social security, and a failure on the part of the Scottish Government to meet its own targets on head-count reduction, as was acknowledged by the Cabinet Secretary for Finance and Local Government in committee yesterday.
I agree with some—indeed, quite a lot—of what Mr Johnson says, but I want to make a point to him regarding his comments about the gap in earnings growth with the rest of the UK. I know that he knows this, but there is such a significant difference between London and the south-east, and everywhere else in the UK. Comparing Scotland with England minus London and the south-east or with the rest of the UK minus London and the south-east would be a fair comparison, but does he not agree that any comparison between Scotland and the rest of the UK including London and the south-east completely distorts the figures, because of the nature of this island’s economy?
I agree that it is important to consider things on a regional basis, but the fiscal framework is not only based on tax revenue per head; it is also baselined on 2016. Those are inescapable facts, which the Government often seeks to ignore.
Could you come to a conclusion, Mr Johnson?
Let me conclude on this. How we exercise power and how we spend tax revenue are hugely important, but today’s Government’s motion is an act of diversion, rather than focusing on those challenges.
I move amendment S7M-01395.3, to leave out from “commensurate” to end and insert:
“a new approach to devolution within Scotland, transferring power and resources from the Scottish Parliament to Scotland’s regions and local communities to support stronger regional economies and better local decision-making; notes the experience of regional devolution in places such as Greater Manchester and the role that greater local control has played in supporting regional economic development; believes that skills policy and funding should form a core part of regional devolution in Scotland, giving councils, colleges, employers and other local partners greater power to respond to the needs of their regional economies; calls on the Scottish Government to provide greater clarity regarding what its public service reform agenda would mean in practice for public services, the public sector workforce and communities across Scotland; further calls on the Scottish Government to publish an updated Medium-Term financial strategy ahead of its Budget, setting out the outlook for spending, taxation, reform and the sustainability of public finances over the medium term, in order for Parliament to have a clear and comprehensive picture to be able to scrutinise the Budget and make decisions about Scotland’s priorities.”
15:08
We spent some of yesterday afternoon talking about the exceptionally challenging fiscal outlook faced by the Scottish Government. It is fair to say that the UK Government also faces a really challenging fiscal situation, but it has far more tools at its disposal to do something about it.
It is also fair to say that the current Labour Government received a ruinous inheritance from the Conservatives. Just to highlight one particular aspect of that economic vandalism, I still cannot believe the Tories’ decision not to borrow when rates were so incredibly low—to fail to use that money to invest in the infrastructure that the country needed. Our economy would have been far stronger if they had taken advantage of that and invested in the economic prosperity of this country through borrowing to develop the infrastructure that we know we need.
The ruinous situation that the UK Government faces makes the Labour UK manifesto from 2024 even more troubling or confusing—we can pick whatever description we want—in hindsight, although Labour knew it beforehand. What the Labour Party has done, as a UK Government, is to bind itself. It has backed itself into a corner. Labour knew, going into government, just how challenging the fiscal situation would be, but it set out a set of fiscal rules and a series of manifesto commitments in relation to tax such that it no longer has the tools available to it get out of this corner unless it breaks its own manifesto commitments. I would encourage it to do so, in the national interest. I do not think that there is any alternative at this point.
We should remember one fundamental truth underneath all of this: the UK remains one of the wealthiest countries in the history of the world. The top 1 per cent—the wealthiest 1 per cent—of our population have more wealth than more than half of the population combined. We are a wealthy but an incredibly unequal society. Inequality is a choice, but not the choice of individuals or families; it is the choice of Governments. We will talk about the efforts that we have made in the Parliament to reduce inequality, but the UK as a whole is still incredibly unequal.
Economic equality, on the other hand, is not only good for those who have been raised up by those efforts; it is good for our entire society. The most prosperous and most resilient economies in the world are almost always the most equal economies as well. That is a clear economic truth.
That ruinous Tory inheritance extends to Scotland. We have suffered 14 years of devastating austerity. We have partly mitigated that, and we talked yesterday about how we did that. I am proud of the £1.8 billion of additional revenue that is being raised this year by Scotland’s progressive income tax system, the quarter of a billion pounds that is raised by the additional dwelling supplement and the substantial amount of money that is going to councils through their discretion to levy additional council tax on second homes and holiday homes. At that point, I should thank Lord Offord for almost single-handedly keeping some of our local authorities afloat, given his property portfolio.
We cannot ignore the impact of austerity in this country. Despite the efforts that we have made to mitigate it, UK austerity has been devastating for Scotland, as it has across the whole of these islands. The studies that I mentioned in yesterday’s debate—to Craig Hoy, who was leading for the Conservatives—show that between 150,000 and 330,000 people died prematurely in the UK as a result of austerity; they died as a result of the cuts made to essential public services by the previous Conservative UK Government.
Will the member take an intervention?
No.
Austerity is not over. We have not seen that real-terms restoration. The new Prime Minister says that he wants to break with neoliberalism. That is fantastic. We have not seen it yet, but I want to see him succeed in that regard. If he is to do that, his budget must get serious about tax reform.
I share Ross Greer’s impatience on this issue. Does he recognise that the tax base is one thing, but there are more entrepreneurial ways for the state to raise revenue, such as by dealing with the egregious extraction of rents from the bus system or looking at how we can municipalise energy locally? Those are ways in which we can build public finances without necessarily needing to involve tax.
I agree with what Mr Sweeney has just said. He will have heard me earlier at First Minister’s question time, urging the Scottish Government to go further and faster when it comes to ownership of our buses. I agree on the point about publicly owned energy generation. I bear the scars from when my party was in government and we and the SNP made efforts to look at how a publicly owned energy company might function under the current devolved context. Sadly, we had to conclude that, under the current constraints of devolution, it would not succeed. However, I strongly encourage the UK Government to pursue those options, because the state should be entrepreneurial in exactly the way that Mr Sweeney has just described.
Wearing his previous hat as the Labour Party’s finance spokesperson—
Will the member take an intervention?
No.
Michael Marra fairly challenged other parties in the chamber to say how we would fund the things that we were demanding that the UK Government did, or to say what our alternatives would be when we objected to decisions that it made. Every other party in this Parliament objected to the UK Labour Government’s decision to increase employer national insurance contributions, for example. The Greens proposed alternatives. I proposed those alternatives to Mr Marra at the time. The first of those is an interesting one—it unites everybody from me to Nigel Lawson; hardly two centrists on the political spectrum—and it is to equalise capital gains tax with income tax. If we were to do that, it would raise between £16 billion and £20 billion every year.
As a direct alternative to the employer national insurance contribution rise, we would remove the upper earnings limit on national insurance for those on high salaries above around £50,000. It varies year to year, but current estimates say that that would raise between £10 billion and £20 billion a year over the next five years.
We could have an exit tax on those super-rich individuals who constantly threaten to leave if we have a more progressive tax system, but who almost never do. A number of countries have them. Belgium’s and Austria’s are very successful. There is a model in the United States. I do not believe that it would translate well to the UK, but there are plenty of other exit taxes that we could learn from.
I agree with bits of the Labour amendment, but I share the Deputy First Minister’s scepticism about Manchesterism. I do not think that Greater Manchester has been badly governed in recent years, but Manchesterism is mostly hype and vibes. When you look at the numbers, you see that the economic trajectories of Glasgow and Manchester over the past decade have basically mirrored each other, although there has been some variance year to year; Tom Forth at the Data City has done a lot of analysis on that. If members only heard the political commentary around how Glasgow has been governed and the economic direction of Scotland compared with that of Manchester, they would not quite believe that those things match up so closely.
There is a need for the UK Government to introduce serious measures not just to tackle the climate crisis to prevent it from getting worse, but to accept, sadly, that some aspects of it have been locked in already. We need a climate shock fund for the UK, because climate breakdown is happening in this country and people are suffering for it. That will require significant reform of Scotland’s fiscal framework. We are currently in a somewhat absurd situation. If it floods in Stonehaven, the UK Government will not step in and it will expect the Scottish Government to use money that is already allocated to something else to support the people in that community, but if it floods in Somerset, the Scottish Government will get consequentials. That means that, if it floods in Stonehaven, we are better off if there has also been a disaster somewhere in the rest of the UK, as it generates consequentials. That is perverse, and it is not how anybody intended the system to work. There is a clear need for the UK Government to substantially change the direction that it is taking.
The Greens have made it clear in our amendment that we think it would be completely unacceptable if any increase in defence spending came at the expense of our public services, specifically in relation to capital. If the UK Government is increasing defence spending by reallocating capital from elsewhere in its budget, and that results in a cut to Scotland’s block grant, that would be completely unacceptable. It seems that there is always more money for war, but never enough money for our communities and for what they really need to see.
There are alternatives on offer. I want the Prime Minister to succeed, but he will need to break significantly with the orthodoxy of his predecessors, not just in rhetoric but through actions and specific proposals on tax, on public spending and on many of the other reforms that Mr Sweeney has just mentioned. I hope that he can live up to that. What I have seen so far and what I heard from the Labour Party conference does not fill me with as much optimism as I had hoped in that regard—particularly the Chancellor of the Exchequer’s remarks in relation to savings on social security, given everything that I have just said about the impact on our most vulnerable of Tory austerity and Tory attacks on social security. If the UK Government wants willing allies in this regard, we are ready to work with it. However, it remains to be seen whether its rhetoric will be matched by reality.
I move amendment S7M-01395.4, to leave out from “suggests” to end and insert:
“believes that the UK Government must implement improved wealth taxation to support the public finances, and devolve a greater range of powers, including fiscal powers, to Scotland, to aid investment and growth; believes that it is the duty of governments to protect the most vulnerable in society; is concerned by the Chancellor of the Exchequer's recent comments regarding social security spending; calls on the Prime Minister to rule out cuts to support for disabled people and people living in poverty, and further believes that any UK Government decision to increase defence spending must not come at the expense of Scotland's public finances in the form of cuts to the block grant.”
15:17
Ahead of the UK budget, I rise in a spirit of helpfulness to the cabinet secretary. The problems that she faces are serious, and it would be politically easy to say to the Government that it has made its own bed, but that would not serve Scottish taxpayers, because it is taxpayers, ultimately, who will pay for the failures of a number of finance secretaries who have sat in the cabinet secretary’s seat, and for any missteps that appear in Andy Burnham’s first budget.
In evidence to the Social Justice, Housing and Local Government Committee, commissioner Eleanor Ryan of the Scottish Fiscal Commission identified the core problem when she said that tax rises or public service cuts would be necessary to plug the gap in the nation’s finances. Although ministers yesterday partially ruled out an income tax rise, we have heard that before, and I do not believe that we can necessarily take them at their word.
The chancellor and the cabinet secretary face interconnected and, in some respects, similar problems. Put bluntly, there simply is not enough money to continue on the present trend of social security spending. The projected gap between the adult disability payment and the block grant adjustment might have narrowed and might be less than was initially estimated, but, to be blunt, neither Government can afford current benefit levels, let alone the projections that are now baked into the system. The truth, for both Governments, is that unless the benefits bill is cut, the budget will be bust.
The solution cannot be to pile yet more pressure on hard-working Scottish households and businesses. Nor can the SNP use Westminster as an excuse—as I think it was partly doing today—to distract from its own economic failures. Those are plain to see, and their consequences will hit our budgets now and into the future: high taxes, weak earnings and employment growth, stifled economic growth and activity, and unsustainable levels of unproductive public spending, most notably to pay the soaring welfare bill.
Ahead of the Westminster and Holyrood budgets, our appeal is simple: there should be no new taxes and no tax increases. In fact, there should be quite the reverse: we must cut tax, control spending and remove the barriers to economic growth. Support for our oil and gas sector is an area of urgent concern in the forthcoming UK budget. The anti-oil and gas stance of Labour and the SNP is exacerbating and accelerating Scotland’s industrial decline, and it is therefore no surprise that domestic oil and gas production has fallen by 40 per cent in five years. UK Labour made a serious error by increasing and extending the energy profits levy, and John Healey must rule out any further increase in, or extension to, it in the budget later this month.
I agree with ministers that the effects of inflation are causing difficulties for households. Eye-watering petrol and diesel prices are why the UK Government must shelve plans to raise fuel duty by 3p per litre at the turn of the year and then again by 2p in March. That would punish motorists and businesses who are already struggling with higher taxes, higher grocery bills and higher energy costs.
Households are not alone in facing those headwinds. Mounting costs are squeezing businesses large and small. Scotch whisky exports fell by nearly 2 per cent in 2025, and input costs are rising significantly. That has led the chief executive of the Scotch Whisky Association, Mark Kent, to warn of dwindling business confidence. Equally, Scotland’s hospitality operators are struggling, with three quarters having faced a year-on-year fall in profitability in the past 12 months. Farmers, the lifeblood of the rural economy, are facing soaring costs and falling prices, and they are threatened by the SNP’s proposal for supermarket price caps and Labour’s partially withdrawn, but still cruel, family farm tax.
Cumulatively, those factors will constrain growth, increase unemployment and reduce tax receipts, but the Scottish Government cannot use a difficult UK budget and a difficult UK fiscal position as a smokescreen to avoid tackling its own challenges. As we identified yesterday, ministers must recognise that their tax experiment has failed. Yes, changes to Scottish income tax mean that we are forecast, as Mr Greer said, to raise up to £1.8 billion more in 2026-27 than equivalent UK rates and thresholds will, but the negative tax base performance gap—in other words, the impact of higher taxes—has widened to nearly £900 million. That is why Stephen Boyle, the Auditor General for Scotland, is right when he says:
“Devolved taxes are growing Holyrood’s budget, but their impact is weakened by Scotland’s lower earnings and employment growth”.
Is it any wonder that HMRC estimates that there are 9,000 fewer payrolled employees in Scotland today than there were last year? The picture is clear: in Scotland, on tax, we are at breaking point, and any upward movement in income tax, particularly in the higher rates, is likely to further undermine the tax take.
I want to stress to the minister, who recently gave us a private briefing to this effect, just how bleak and fragile the public finances are. The £5 billion black hole is real. All eyes appear to be on Ivan McKee. The eggs are all in one large basket of public sector and public service reform. Out of, I suspect, self-preservation, Jenny Gilruth is quietly painting a very big target on Ivan McKee’s back, but I very much doubt that the Government will achieve the £563 million of savings that it needs to this year.
Yesterday, the cabinet secretary announced that the Government was off track to reduce the overall size of the civil service. These must be very real concerns to the minister. In overall terms, I wish Mr McKee and the cabinet secretary well, but, when it comes to public service reform, which is where the big vulnerability is—in addition to social security—I suspect that the mission is doomed to fail, unless the Government takes on the unions, dramatically changes the culture of the civil service and persuades vested interests in its own Government, including the cabinet secretary with responsibility for social security, that things must change. If things do not change, it will be taxpayers who pay the price for this SNP Government’s economic failure.
I move amendment S7M-01395.5, to leave out from “welcomes” to end and insert:
“believes that the UK Budget should prioritise economic growth by avoiding further tax rises, keeping fuel costs down and supporting investment in Scotland; calls on the Scottish Government to control unsustainable welfare spending and deliver meaningful public service reform, and calls on both governments to reduce the burden on workers and businesses, and to support economic growth.”
15:24
Yesterday, I was contacted by a constituent who messaged me in desperation to say:
“I’m having to pay £50 a week to get to and from work. I work for £14, and this is not viable any more. I also run a little farm, and the fuel costs rising is breaking us.”
Members across the chamber will, no doubt, have received similar heartfelt messages over recent days from people at their wits’ end wondering how to make household and business budgets stack up.
Diesel prices are at record levels, heating oil is twice as costly as it was at the start of the year, and the domestic energy price cap is projected to rise by 16 per cent from January. With the calamitous actions of the Trump Administration in Iran and Russia’s illegal war in Ukraine showing no signs of letting up, causes for optimism are thin on the ground right now. As my amendment makes clear, the forthcoming UK budget must take steps to respond to the growing cost of the energy crisis that is fuelling wider cost of living pressures.
Of course, we know that those events only reinforce the need to reduce our reliance on fossil fuels and replace them with domestic sources of renewables for economic, environmental and, increasingly, national security reasons. Those efforts must be stepped up and accelerated. However, they will take time, and people are struggling now, which is why Liberal Democrats are calling for a temporary 10p cut to the fuel duty, alongside a cut to VAT on public electric vehicles charging.
In addition, my amendment underscores the importance of the budget facing up to the UK’s and Scotland’s relatively poor economic growth. Liberal Democrats believe that the most significant step that we could take to address that issue would be to begin to reverse the damage that was done by Brexit. The statement from the Prime Minister this week was very welcome, and I encourage Andy Burnham to look at taking forward our proposals for a new defence and economic partnership with the EU, including returning to the single market and joining the new customs union, which, over time, could boost Government revenue across the UK by around £27 billion a year.
Although the UK Government has important and difficult decisions to make, so, too, does the Scottish Government. I was interested to note that the cabinet secretary referred to the chancellor’s “opportunities”, whereas she simply faces “challenges”. As we heard in yesterday’s debate, and as the Finance and Public Administration Committee has heard for some weeks now, it is not good enough for Scottish ministers to simply point the finger and demand that others get them out of a financial hole that they helped to dig.
I would rather not point any fingers and that the full powers of an independent Scotland were here, so that we could get on with the day job of growing the economy. However, it is the case that the chancellor’s decisions will inform whatever decisions we take through the budget process. I have noted the wording of the Liberal Democrats’ amendment and I am interested to pursue with Mr McArthur the new position of the Liberal Democrats in relation to the European Union. Is it now the position of the Liberal Democrats that we should fully rejoin the European Union?
The position of the Liberal Democrats in relation to our close ties to the European Union has always been about taking an incremental approach, in recognition of the fact that the members of the European Union will have a say in the matter. At the moment, there is little appetite for engaging in that process, so we need to develop it incrementally. We have set out how we could incrementally get to that position with regard to the single market and the customs union through a defence and economic partnership with the European Union.
Public service reform is at the heart of the Government’s approach to dealing with the £5 billion black hole in the public finances. To date, though, details are sketchy. At times, stated objectives appear contradictory, and the plans produced thus far have been dismissed by most independent observers as either unrealistic or insufficient. Even the cabinet secretary admitted at the Finance and Public Administration Committee earlier this week that the Government is already “off course” in delivering the head-count reduction that it committed to; meanwhile, numbers have actually gone up.
On tax, too, as we debated yesterday, reforms are long overdue—not only on council tax, which is perhaps the most egregious, but also on the land and buildings transaction tax and on non-domestic rates. That reform must be framed not only by the need for fairness but with economic growth in mind. Broadening the tax base is crucial to addressing the fiscal gap and delivering economic growth.
As I said yesterday, finding ways, wherever possible, to get people into the workforce and fulfilling their potential is key. Whether those are people with long-term conditions or neurodiversity; young people not in employment, education or training; or the thousands who are languishing on NHS waiting lists, all have a part to play, but most will need support to do so.
As with addressing the wider challenges that our NHS faces, tackling waiting lists will require a renewed commitment to supporting social care, which Scottish Liberal Democrats will look to progress in discussions with the Government over the forthcoming budget. We will engage constructively in that process, as we have done over previous years. That is the responsible thing to do in the interests of our constituents, communities and the country as a whole. I urge Parliament to support the amendment in my name.
I move amendment S7M-01395.1, to leave out from “welcomes” to end and insert:
“believes that the focus of the UK Budget should be economic growth; further believes that the most impactful measure that the UK Government can take to improve economic growth is to reverse the economic damage of Brexit by negotiating a new growth and defence partnership with the EU, including joining the single market and a new customs union, and calls on the UK Government to take measures to support people with the cost of living, including cutting fuel duty by 10p.”
We move to the open debate.
15:29
Scotland’s finances are in a challenging position, and the Scottish Government does not shy away from that reality. Whether because of Brexit, Russia’s illegal war in Ukraine, inflationary shocks, Westminster austerity or conflict in the middle east, we are operating against a backdrop of prolonged economic turmoil. All those factors have placed enormous pressures on public and household finances in recent years, and the Scottish Government has limited room to respond to them.
The UK budget is an opportunity to change direction on devolution, fair funding, the cost of living and Scotland’s ability to invest in our future. This summer, Andy Burnham spoke about extending devolution. There were plenty of catchy metaphors about power and energy but a distinct lack of detail. If the Prime Minister is serious about opening the door to new powers for this Parliament, we will walk through it. We will work constructively to find powers that can be devolved quickly. However, devolution without the power to invest is only partial devolution.
The UK chancellor has told his Cabinet that new devolution has to be paid for out of existing budgets. That is why it is so important that the motion for this debate calls for commensurate funding, because handing over responsibility without resources is just handing over a problem. However, devolution is only one part of the equation. Scotland also needs sufficient funding to exercise the powers that we already have. As things stand, Scotland’s resource block grant is forecast to fall in real terms for the first time since 2022-23—that is not my assessment but that of the Fraser of Allander Institute, which was published earlier this week.
The additional money in this year’s budget came largely from writing off English local authority debts. If we take away that one-off and add in low UK spending growth, our resource budget for next year falls by 1.2 per cent in real terms.
Will the member take an intervention?
Will the member take an intervention?
No, thank you.
That is the cliff edge that the chancellor can stop on 28 October, should he choose to do so.
On capital investment, I welcomed the Prime Minister’s assurance that his plans to increase spending on defence cannot come at the expense of social security, but cutting capital budgets to pay for defence is a choice by the UK Government to move away from reversing historical underinvestment in public service infrastructure. As the Institute for Government says, the result of that choice is likely to be weaker growth, and in Scotland it will result in an automatic fall in our capital funding. I am not arguing against investing in defence, but it is not honest to pretend that that is not a back-door cut to Scotland’s investment budget.
The impact of damaging UK choices and policies does not stop at the border, and they continue to drive Scots into poverty. This year alone, the Scottish Government is spending £159 million to mitigate UK policies such as the bedroom tax, the benefits cap and the young parent penalty.
The member has not mentioned the GERS figures, which show that there is £2,700 more public spending per man, woman and child in Scotland. How would that be funded in her independent utopia?
What Mr Hoy has not mentioned is that that is under the current constitutional arrangements. It does not reflect what Scotland would look like as an independent country.
There is no doubt that the UK Government faces difficult choices over public spending and taxation. Additional revenues from wealth taxation would help to create room for investment in public services and economic growth. Scotland is doing what it can—legislating on the mansion tax, for example—and the chancellor should show the same ambition across the UK. If he will not, he should let this Parliament do it.
The burden must not continue to fall on the households that are already under extreme pressure. Inflation is back above 3 per cent, driven by the things that people cannot avoid paying for: energy, fuel and housing. The Prime Minister promised “breathing space” in his budget, but now we hear that it will be “challenging”. We are seeing the same cynical pattern play out. People were promised “change” under Starmer, and we know how that went. We were promised “hope” under Burnham, but now we are being softened up for a Westminster budget of cuts and tax rises. People need help this winter, not hand wringing and slogans.
Scotland is energy rich, but we pay among the highest bills in Europe. By January, energy bills are set to be £1,000 higher than the Labour Party promised at the general election. Andy Burnham has said that he wants to deal with the energy costs as part of a 10-year plan, but we need action now and not in a decade. Diesel is already more than £2 a litre. Last week, the Convention of Scottish Local Authorities told the Finance and Public Administration Committee that care staff who pay for their own fuel are turning to councils for help.
People are waiting to hear how the latest UK Prime Minister is going to put money in people’s pockets. The UK budget must contain immediate measures to reduce household costs, and it must cut fuel duty, as other European countries have done. If the UK Government will not act on household costs, it should hand this Parliament the powers to do so. Greater fiscal powers could give Scotland more ability to respond to economic shocks, support investment, develop long-term infrastructure and respond more flexibly to economic circumstances in Scotland.
Scotland needs the UK budget to deliver three things: fair funding, cost of living support and greater fiscal empowerment through devolution. The UK Government must end the era of austerity politics and deliver an increase in Scotland’s budget in real terms. It must deliver the immediate action on bills that households need and not just promise action in the future. The more powers that we have in Scotland and the more policy levers that we can control, the more we can achieve.
The Scottish Government is ready to work with the new Prime Minister on his plans to expand devolution. Ultimately, however, Scotland needs the powers that come with independence to build the stronger economy that we need to boost living standards. Independence is the route to delivering fairness, wealth and opportunity for all our people.
15:36
Our responsibility in the Parliament is simple: to represent the people of Scotland, listen to their concerns and do everything that we can to improve their lives. For far too many people, life is becoming harder, not easier. The cost of living crisis is not over. Across Scotland and the rest of the UK, families are still struggling to heat their homes, pay their bills, put food on the table and plan for the future.
People were promised change. The Labour Party promised to bring down the cost of living and ease the financial pressure on working households, yet many families continue to face the exact opposite: rising costs and growing uncertainty. Keir Starmer promised to cut energy bills by £300, but, instead, they have risen by £1,000.
Too many households are being forced to make impossible choices—choices between heating and eating, and between saving for the future and simply getting through the month. That is why the UK chancellor must use the budget to provide meaningful support for those who need it most. This is an opportunity to deliver action that puts money back into people’s pockets, protects families from rising costs and gives Governments the tools that they need to support their communities.
Does Alex Kerr agree that every pound asked of the Treasury should come with a plan for better results and not just a bigger budget?
One of the things that I will come on to discuss—but I will mention it now—is that child poverty is falling in Scotland, and that is because we had a plan. The Scottish child payment means that child poverty in Scotland, unlike in the other UK nations, is going down. The UK Labour Government should consider copying our homework on that, as it has done with quite a few other things. If it were to adopt the child payment across the rest of the UK, we could potentially invest that money in increasing the child payment or taking other interventions to tackle poverty across Scotland. That is the plan. If members are with us, I think that it is a pretty good plan, and I hope that the Labour Party will listen.
Let me be clear: real action does not look like scrapping the triple lock for Scottish pensioners to pay for free personal care for the elderly in England. When Keir Starmer won a historic majority for the Labour Party, which members on the Scottish Labour benches campaigned for, what was the first act of that Labour Government? It was to cut the winter fuel payment for pensioners, until the SNP, alongside other parties, embarrassed it into a U-turn. What was one of the first major policy announcements of Andy Burnham’s Labour Government? It was the scrapping of the triple lock and making Scottish pensioners pay for its plans.
Does Alex Kerr accept that the logical conclusion of not getting rid of the triple lock would be, at some point, 100 per cent of public expenditure being spent on the state pension? That would be the inevitable ratchet effect. Does he also accept that the Barnett consequentials that will flow to Scotland as a result of investment in a national care service could lead to the introduction of a similarly enhanced scheme in Scotland, if the Government chooses to do that?
The last time that the link with wages was taken away from pensions was under Thatcher. That is part of the reason why the triple lock had to be brought back in—because pensions in the UK fell way under the level of other pensions. The question—Labour members can intervene at a later point—is whether Labour will adopt the child payment across the rest of the UK to help us to accelerate that mission. Michael Marra’s pitch is to work with us on tackling child poverty, and that would turbo boost that work in Scotland.
We see, once again, the reality that Scottish Labour takes its marching orders straight from London. Just two weeks ago, Michael Marra said on the record that he believed the triple lock should not be scrapped. Andy Burnham tells him to jump and, before you know it, he is hangin fae the rafters. That is just like the attempts by Scottish Labour to justify the scrapping of the winter fuel payment before they realised how damaging their position was.
We all agree that we want child poverty to come down. That should be one of the key determinants of a successful Scotland. But why, with all the effort that has been put in, are 20 per cent of children still living in poverty? That figure has not moved in more than 20 years. [Interruption.]
I hear from members across the chamber that austerity is a reason for that, along with a host of things. Child poverty is falling here, and we are committed to that. Does Reform back keeping the Scottish child payment? [Interruption.] I have to make some progress.
Despite every council area in Scotland voting to remain a member of the European Union, Scotland was dragged out of one of the world’s largest trading blocs, which narrowed the horizons of young people across our nation. There is a common thread here. Those decisions would not have been made if Scotland had control over her own affairs. Currently, we have some power to mitigate the disasters imposed on us, but why should we reduce our ambition to cleaning up Westminster’s mess?
We know that the Scottish Parliament is best placed to make decisions for Scotland, but, if this Parliament is to tackle inequality, drive economic growth and improve living standards, it needs the powers to do so. The Prime Minister has spoken about new powers for Scotland, and people across the UK, including Andy Burnham and, indeed, Scottish Labour, have recognised Scotland’s right to choose its own future, but warm words are not enough. If there is a genuine commitment to empowering Scotland, that commitment must be backed by action. The powers that can be devolved should be devolved. Decisions that affect Scotland should increasingly be made in Scotland.
Will the member take an intervention?
I need to make progress.
The more powers we hold in this Parliament, the more we can do to support businesses, reduce inequality, strengthen public services and help people through difficult economic times. Ultimately, Scotland’s future should always be decided by the people of Scotland. If the UK Government is unwilling to take the action needed to address the cost of living crisis, we must ask ourselves a fundamental question: who is best placed to build the prosperous future that Scotland deserves? I believe that the answer is Scotland.
This debate is about more than budgets and balance sheets; it is about the family worried about the next energy bill; it is about the young person wondering whether they will ever own a home; and it is increasingly about the pensioner choosing between heating and other essentials. The people of Scotland deserve action, they deserve an opportunity and they deserve a Government with the powers necessary to deliver both. Fundamentally, people deserve to have a say over their own future. If Michael Marra and his boss Andy Burnham are actually democrats, it is incumbent on them to give the people who live and work in Scotland the opportunity to answer the question, “Can Scotland still afford to remain a part of the UK?”
15:43
Scotland is a nation. That statement was overwhelmingly agreed on in our Scottish Parliament last week. We are a country in our own right, but we are debating what our nation’s priorities should be in the UK budget. What other country in the world faces this bizarre situation?
Will the member take an intervention?
No, thank you.
We are a nation in our own right, but we have to outline to another nation what funding and crumbs off the table we should get. I have been an MSP for less than five months—
Will the member take an intervention?
I have already said no, thank you.
The member is not taking interventions. We will not have them from those who do not have their microphones on.
Thank you, Deputy Presiding Officer.
I have been an MSP for less than five months and, in that short time, the failings of the UK system have been stark and clear to see. Yes, we have some devolved powers, but the levers of full fiscal autonomy remain frustratingly out of reach.
I am proud of our budget processes in the Scottish Parliament. There is opportunity for everyone to get involved, from pre-budget scrutiny to the various stages of the budget bill, with opportunities for amendments and the willingness of the Scottish Government to listen, compromise and work together. Every member of our Scottish Parliament is involved. Every member was invited, by the Presiding Officer, to upskill in fiscal literacy in order to ensure that the people of Scotland are best served, as they should be. That is what democracy should look like.
We might compare our system with that of Westminster, although it is hardly a comparison.
Will the member take an intervention?
No, thank you.
Yesterday, in a meeting with conveners of the Parliament’s committees, the First Minister put it eloquently in his response to a question posed by Jenni Minto, the convener of the Standards, Procedures and Public Appointments Committee. He said that budget scrutiny in this Parliament is forensic, whereas, in the House of Commons, it is non-existent—it has never darkened the door of the place.
Will the member take an intervention on that point?
No, thank you.
As far as I can see, there is little, or no, way for any of the Scottish MPs to either amend or influence the UK budget in any significant fashion.
However, here we are, and, as long as we are tied to that outdated system, we must do all that we can to ensure that the people of Scotland are best served. I truly hope that there is a genuine desire from the new Prime Minister to do things differently.
I whole-heartedly support the Deputy First Minister in her asks, as set out in the motion. We are an energy-rich nation, but most households are struggling with the cost of living. Many will be carrying real anxiety as to how they will be able to heat their homes this winter, and pensioners will be worried about their future following the announcement on the scrapping of the triple lock in the future. Energy bills are almost £1,000 higher than promised, food prices are soaring and mortgage rates are rising. That is not good enough, and those issues must be addressed in the UK budget.
A likely increase in defence spending will reduce the funding that is available for Scotland. With the continued abhorrent investment in nuclear weapons—
Will the member take an intervention?
No, thank you.
It is perhaps time for the UK Government to rethink its policy, especially in the light of the fact that global pandemics, the collapse of biodiversity and cyberattacks pose far more risk to humanity than the threats of nuclear weapons. The damaging rise in national insurance contributions, the cruel bedroom tax, the outrageous young parent penalty in universal credit and the pressures on our Scottish whisky industry are just a small number of examples of policy choices that are damaging our nation.
In 2018, Philip Alston, the United Nations special rapporteur, reported that
“poverty is a political choice”
and warned that our community roots would be broken. That was in 2018—and look where we are today, eight years on, with the Scottish Government having to prioritise community cohesion.
Political choices will be made in the UK budget. The Scottish Government will do what we can to mitigate the impact in Scotland of decisions made elsewhere—protecting the most vulnerable in our society, as we always do—but I hope that, for once, we will not have to do so.
15:48
I welcome the opportunity to speak in support of the motion in the Deputy First Minister’s name. At its heart, the motion is about a very simple request of the UK Labour Government: to use its powers in the upcoming budget to make people’s lives better in Scotland.
Across the country, households are under serious pressure as the cost of living soars. Energy bills have risen again today, and by January they will be a thousand quid higher than the Labour Party promised at the general election in 2024. In some parts of Scotland, diesel is over two quid a litre and three quarters of people are worried about the ever-rising cost of food. Those are not abstract examples of Westminster’s failure to tackle the cost of living; they are pressures being felt that will be discussed around kitchen tables in Aberdeen and across the north-east of Scotland tonight.
My first point, therefore, is that people need real action now. That starts by finally ending the UK Government’s years of austerity and increasing the Scottish Government’s block grant in real terms.
Whatever our political differences and party allegiances, there is surely agreement on the principle that Governments should use every available lever to help households through a cost of living crisis. With the powers available, the Scottish Government has the best cost of living package in the UK—free tuition, free prescriptions, the Scottish child payment and the £2 bus fare cap, which I hope will be rolled out in Aberdeen and Aberdeenshire in the very near future.
Of course, the UK Government continues to hold power when it comes to energy, fuel and large aspects of household incomes. That is why the announcement this week on the future of the state pension really matters. Rather than help Scottish pensioners, the move would cost every one of them about £2,000 a year. With ever-increasing energy bills, Scottish pensioners cannot afford any more cuts to their household budgets. Official estimates today provide evidence that, by 2050, Scotland will lose a total of £4 billion a year as a result of Labour’s attack on the triple lock.
Does Jack Middleton, as a working-age person like me, at least agree that the state pension outstripping average earnings is fundamentally unsustainable in the long run?
I am curious about Scottish Labour’s position, because, when he was announced as leader, Michael Marra supported the triple lock, but Mr Sweeney has been sent out today to bash it. They need to get their own house in order before they come knocking at mine.
One of Keir Starmer’s first moves as Labour Prime Minister was to scrap the winter fuel allowance. It was one of a catalogue of errors that, ultimately, led to his resignation. It beggars belief, as my colleague Alex Kerr said, that Andy Burnham has made the political choice to make the same mistakes and, as one of his first acts as Prime Minister, attack Scottish pensioners who have paid their way throughout their working life. Of course, the state pension is reserved to the UK Government, but today, as we mark world day of older people, that does not mean that the Scottish Parliament should be silent about the consequences for people living here. All of that, of course, is to fund social care in England, which brings me to a broader point on funding.
If the Scottish Parliament is to take on greater responsibilities, which would be devolved by the UK Government, it must have the financial capacity to deliver them. The motion rightly calls for an increase in the Scottish Government’s budget in real terms. There should also be a serious discussion about whether the taxation system is raising sufficient revenue in a fair and sustainable manner, including whether those with the greatest ability to contribute should make a greater contribution.
I sincerely welcome the Prime Minister opening the door to further devolution. There should now be a constructive process to identify the powers that could make a tangible difference to economic growth in Scotland, to the reduction of inequality and to the support of household incomes.
For my constituents in Aberdeen Central, that has a particular relevance when we consider our energy economy. Our region has supplied the skills and expertise that have powered these islands for half a century. Those workers deserve confidence that their skills have a future. That means recognising the contribution of the existing sector to our energy mix, but it also—importantly—means investing directly and heavily in the renewables sector that will power the future.
Instead, Labour has chosen to leave Scotland’s workforce, industry and economy in the lurch by delaying a decision on Jackdaw until after the Holborn and St Pancras by-election. By my working, that decision costs our economy greatly, to the tune of at least £1.4 million in tax revenue every day. That is a conservative estimate, but it is a significant one, too. Let us remember that we are talking about wealth that is unlocked by Scottish workers who are harnessing Scottish resources. Wealth created from North Sea projects should not be used to plug black holes in the Treasury; it should be invested directly into Scotland and Scotland alone.
I listened to Jack Middleton’s speech yesterday—he is a great advocate for the oil and gas sector in the north-east. We know that GDP is suffering and that earnings growth and employment are weak in the north-east—if only Jack Middleton could persuade his colleagues to open up the oil and gas fields and remove their presumption against doing so.
I am not entirely sure what that intervention was, but I thank Ms Hamilton. I believe something that the Conservative Party, I am afraid, has significantly moved away from—that Scottish wealth should be invested directly in the renewables industry in the north-east of Scotland and beyond. Scaling up that industry will benefit our economy massively. Meeting our net zero targets and properly managing the energy transition will unlock £150 billion of additional gross value added for the economy over the next 25 years. The future generations fund that Stephen Gethins and the Scottish Government called for yesterday—and the Conservatives voted down—would unlock that reality.
My call for the Labour Government, which is proud to talk about devolution and the fight against deindustrialisation, is to include that simple ask in its upcoming UK budget—and to cement Aberdeen as Europe’s capital of energy excellence.
15:55
Almost every time that I visit a business in Angus South—whether it is one in agriculture, hospitality, retail or anything else—I hear about the same pressures. I hear about Brexit, the cost of employing people, energy bills, transport costs and other overheads.
Will Lloyd Melville give way?
I have just begun.
All those pressures are making it more difficult for businesses to invest, expand and create jobs. Those businesses want to grow. They want to take people on and to invest in their communities and in Scotland’s economy.
The Scottish Government is using the powers that we have. This year’s Scottish budget reduced all three non-domestic property rates, maintained the small business bonus scheme and provided targeted relief for retail, hospitality and leisure businesses. However, there is a limit to how much we can do in Scotland if decisions taken elsewhere continue to add costs back on. Arrangements put in place by the UK Government are holding Scotland’s economy back. The UK Government could, and should, make a real and immediate difference to businesses in my constituency—through policies on employer national insurance contributions, VAT, energy costs and inheritance tax for family farms.
Some businesses in Angus have told me that the changes to national insurance resulted in almost £100,000 of additional costs in the first year alone. That burden has not hit businesses in isolation—those same businesses are facing rising energy bills, increasing transport costs and higher rents, which reduce the money that they have to recruit and retain staff and to grow. If Andy Burnham is serious about wanting growth, he must reverse that punitive measure.
The same applies to our hospitality sector. This summer, when it temporarily cut VAT on children’s meals and family attractions, the UK Government demonstrated that, when it wants to stimulate demand, VAT can be reduced. However, hotels, pubs, restaurants and cafes are facing persistent pressures from wages, food costs, energy costs and others, and they are, reluctantly, passing on those costs to consumers. That is why Westminster must go substantially further and cut the VAT rate to 10 per cent for hospitality. I heard that clearly over the summer and, most recently, last month, when I visited Forbes of Kingennie, in my constituency.
Up to 72 per cent of the total price of a bottle of Scotch whisky flows to the Treasury. Despite promising to back Scotch whisky to the hilt, Labour hiked the duty on it in its first budget. Revenues plummeted. Once again, a UK-wide tax system bears down particularly heavily on one of Scotland’s great economic success stories. Andy Burnham has a golden opportunity to undo some of Starmer’s damage by cutting whisky duty. That matters far beyond the distillery gate—it matters to hospitality, to tourism and to the farmers who supply the barley on which the industry depends. Those farmers receive less than £200 per tonne of barley. Meanwhile, distilled, that same tonne can easily generate an amount well into five figures in duty and VAT for Westminster. Instead of watering down protections on Scotch whisky, the UK Government should back our most famous product and deliver the cut in duty that is needed so badly.
The family farm tax also needs to be scrapped. Although I recognise that the UK Government has rowed back on its original proposal—albeit after intense pressure from rural businesses—the changes to thresholds and transfers of unused allowances between spouses do not go far enough. Farmers across Angus remain deeply concerned and have told me that, although their family farm might be worth a substantial amount on paper, they simply do not have the cash sitting in the bank to meet a large inheritance tax liability—not least given the impact of rising fuel, fertiliser, feed, energy and staffing costs.
Let us not forget that the tax disproportionately impacts Scotland, with our larger farming sector. That is why I back the Scottish Government’s call for inheritance tax powers to be devolved, so that we can design a system that meets Scotland’s needs. In the meantime, the UK Government should reverse the family farm tax and give our farmers the certainty that they need for the future.
The cost of energy bills has risen again today, despite the promise that Labour made before the election to cut bills by £300. Although I welcome the removal of VAT from domestic energy bills this winter, I am left wondering what I am going to spend that extra £4 a month on. Perhaps I will treat myself to a Freddo once or twice a week. Ah, but wait—it will need to go towards the increase in energy bills that was announced today.
However, this is no laughing matter; it is deadly serious. People across Angus will be dreading their energy bills dropping through their letterboxes this winter. The paltry VAT move is a drop in the ocean compared with today’s rise in the price cap. It is woefully inadequate. In an energy-rich country such as Scotland, how can it be that energy costs are such a source of anxiety for households, businesses and industry?
I see that time is marching on, so I will conclude. Businesses in Angus South are not telling me that they lack ambition. Instead, they say that they lack the means to go ahead, because Westminster is holding them back. That has to change in the UK budget.
16:01
I might be getting this entirely wrong, but I am quite struck by the fact that in a debate about Scotland’s priorities for the UK budget, we have had speech after speech from SNP members, but not one contribution in the open debate from the other parties in the chamber. That says an awful lot about the priorities of members from other parties in standing up for the people of Scotland on budget responsibilities.
I am afraid that that is because of sheer numbers. We have our opening and closing speeches, then there is no time for other parties in the open debate. I wish that the Lib Dems had more members, but maybe the electorate will choose differently next time.
The irony of the fact that Mr Rennie made that point when he is the only Liberal Democrat in the chamber is not lost on me.
I welcome the motion from the Government and I support it, because it is focused on tackling the cost of living crisis. When I go door knocking on a Tuesday morning before I come to the Parliament, whether in Carntyne or Sandyhills, people’s biggest concerns are energy bills and the cost of living crisis.
This country generates more electricity than we can consume. We are an energy-rich country, but we are going to be faced with the ridiculous situation in which, in the coming months, pensioners in Swinton, Sandyhills and Carntyne will face a very live decision about whether they can pay their bills: choosing whether to turn on the heating or to go to the supermarket, such as the Aldi in Shettleston. That goes to the very heart of the issue of our aspirations for the people of Scotland. Only two years ago, during the general election of 2024, Labour Party members were traipsing round streets across the east end of Glasgow telling folk that they would get £300 off their energy bills, and we are now in a situation in which they have to pay £1,000 extra on their energy bills, which Daniel Johnson is about to explain.
The member is right about the importance of energy bills, but does he not also accept that the events in the Strait of Hormuz are a significant factor in what is going on, and that he cannot lay the blame for that at the door of the Labour Government?
Part of my issue is that there have been a number of situations during the past two years in which the Labour Government has claimed credit for things that have gone in its direction. I have seen infographics from the British Labour Party north of the border that talked about interest cuts when that was all going in Labour’s direction. If the Labour Party wants to own economic policy, I am happy for it to do so, but I would be grateful if it could do so consistently.
Energy bills are not the only issue. When people are driving around Baillieston in my constituency, they only have to look at prices at the Morrisons petrol station to see that diesel now costs £2 a litre, which is part of the reason why we need to see a cut in fuel duty. It would be nice to hear members refer to that, too.
There are other decisions that the United Kingdom Government and the Labour Party could take, including on reducing VAT on hospitality or dealing with the issue of the bedroom tax across these islands, because we must not forget that this very Parliament spends money mitigating the effects of the bedroom tax.
Will the member accept an intervention?
I am happy to give way to the Bolshevik from the Borders.
Does Mr Linden not recognise that this Parliament could cut a number of taxes to put money in people’s pockets?
As I spend time in this Parliament, particularly when we discuss the issue of public services in the Criminal Justice Committee, I regularly hear members talking about wanting to invest more money, so it is interesting that the member is now talking about cutting taxes.
The reality is that if Mr Langan wants to have good public services he has to pay for them—I am afraid that that may sometimes mean that a member of the House of Lords might have to pay a bit more as well.
Does the member recognise that certain functionalities of taxation in Scotland could be improved? For example, non-domestic rates are a really blunt instrument. In some instances, people who are trying to invest to renovate a building are penalised for doing that, which blocks growth and progress. Can we look at how to tailor certain taxes to achieve better outcomes?
There is a risk that Mr Sweeney and I could be here for a long time if we get into a debate about buildings. I have a degree of sympathy for his position and I know that Scottish Government ministers have looked at the issue of non-domestic rates.
The First Minister has indicated that, if the Labour Party starts to take a more constructive approach—as appears to be the case, particularly since the election of the latest Scottish Labour Party leader, Michael Marra—and Labour members come forward with policy suggestions, they will find that the doors of the Deputy First Minister, and indeed of Ms Goodlad, will be open. If so, I am sure that Mr Sweeney will want to press the issue.
There are some areas where the UK Government could certainly move in ways that would make a difference here. Just before the Bolshevik from the Borders intervened on me, I mentioned the issue of the bedroom tax. We are spending far too much money on discretionary housing payments. If we could spend money investing in things such as local government instead of mitigating the bedroom tax, that would be welcome. There are other things that we could do on national insurance, the benefit cap or the young parent penalty, but the common theme with all those issues is that they are reserved to the United Kingdom Government.
That brings me to a fundamental point. The Labour Party has changed its Prime Minister and the early signs are that he is a better communicator and has a lot more charisma—although that probably would not have been difficult, based on who he succeeded. When the rubber hits the road, we have to see whether there will be change—
Will the member accept an intervention?
I am happy to give way to Ms MacDougall, as long as she is not going to read from a written-out intervention.
How does the member explain the fact that we get more money per head than other places in the UK do, but our schools get worse results?
I am not sure that is actually the case. If the member wanted to come with me to visit schools in my constituency, I could take her to St Andrew’s secondary school, which gets £250,000 from the pupil equity fund in recognition of the challenges that pupils face there. That is not something that happens south of the border. Perhaps that was at the bottom of the handout that she got from the whips and she might get to that later.
The fundamental point that I want to come back to is that we can have debates about our requests for more powers or about what we want to see from a United Kingdom Government, but the reality is that the only way we are going to get real change is with the powers of independence. It was interesting to note that the Labour Party, at its conference in Liverpool over the past few days, decided that it would start reopening the question of Europe. That is fine if Labour wants to do that, but it raises a point about consistency: if Labour wants to reopen the issue of Europe, it ought to reopen the issue of where Scotland stands by giving us a referendum that would give us a fresh start with independence.
We move to the closing speeches.
16:09
On reflection, I agree with David Linden. I think that there were far too many SNP contributions in the open debate and that we should immediately change standing orders to prevent such a calamity from happening in future. [Interruption]. That has woken them up.
I have to say that this has been a rather dispiriting afternoon, because we have simply had the trading of a series of slogans, and I am not sure that we are any further forward. I can check, but I do not think that the chancellor will have been tuning in to the debate to find out whether we have any nuggets that he might want to include in the budget.
Although the Deputy First Minister had lots of helpful, constructive and friendly suggestions for the chancellor, which I am sure that he will take on board, we heard almost nothing about—there was complete silence on—the looming £5 billion deficit that is coming down the track here in Scotland. We also had silence on how the Government intends to grow the economy here in Scotland so that we can close that looming £5 billion financial gap. We also had absolute silence—which is being replicated right across Government—on how we are going to drive down the costs of government. Indeed, we heard this week that the Government’s attempts to reduce staff numbers have resulted in those numbers going in the opposite direction.
We had complete silence on all of that. I would prefer us to have a much more constructive, serious debate on those difficult and challenging issues, which I accept are not easy to address, rather than another debate in which we just trade slogans. We know that the SNP likes independence. We know that Reform does not like the European Union. We know that Craig Hoy does not like tax rises. We know that Daniel Johnson has a lot of intelligent things to say. [Laughter.] We know all of that. So, can we not just cut that out next time and cut straight to the chase? [Interruption.]
I apologise to Ross Greer, who has equally intelligent things to say.
Is Willie Rennie very politely asking me to shut up?
I would never dream of doing such a thing.
I want to get down to substance, because there are some serious issues that I would like to debate. Liam McArthur has set out the Liberal Democrat asks for the UK budget, which I am sure that he will send on to the chancellor.
This morning, an Audit Scotland report was published on how we are spending the money in the offshore wind investment programme. We are behind schedule on that. Why is that? Although we have managed to lever in extra private investment on the back of that programme, only £141 million of the £500 million has been spent on the 17 projects. Why are we behind schedule on that? What does that mean for the ScotWind programme? What does that mean for growing the offshore renewable energy sector and the potential tax revenues that could come from that, which might help us to close the financial gap? That is an issue that I am interested in.
Why are we so slow on the construction of houses? We had a debate on that earlier in the week. The number of starts has gone down significantly, as has the number of completions. I had thought that the Housing (Scotland) Act 2025 was a step in the right direction. I had thought that it managed to provide enough exemptions on mid-market rents and on buy to rent. All those provisions were good. There was also investment in the planning system in an effort to unblock the sites that were stalled.
Will the member take an intervention?
I will, in a second—let me finish this point.
All of that was good, but why are we not managing to increase the number of new starts and the number of completions? If we cannot get the construction sector moving, we will have a problem with growing the economy and utilising that workforce.
I recognise that that compounds the fiscal challenge that the Government is facing, because it is haemorrhaging money into meeting emergency homelessness accommodation costs, but it is not investing in new housing stock and turning tenancies into a revenue stream for the public sector.
That is exactly the point that I was seeking to make, and I think that Paul Sweeney has made it in a much more intelligent fashion.
This week, we debated the fact that we are sending orders for buses to China. How can we get Alexander Dennis into a position in which it is fit to build more of those buses here, utilising the Scottish workforce, increasing our tax take and closing the £5 billion financial gap that we have talked about?
We still have the Dalzell steel plant in Lanarkshire. That has been mothballed for two years. We could get that working to fulfil the order for the British ships that the UK Government is progressing with. Why can we not manage to get that plant moving again, to get the workers working and to get the tax take in so that we can close the financial gap?
I would far rather be debating all of those things this afternoon. I do not adopt a Reform or Conservative approach to this but, crucially, it is a matter of getting the welfare spend in this country down—not by slashing and burning benefits, but by providing ladders of opportunity to get people out of their situation.
[Made a request to intervene.]
Paul Sweeney rose—
In a second.
That way we can get people into the workforce and create opportunities for them. That is good for them, good for the tax take and good for the country.
I call Paul—
I will take the intervention from David Linden, if that is okay.
I am grateful to Mr Rennie for the thoughtful way in which he is approaching his speech. We always have discussions about the welfare bill—or the social security bill, as some of us refer to it; Mr Rennie will recognise the distinction. Does he understand and recognise that we are talking about demand-led benefits? The reality is that we are living longer, and with complex health conditions; it is not as simple as saying that we can just crack down on that bill when we have difficult health conditions.
A central feature of the current cohort of people who rely on benefits is that they are younger people with conditions of the mind, such as attention deficit hyperactivity disorder, autism or other mental health conditions. Those people should be given the opportunity to work, which will increase our income tax take and other taxes. That might not necessarily reduce the benefits bill in that respect—David Linden is right about that—but it can contribute more to the growth of the economy. That is my point here: it is a waste of talent unless we can get those people back into the workplace, and that does not benefit the economy either.
We should have been debating all those issues this afternoon, rather than just trading slogans between parties. I urge the Government to try to move forward and to focus on the detail because, unless we get on top of it, we will have a massive problem in just a few years’ time with that £5 billion deficit.
16:16
Today’s debate has reflected the different paths that our country could take, depending on the decisions that are made in the UK and Scottish budgets this year. I have listened carefully, and there are many policy choices to be made, but there are really only two directions that Scotland and the UK can go in. It is evident that either of Scotland’s Governments can increase taxes yet again, make life harder for households and businesses, increase the cost of living, slow down the economy, damage growth prospects and borrow more that future generations will have to pay for; or they can change their tune and finally make life more affordable.
They can reduce the cost of living so that families can cover their monthly bills, they can let taxpayers keep more of their own money, they can give businesses a break, and they can show some fiscal responsibility and balance their budgets so that our children and grandchildren are not left with a mammoth debt burden. They can set conditions for a new era of growth and prosperity.
Does the member regret the significant debt burden that the Conservative Party left the country with?
Jamie Langan will understand, from when he was a Conservative, that, amid the challenges of the pandemic and the Ukrainian war, the Conservative Government sought to support individuals across the United Kingdom: that is exactly what the Conservative Government did. That is the vision that I have talked about, and which my colleague Craig Hoy has set out today: a better future for Scotland and Britain.
As Willie Rennie said, the debate has covered vastly different potential directions in Scotland and the UK. It has been quite a depressing debate, I would say, but we know which way the SNP is likely to go, even if Jenny Gilruth says that she is not inclined to raise taxes. I believe that the SNP will gladly see costs rise and bills ratchet higher than ever. The SNP is first class at spending other people’s money.
Today’s debate has been very much about blame shifting and deflection. As I say, it has been quite depressing. The 15 SNP back benchers who have turned up have made tediously predictable contributions. Rather than address the key weaknesses of their own making, using the powers that the SNP has, they have wallowed in self-pity. It is not ambitious for anyone who is listening, but nobody is listening, and that is the key point. The SNP is not creating opportunities for Scots who want to get on in life.
The Scottish Government projects a £5 billion funding gap by 2030, which is extremely concerning. Scotland’s income tax base performance gap widened from just under £500 million in 2023-24 to £888 million in 2024-25. In addition, the 2027-28 Scottish budget will be reduced by a £720 million negative income tax reconciliation. The SNP Government will need to manage that reconciliation, but none of the SNP members has addressed that point today. That will lead to less money for crucial public services for everyday people who rely on them.
What about the SNP’s £560 million of planned savings?
When it comes to the income tax reconciliation, does the member agree that there is definitely something that must be looked at in the fiscal framework because, right now, there are a lot of aspects of the framework, particularly that reconciliation, that mean that the Government cannot plan over multiple years? There are a lot of calls for the Government to hand out multiyear funding streams but, to do that properly, the Government must be confident that the money that it gets will come over multiple years, too.
The Scottish Fiscal Commission has warned the Scottish Government about its overspend and about the potential of less tax income. The Scottish Government has had plenty of time to prepare to deal with the reconciliation. All that will happen is that there will be less money for public services, because the Scottish Government is using that money irresponsibly.
The Scottish Government also plans to reduce the size of the public sector workforce. What has happened to that? There has been no progress whatsoever. Of the SNP’s £560 million of planned savings, 44 per cent are expected to fall on the NHS, and there is no detail on public sector reform. It is a complete disaster. There has been little progress. No wonder the economic agencies are saying that the Scottish Government needs to be transparent. It needs to show the public what it means when it talks about tax rises and less money for public services.
There is a point of conciliation here, and that is that energy costs need to be dealt with. They are rising globally. It makes no sense not to use the resources that we have here on our doorstep. Those energy costs also mean that Andy Burnham must give drivers a break by cancelling an increase to fuel duty or, better yet, cutting fuel duty. Prices at the pump have risen to just over £2 per litre at many garages, which experts say is among the highest prices in Europe.
Today’s debate has been depressing. Very few SNP members have turned up—[Interruption.] This is a great lesson in maths. They do not understand that my point is about proportionate numbers of their own ranks.
There is no hope for the public to put their trust in this SNP Government to run taxpayers’ finances, and that is a sorry state.
16:22
I start by agreeing with what Willie Rennie mentioned earlier about trading slogans, but that will be the only thing that I agree with Willie Rennie on in this debate.
The phrase “cost of living” has almost lost all meaning in the Parliament, as it is mentioned so many times. However, behind every debate on the subject is a human being, a family and a daily exhausting struggle for basic human needs. I ask members to think of a young mother in my constituency of Glasgow Southside. She is under 25, raising her young child and trying to navigate a social security system that feels less like a safety net and far more like an obstacle course. Under the current universal credit set-up, simply because she is under 25, the UK Government decides that she gets £86 less every month to survive. However, her landlord does not offer a youth discount on her rent, energy companies do not lower the tariffs for under-25s and supermarkets do not charge less for the big shop. It is no wonder, then, that young mothers in Scotland face a staggering 52 per cent rate of relative poverty.
Just today—I implore Willie Rennie to read this—a joint research report by Close the Gap and Save the Children Scotland explores—
Will the member take an intervention?
I will not take an intervention at the moment.
The report explores those severe labour market inequalities. It highlights that young mothers face a systemic double penalty: the traditional motherhood penalty of discrimination, childcare barriers and a loss of earnings due to parental duties, combined with the youth penalty of lower statutory pay bands and reduced social security allowances.
Universal credit is fundamentally failing our communities, from single mothers and private renters to young school leavers. That is why the Prime Minister and the chancellor need to put money back into people’s pockets during this crisis. We must increase the basic rate of support under universal credit, which sits at historic lows, and end the punitive youth penalty once and for all. I agree with Alex Kerr’s remarks about Scottish Labour and its indication that it would support the Scottish child payment, but I have not seen that indicated in the Labour amendment.
Instead of providing stability, the freeze on local housing allowance is driving private rents completely out of reach, as the Deputy First Minister alluded to. In greater Glasgow, low-income families now face an average annual shortfall between their housing support and actual rent of £642 for a two-bedroom home and £1,080 for a three-bedroom home. That gap is pushing working families straight into temporary accommodation and homelessness. Meanwhile, as we heard earlier, the Scottish Government has been forced to allocate around £160 million to our social security system for mitigation.
I am also deeply concerned about the cuts to disabled people’s benefits and the rumours of cuts to the personal independence payment by the UK Government, as alluded to in our amendment. Although disability benefits are devolved, decisions that are made in Westminster directly impact the budget that is allocated to Scotland. The proposed changes would further strain our budget, because any cuts to PIP would bring a corresponding reduction to ADP delivery.
The Prime Minister speaks loudly about supporting more than a million young people into education or work, but how can a school leaver take up their dream apprenticeship in Glasgow if rental support does not cover a basic room in the city? Housing support must enable opportunity, not lock young people out of it. Rather than address those structural failures, the chancellor recently signalled further benefit cuts, claiming that social security should merely be “a bridge to work”. That is deeply concerning. Such cuts force households into destitution in the hope of punishing them into employment. It is the exact same failed austerity logic that we endured for 14 years under the Conservatives.
[Made a request to intervene.]
I will not take an intervention at the moment.
As the Joseph Rowntree Foundation has proven time and again, extreme poverty acts as a blocker to work, not a driver. A parent who cannot afford a bus fare cannot travel to a job interview. A social security system that is built on sanctions and reductions creates anxiety, isolation and economic disengagement. Research from the Public Law Project shows that 91 per cent of sanctions are handed out simply for missing or being late for a meeting, thus using punishment as a first resort and destroying the crucial trust between claimants and work coaches.
That reality was starkly laid bare in recent research from the University of Glasgow’s centre for public policy. The evidence from its state of poverty project demonstrates how fragmented and siloed Government decision making actively traps households in hardship. When housing, social security and local services operate in isolation, administrative traps are created that prevent people from accessing the lifeline supports that they are entitled to. Income support alone cannot succeed where Government systems are working in silos against an individual. All Governments should be working on that issue.
We see the compounding weight of these policies every day in our constituencies and regions. We are living through a severe housing emergency, which is felt acutely in Glasgow, where our council faces unprecedented housing shortages alongside a £90 million budget deficit. The Deputy First Minister has assured Glasgow that it will receive meaningful support, and I hope that that comes when the budget arrives.
While some in Parliament disgracefully use this crisis to target asylum seekers, we should be looking at the structural inefficiencies that exist. For example, the Home Office rehousing scheme funnels public money into private contracts with companies such as the Mears Group. If that contract were transferred to a public agency, we could deliver a vastly superior service—one that is cheaper, better and does not profit off human misery.
We cannot cut our way to growth when the top 2 per cent of households in Scotland hold more wealth than the bottom 50 per cent of households combined.
[Made a request to intervene.]
I will not be taking an intervention.
That money exists; it is simply in the wrong hands. That is why all of us in this chamber should call on the UK Government to implement a wealth tax in order to properly fund our public services, restore our safety net and build a society that is rooted in care rather than punishment.
16:29
I am glad to see that the Scottish Government has begun to recognise that a new approach to governing is taking shape across the United Kingdom and that our new Prime Minister is leading the charge towards a fairer, more prosperous and more democratic Britain. I was very proud to be in the room when he gave his recent speech at conference.
A Scottish Government that acts collaboratively will find that it can build partnerships for mutual flourishing across our shared isles, and yet I must be honest that I am disappointed that, once again, the Government has opted for the simplistic shopping list method of negotiation. Rather than setting out a coherent, systems-thinking vision for the future of Scotland, recognising the complex trade-offs that we face in public policy, it has made what feels more like a prickly, sanctimonious and haughty set of demands.
I do not think that the SNP needs to take any lessons from Labour on the budget process, given that Labour has achieved absolutely nothing in any budget process in recent years.
I agree—it was a failure on our part not to participate more constructively in the budget process.
I thought the member made a very thoughtful contribution to today’s debate, unlike some of his colleagues.
Fundamentally, these are matters for intergovernmental talks, and yet they are again consuming valuable parliamentary time. The October recess is almost upon us, and yet, since the election, not a single piece of legislation has gone through the Parliament. We have to recognise that we are a legislature, not a debating society.
Let me be clear about what the amendment in the name of my friend the member for Edinburgh Southern asks for. Too much of the debate has been about Scotland’s relationship with the rest of the UK in a constitutional sense, but we need to remember that we are here to transform and reform Scotland, across all aspects of Government. Local government, planning, transport and skills are overwhelmingly matters that this Parliament already controls.
Does the member share my frustration at Katie Hagmann’s speech? I ask that given that she did not take an intervention and seemed to summarise budget scrutiny in this place as being perfect and not requiring any review, and she seemed to think that, at Westminster, the process is appalling. Mr Sweeney is a former MP. A finance bill will go through Westminster, and there is great scrutiny of the UK budget through that process. As a former member of the Finance and Public Administration Committee, I know that it was a frustration of my committee colleagues that we did not go through such a process here. Will the member perhaps alert Katie Hagmann to how the process works here and at Westminster, given that there is detailed examination of the finance bill at Westminster but no such process here?
I agree that the process for scrutiny of the budget here is poor, and there could be more integration of the civil service in determining how we look at options for budgets in this Parliament.
On the point about information sharing, one of the challenges that the Scottish Government faces is the short period that it has for presenting its budget following publication of the UK Government’s budget. Does the member support better information sharing between the UK Government and the Scottish Government at an earlier stage to help facilitate transparency?
I think that there is a very open attitude to a change in tactic on the approach to that, which would deliver a more efficient public service. However, the same goes for local government, because many councils find it very difficult to reconcile quickly the budget decisions that are made here, so let us join up the whole chain to deliver a more effective fiscal position.
Mr Hoy made an interesting point about Ms Hagmann’s speech, because I was concerned about the apparent endorsement of full fiscal autonomy. We need to recognise that that would entail a £14.3 billion reduction in public expenditure in Scotland, which would be disastrous, frankly.
Given that Mr Hoy was not at the Conveners Group meeting yesterday, he might have misinterpreted Ms Hagmann’s point about what the First Minister said. The point was specifically in relation to the second reading of the finance bill and how public bill committees are constituted. I know that Mr Hoy sometimes does not like to get into the detail of these things, but it is important that he does not inadvertently mislead the chamber on that.
That is a fair observation. David Linden and I are both former members of the House of Commons, and I agree that the system here is better than the public bill committee system in Westminster.
The only question before us today is whether we keep powers tightly to ourselves or let them flow outwards to the people of Scotland. Therein lie the seeds of good growth in every postcode of this country, which the Prime Minister mentioned. Nobody can pretend that this is a fringe preoccupation. In March, the previous Scottish Government and COSLA jointly published “Democracy Matters: A Route Map to Reform”, which argued that decisions about public services should sit as close as possible to citizens and told us that implementation would be a matter for the next Administration. Colleagues, that Administration is this one.
The previous Parliament incorporated the European Charter of Local Self-Government into Scots law. The charter states:
“Public responsibilities shall generally be exercised, in preference, by those authorities which are closest to the citizen.”
The principle is agreed and settled, the charter is law and the route map is written. What is missing is the political willpower to realise it.
The scars of austerity during the 2010s have left communities feeling threadbare and unheard across the country. Too often, measures that should have empowered them, such as community asset transfers, have become a way of handing volunteers the liabilities for running the local community centre. What could be opportunities for empowerment become cuts by indirect means.
The Government’s route map concedes that point. It acknowledges that the reduction in community learning and development teams now limits the hands-on support that councils can provide. Without investment in that infrastructure, the communities with the fewest assets will be the least able to take on new powers. We need to do better in that regard.
On tackling child poverty and investing in our communities, I made the point that an opportunity to work with the UK Government would be the adoption of the child payment across the UK, which would help bring down child poverty and, crucially, unlock a host of resources for the Scottish Government. Would Scottish Labour support that in this budget?
We are certainly open to such innovations.
Let us reflect on the Prime Minister’s speech. He said that we need to stop paying for failure and to start investing in the success of our people and unlocking the talents and potential of our society. That is what we need to do. Often, people are stressed and struggling, so if we integrate the benefits system—as Ms Bruce said—let us make it more automatic so that benefits are triggered without people having to navigate a complex bureaucracy, and let us make it effective in delivering good outcomes for our communities.
I am sure that most members know my support for better regional governance and for combined mayoral authorities for Scotland’s major city regions, but our amendment does not ask members to settle that argument today. Regardless of the exact framework, I appeal directly to the Government to stop treating strong local government as a rival to Holyrood instead of a supporting partner. My home city of Glasgow ranks 35th out of the UK’s 63 largest cities and towns by productivity, despite being the fourth largest by population. The Centre for Cities estimates, conservatively, that Glasgow’s economy underperforms by £7.3 billion every year.
Public transport across the region is divided among Strathclyde Partnership for Transport, eight local authorities, the Scottish Government through Transport Scotland and private operators, yet the modelling shows that simply aligning timetables, frequencies and fares could put 300,000 more people within 30 minutes of Glasgow’s urban core. It is not about building a new railway or bridge, but making one set of decisions at the scale at which people live and work. That is the difference—the economics of agglomeration—that regional democracy could make for Scotland.
The last railway to be entirely built in the Glasgow suburban area was built as long ago as 2005, when the Maryhill line was extended by 1.6km from Maryhill to Anniesland to link the northern suburbs to the north Clyde line. That is a paltry investment for a city the size of Glasgow.
Those problems of disempowerment are not only in Scotland’s great metropolitan city of Glasgow. The Highland Council area is roughly the size of Belgium, and the needs of Skye and those of the Inverness suburbs must compete against one another. For many islanders, local democracy is not local at all and power for the people of Skye sits largely away in Inverness and Holyrood. A true two-tier local democracy under the Scottish Parliament, as in most of Europe, would allow politics to be handled at local, regional and national levels. Instead, we live in a country where councils are so weak that rules about parking are decided in Holyrood and are so large that even their limited power is far from those on the ground.
We must address the real issue: the Scottish Government has become worryingly anti-politics and overly technocratic. The First Minister told us that his one rule for local government reform is, “No more politicians”; we in the chamber need to recognise that that is not a healthy attitude. Aristotle observed that man by nature is a political animal; participation in politics is not to be treated with disdain. As progressive politicians, we should want more people to be involved in our democracy at all levels. In fact, politics has already been practised across our communities, largely unnoticed: it is there when the chair of a small charity tries to keep quarrelsome trustees on board, when a community-based housing association tries to improve the living standards for their community and when the organisers of a food pantry are trying to build a co-operative commonwealth. We need to empower those people and, because we are a proud democracy, bring them properly into our democratic processes so that accountability to the electorate and transparency in decision making become the hallmark of how we do things here in Scotland.
This Parliament was founded on the conviction that decisions are better made closer to the people they affect. That argument does not end at the door of this Parliament. Please vote in favour of the amendment by my friend the member for Edinburgh Southern. We know that Scotland can be run better. We want to see that happen and, crucially, with collaboration and creativity, we can build the better nation that we all want to see.
16:39
I approach this debate with some amusement. Reform is likely to see very little in the budget that will fill us with enthusiasm, so what follows just amounts to a wish list on my part.
Last year’s UK budget confirmed that the public finances are under strain, and the benchmarks on growth that it provided have not been hit in the past year. I point out that our European neighbours are suffering slightly more than us in terms of GDP, although our productivity rates are lower. Crucially, low growth seems to land more significantly on UK households, and there are a few reasons for that. The wholesale price of power in the UK is heavily tied to expensive European gas prices, and green policy costs are loaded directly on to consumer and business bills instead of being funded by taxation.
Gas is being pumped to the UK for domestic use. Reform sees gas as a transitional fuel, just as the Chinese use coal and France is run mainly on electricity from nuclear and hydro power. Experts tell us that, regrettably, the price of gas is not going down any time soon, and that will still be the case even if Jackdaw gets the green light. However, if Jackdaw licences were restricted to gas for domestic use only and were not competing in a European marketplace, the price of gas in the UK would fall. Malcolm Offord talked about that in his speech, and Liam McArthur gave us a moving example of someone in his constituency who has struggled with the price of fuel that they need to get to work. That restriction would have a positive financial impact on homes and businesses, providing much-needed jobs for households.
Our food is harvested and manufactured using fuel and it is moved around the UK predominantly by heavy goods vehicles that use diesel. The cost of all that energy must be loaded on to the cost of goods in our supermarkets, and people’s weekly shopping costs have also been compounded by a plastic packaging tax. With the crisis in diesel supply potentially hitting us down the line, that will inevitably influence inflation. The cabinet secretary has confirmed that it will likely hit 3.75 per cent on current targets alone.
The housing crisis places a squeeze on people, creating high rents and making it more difficult for those who are starting out to get on the housing ladder. Regrettably, middle-income families who are working the hardest are being squeezed the most. The average age of young people buying a home is now 34, and they are the lucky ones. The rent controls that the SNP has introduced have had an adverse effect on the supply of affordable rented accommodation. Social landlords have left the market or have reduced the available supply but increased rents.
I think that it was Daniel Johnson who said that, in respect of the fiscal position, the Scottish Government is out of its depth or has lost its way. I hope that that is correct—I do not want to put words into his mouth. He also highlighted that we have not seen the medium-term financial strategy yet.
Nights out on the town are becoming a rarity for some people, so I would like VAT on hospitality to be reduced. When it is cheaper to dine out in Paris than in Glasgow, we know that something is wrong. We have the highest VAT rates in Europe.
The chancellor has several levers to pull when he delivers his budget. While continuing the benefits of lower VAT, he could review the windfall tax on energy companies, as Craig Hoy mentioned, and remove the green levy from household and business bills. Looking to the future, we need better joined-up transport infrastructure to help with our freight options.
The personal allowance, which the UK Government controls, has been frozen for several years, creating fiscal drag. As I said yesterday, we want the chancellor to look to increase the allowance to £15,000. The Deputy First Minister says that she wants to simplify tax rates, so perhaps we can be hopeful there.
We want to get our young people off benefits and into work. We want to keep our young people in this country by enabling them to take starter jobs and keep most of their earnings as a state incentive to work. Even Labour politicians are on record as saying that our young people are getting a poor deal at the moment. We accept that such a move would significantly help middle-income households, but those are the very people whose shoulders seem to be getting narrower all the time. They are working harder but, unfortunately, they are seeing little reward.
I would like the UK Government to look again at inheritance tax, particularly in relation to family businesses. You cannot cut off someone’s income lifeline at the age of 50, when they have worked hard to consolidate a family business and forsaken other personal opportunities. To suddenly have that torn out from under them is unfair and punitive within the timescales that have been laid out.
There is an interesting point about succession planning for small businesses, and asking whether we could do more to promote employee ownership in the long run. If a family has started a business and is looking to retire, are there ways for us to incentivise a transition to selling it to the employees instead of to, say, private equity, effectively offshoring ownership in the business, which happens all too often in Scotland?
I agree with Mr Sweeney that all options need to be looked at. In such a scenario, all options should be on the table.
Capital gains tax is another mechanism that many people on the left would like to be increased to a similar level to income tax. Indeed, Louise Haigh and Wes Streeting have been quoted as saying so, and have talked about policies such as reviewing the pension triple lock, which has been mooted across parties as a potential future funder of social care for the elderly. The triple lock was a bargaining chip from the Tory-Lib Dem coalition pact in 2010, but it will be difficult to preserve in the future in its current form unless overall economic conditions substantially improve. Currently, the triple lock is unaffordable because there is no economic growth.
Pensioners are easy targets. If the bill for welfare costs was sorted and reduced instead of increased, the triple lock might become affordable, to the benefit of financially vulnerable pensioners. We would wish to uphold it. To get the best affordable deal for them, all parties need to look closely at international comparators. Before anyone cries “far right”, I note that Australia has been successfully operating a means-tested policy for years. That is common sense from a left-wing Government.
Under Keir Starmer, the UK Government has started killing quangos, and we are pleased that Scotland will follow suit, as we heard from the First Minister in his programme for government. We need to be focused on internal Government waste, too, and on the UK Treasury’s “Managing Public Money” policy. We should do that in a manner similar to our own scrutiny of the Scottish public finance manual, which covers controversial gifts and delegated ministerial powers.
Politicians across parties are saying that the bill for welfare needs to be cut, and that must start to be addressed in the budget. We need to tighten up on PIP and ensure that money is being targeted where it is most needed. Reform would not have extended the two-child benefit cap; the way that it uprates universal credit within its capped amount is a crucial reason for that. Some families who are not working now have more income per month from benefits than those who go out to work have. That is not equitable in a society that cares so much about equality. The benefits system must represent a finely balanced act for all.
Defence is another crucial area that is in need of money. In Scotland, our security is at risk—we all remember the Glasgow airport attack. We must increase defence spending as soon as possible, so I have a suggestion for the Prime Minister: he should divert what he is spending on plans to re-enter the big federal state of the EU, starting with the £570 million that it is costing to kick-start the Erasmus programme. Students do not have to go abroad now to meet their international counterparts, as they already have many of them here in UK universities. He should give that money to John Healey so that he can plan a modern-day defence force that is fit for the countless challenges that we face. After all, that was the reason that John Healey gave for resigning from Keir Starmer’s Cabinet, if any of us believed that at the time.
I have a name for that new defence strategy: operation survival. I borrowed it from Benjamin Netanyahu. Members might not like his politics, but Israelis like the way in which he runs his economy and manages his complex democratic coalition. It funds their defence and their technological supremacy, which we can all learn from. Israel’s GDP is predicted to be 3.5 per cent per capita this year, and trade between Israel and the UK benefits both economies.
The UK can learn much from Israel’s multilayered defence system, with its technological innovation pipelines and close integration between specialised and conventional forces. There is also much that we can appreciate in Israel’s crucial iron dome. Parliamentary papers on defence have noted that the UK has gaps in its domestic missile defence, prompting calls for us to have a similar domestic shield against advanced drone and missile threats. We need it now. That spending should be non-negotiable, and we should be working with the Israeli Government to achieve it. I did not speak in the sanctions debate—
Please bring your remarks to a close.
I will save those closing remarks for another time.
I call Hannah Mary Goodlad to wind up the debate and take us to decision time.
16:50
I have a lot of pre-written words here, but to be honest, I am just going to reflect on what I heard towards the end of the debate.
To give Netanyahu as an example of somebody who we should take lessons and learnings from—somebody who is a war criminal, perpetrating genocide on the people of Gaza—what planet is Kim Schmulian on?
I had not actually finished my speech. I wound up because the Presiding Officer asked me to. I would have gone on to explain why Israel is so important to me. I have family there. I am a Christian woman who has been married to a Jewish man for 33 years. I hear talk in this chamber all the time about integration and multiculturalism, as if it were so easy. I wanted to explain that it is not.
Many of us in this Parliament have faith, but that is absolutely no reason to give a war criminal as an example of someone who we should include in a debate on a fiscal strategy—it is just incomparable. As politicians, we have a duty of care to act calmly and responsibly in response to global tensions, so I completely reject that comparison.
I want to move on to the constructive comments that Mr Sweeney made towards the end of the debate, and I want to say that I agree with Mr Willie Rennie—there is a lot that we agree on. We started to get into the territory of agreement on process and participation in budgets. There is a piece on improving the budget process from the national Scottish level to our regional council levels and our local council levels.
I welcome the indication that there could be a better budget process from the UK Government in relation to the Scottish Government. I also very much welcome the point on engaging with the upcoming Scottish budget. We would very much welcome that engagement, and we look forward to working with members on that. As Alex Kerr said, there is strong indication that the child payment could be explored and extended across the UK. Again, that is something that we could work on.
On responsibility and the devolving of powers not only to Scotland, but regionally within our country, if responsibility does not come with funding, it is a problem. That point has been woven through the debate today. Responsibility and funding must come hand in hand, because otherwise we are passing the problem down.
I welcome Daniel Johnson’s comments on devolution across the country. It is a shame that he was not here for the debate that we had on Tuesday, because we explored that issue in depth, but I know that he was south of the border at a conference.
One issue that struck home in the debate on Tuesday was the piece about democratising our country. We see people pulling back, a disengagement and an apathy at many levels across Scotland. That leads to a lot of the social tension that we see—the rise of the far right, violence against women and a racial tension across society. I was listening to an episode of “The Rest Is Politics” podcast with Gordon Brown, and he identified the same piece. He identified that people are not engaging locally in the same way that they used to, whether that is in kirk groups, political parties or unions—participation is very much down. If we are to take democracy to the heart of Scotland, we will be able to target and increase global participation.
The minister may think that I am cynical in asking this question—I am not sure. Is it not a bit of a surprise that the Scottish Government is, all of a sudden, looking at a root-and-branch review of our regions and all the structures only after a new Prime Minister has emerged and has said that he may potentially intervene from Westminster to impose some form of regional devolution in Scotland? Is it just a power grab by the SNP, which fears that the Labour Government wants to cut across it?
The SNP has the principles and values of self-confidence and decentralisation, and pushing power out and down, at the core of who we are as a party. If Mr Hoy had taken the time to read our manifesto, he would have seen that public service reform was woven throughout it.
At the start of the debate, the Deputy First Minister set out the actions that we are calling on the chancellor to take, including a reversal of the planned real-terms cut in our block grant funding. Members across the chamber have indicated what they would like to see at the budget in a couple of weeks’ time, but I am very sorry to have left Rachael Hamilton depressed in that regard.
We all have different views on what those priorities should be, but I think that we can agree that the budget must work in favour of Scotland to address the cost of living and energy costs, and to push power out, down and across. When you do not have the economies of scale, there can be a question of cost around democracy, devolution and autonomy, and we must see that red thread follow through at national, regional and local levels. The budget must also target, and provide support for, the high cost of energy bills; I am acutely aware of that in my constituency. The very same wind that provides Viking Energy with profit strips the homes of people in Shetland, and 35 per cent of our population there is in fuel poverty.
Ross Greer made a point about metrics and GDP. We have used GDP as a measure of growth for many years. If we are talking about facts and figures, I point out that, since 2007, GDP growth in Scotland has been 10 per cent in comparison with 8 per cent in the rest of the UK. Scotland has also been the most attractive place to invest outside London for the past decade and a half. However, it is an interesting point, and GDP could be supplemented by other metrics across the board. We should acknowledge that GDP also grows in times of war and natural disasters such as floods, and during many other times that are not good for the wellness or happiness of a nation. Measuring inequality is, therefore, a very good supplement to GDP.
There is something called the Palma ratio, which is a measure of inequality across Scotland, England and the UK, and it also measures inequality globally. Basically, the principle is that a lower number on the Palma ratio means that a place is in better shape in terms of reducing inequality. I would argue that that is the kind of principle that a Government should lean towards. Scotland’s number is 1.1, and for the rest of the UK it is 1.4, so, in trying to address inequality and reduce the divide between those who have and those who do not, Scotland is doing better.
I want to talk about the £5 billion hole in our public finances. It is the responsibility of any Government to have fiscal sustainability at its heart, and members should make no mistake about it—this Government has a laser-sharp focus on reducing that gap, and we are starting that work now.
In my first week, I gave Willie Rennie a commitment that I would focus on the 1 per cent and on the detail, and that I would be as boring as I could. I will continue to do that. We are looking into that detail across Cabinet and Government to enable us to put at the heart of our fiscal strategy a portfolio efficiency plan that looks at reducing the number of quangos, at streamlining and at targeting public sector spend. That includes looking at the public sector and civil service workforce; we have reduced that year on year.
Would Hannah Mary Goodlad cheer me up?
Sure.
Does Hannah Mary Goodlad believe that the Scottish Government will reach its efficiency target of £563 million? Can she give Parliament an update on where the Government is with those efficiencies?
There is a target that we are driving in the next few years, and we are taking a portfolio approach to that. The First Minister has been very clear that Cabinet portfolios need to look at the commitments that are in our manifesto and within the portfolio and identify savings where we can. We have a saving of £1.5 billion to be delivered by 2028-29, and a further £0.7 billion to be saved towards 2029-30. That is £2.2 billion in total. We need to assess, deliver and measure that as we go, because Ms Hamilton is right—the first rule of Government is to ensure that we remain in the green. We are taking those steps now to ensure that, towards 2030, we are on track.
I lean into what I said to Willie Rennie before—I come from business and I can be very boring and I will continue to be so.
In Scotland, we are leading the way in showing that we can grow the economy and take meaningful action to tackle poverty, with around £3.5 billion allocated in 2026-27. That action improves the lives of people in Scotland and creates new opportunities for all to succeed. Even as we take action, UK Government decisions continue to have a significant impact on Scotland’s public finances. Decisions taken elsewhere affect our back pocket.
It is still early days for the UK Government under Andy Burnham, and the First Minister has been clear that we will work constructively. We want to work constructively, and I am sure that you get that sense from us in this chamber. However, the upcoming budget is the real litmus test as to where the UK Government’s priorities lie and whether it is prepared to take bold action. This Government is clear on what the UK Government needs to do and we are clear on what we need to do. We extend the hand to those who will work with us. Increased funding, action on cost of living, support for economic growth, real change to tackle child poverty, and respect for devolution and further autonomy—
Minister, you are well over your time. Can you wind up, please?
Those priorities give us the best chance to see Scotland flourish. That is why we will continue to make the case for Scotland’s needs to be recognised and resourced.
That concludes the debate on Scotland’s priorities for the UK budget.
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