The next item of business is a debate on S4M-12521, in the name of John Swinney, on protecting public services and boosting Scotland’s economy.
14:40
I am delighted to open the debate and to have the opportunity to set out the Scottish Government’s alternative approach to the austerity agenda that the United Kingdom Government is pursuing and which is such a strong feature of the Westminster political debate.
Our proposed approach balances the need for sustainable public financing with ensuring that public services are protected. Scotland’s economic recovery is well established: our economy has grown continuously for two years; gross domestic product is above pre-recession levels; and the number of people in employment is at an all-time high. The economic outlook is also the strongest it has been for many years. Yesterday, the Fraser of Allander institute revised upwards its forecast for the Scottish economy: it expects growth to be 2.6 per cent in 2015 and employment to rise by 51,000.
Is the Deputy First Minister about to praise the United Kingdom Government’s economic policy? I am sorry to pre-empt what I know he is about to say.
What I was going to do was read the next line of the carefully crafted argument that I have to share with Parliament, which goes as follows: the growth has come in spite of, rather than because of, the United Kingdom Government’s austerity programme. I hope that that meets Mr Rennie’s expectations, which is always something that I am keen to ensure happens.
The serious answer to Willie Rennie’s point is that the growth that we are seeing follows years of slow growth in the United Kingdom. In 2010, the return to economic growth was predicted for 2012, 2013 and 2014. However, it was not until 2014 that we began to see the growth emerging after two years of it being poorer in comparison. Our recovery has been relatively weak compared with some of our G7 partners.
Would the cabinet secretary not concede that the countries in Europe that followed the policy that he advocated at the time may have done well in the initial phase after the recession but that they are now languishing with some of the lowest growth rates in the western world?
I am making a point about what we see if we look at the sustained investment strategy that could have been pursued by the UK Government, which was not to reduce public expenditure as fast as was proposed and has been executed. We set out, against the original plans of the United Kingdom Government, our total opposition to the one third reduction in public expenditure and capital spend. The UK Government, to be fair, lowered its proposed cut from 33 to 26 per cent as a consequence of the pressure of poor economic performance, and we are beginning to see growth returning to the United Kingdom economy.
My point is that, if the United Kingdom Government had not delivered that accelerated reduction in public spending to begin with but had tempered the reductions, we would have been able to see better growth in the short term, which the evidence supports.
GDP per capita in the United Kingdom remains 2 per cent below the 2008 level. Moreover, families are not seeing the benefits of the recovery as wages are not expected to return to pre-recession levels until 2019.
The Fraser of Allander institute has refreshed its figures, but unemployment figures are still high. Its November 2014 report says:
“It is questionable whether the number of full-time workers will ‘ever’ reach pre-recession levels. The data point towards a more permanent structural shift towards part-time work and self-employment”.
Such work is low paid and much more difficult. Therefore, we are left with a difficulty in tackling inequality.
I broadly accept that analysis. Although the headline employment levels are encouraging, although unemployment is coming down and is below 150,000 for the first time in five years, and although we have a record level of employment, particularly female employment, in Scotland, I accept that beneath those positive headline indicators there are challenges with regard to underemployment, part-time employment and low pay.
That is exactly what the Government’s economic strategy, which was set out on Tuesday, is trying to address; it is trying to focus on some of those underlying factors that I know are of significance in improving the Scottish economy’s performance and, more important, in providing individuals in our economy with a more rewarding experience of employment.
Despite five years of austerity, the Chancellor of the Exchequer has failed to meet his deficit or debt targets. In June 2010, he predicted that, this year, the UK would be running a £5 billion budget surplus on the structural current budget and that debt would be falling as a share of GDP. However, the latest forecasts suggest a structural current deficit of almost £50 billion and a continuing rise in debt.
Over the six years to March 2016, the chancellor is likely to borrow £150 billion more than planned in his June 2010 budget, which is the equivalent of almost £2,500 for every person in the UK. That bears out the point that I have made to Mr Johnstone and Mr Rennie that the chancellor is significantly adrift from the predictions that he made at the time.
If we followed the Scottish Government’s preferred and published approach, when would the deficit be eliminated?
Under our proposals, the deficit would take longer to eliminate and we would borrow more than the chancellor has predicted; however, we would be ensuring the recovery of the public finances by investing in growth in the Scottish economy.
Mr Brown will, as someone who supports a Government that is presiding over such an approach, know that borrowing is a factor and a feature of the management of public expenditure for any Administration that takes it forward. The question is how that borrowing is balanced—and balanced effectively, into the bargain.
Will the cabinet secretary give way?
Yes, but we will need to make some progress after this.
I will be very brief. In light of his comments, can Mr Swinney confirm that the Scottish Government’s view is that we should have full fiscal autonomy?
As Jackie Baillie knows, my belief is that Scotland should be in control of all aspects of our expenditure, our revenue and our economy, because I believe that Scotland should be an independent country. That is the position of the Scottish Government.
When, a few weeks ago, the First Minister set out the Scottish Government’s suggested alternative to the UK Government’s austerity agenda, she concentrated on the fact that the entire Westminster debate circles around maintaining austerity. However, reducing the deficit is just one of the many interconnected challenges that we should address; the others include boosting productivity, improving living standards and reducing inequality, which brings us back to the point that Mr Rowley raised with me a moment ago. The deficit needs to be reduced but in a way that does not harm the country’s social fabric.
The Scottish Government believes that there is a sustainable alternative to Westminster’s obsession with the deficit, and it has outlined an approach that will provide real-terms growth in spending on public services of 0.5 per cent every year from 2016-17 to 2019-20. Compared with current UK Government plans, that approach would permit a further £180 billion of investment in public services across the UK over the next four years and, for Scotland, it would free up additional resources of around £14 billion over the same period for investing in health, education or other parts of our economy.
I see that Mr Swinney and the First Minister are now promoting the idea that economic policy can tackle inequality. What redistributive policies is the Government going to pursue?
My first act on tax was to implement a redistributive measure that favours those who undertake property transactions at the lower end of the spectrum. I would have thought that Mr Findlay might have welcomed that. I was delighted that his colleagues supported the Government on that initiative in voting to approve a draft order at the Finance Committee just the other day.
Although our approach will mean borrowing slightly more than the UK Government currently plans to borrow, our spending proposal will keep the public finances on a sustainable path and will reduce the deficit as a share of our national income over the next session of Parliament. Protecting infrastructure, education and innovation will support stronger and more sustainable growth in the future, which will help to further reduce national debt as a share of our GDP. That will mean that we can manage to bring the deficit down, while at the same time supporting public services and the important services on which members of the public rely.
We are not alone in advocating a rethink of Westminster’s austerity agenda. The director of the National Institute of Economic and Social Research has argued that the idea that further austerity is inevitable, desirable and necessary simply does not add up from an economic perspective.
The Scottish Government’s approach is to support growth in a balanced and sustainable way so that the benefits of economic success are shared by everyone. That approach was set out this week in the Government’s economic strategy.
It is well understood that a strong economy is essential in building a fair and wealthy society. However, the Government believes that the reverse is also true: a society that is fair and equitable underpins a strong economy. We believe that equality and cohesion are good for growth and good for individuals. The Organisation for Economic Co-operation and Development estimated that rising inequality has reduced economic growth in the UK by nearly 9 percentage points between 1990 and 2010. That implies that UK GDP could have been nearly £100 billion higher in 2010—equivalent to £1,600 for every person in the country—if the United Kingdom had been a more equal country.
The evidence is clear: inequality is not only important in itself but vital to creating the conditions to deliver sustainable economic growth over the long term. That is why the Scottish Government’s approach will continue to be based on the principle that delivering sustainable growth and addressing long-standing inequalities are reinforcing, and not competing, objectives.
“Scotland’s Economic Strategy” sets out an overarching framework for how we aim to achieve a more productive, cohesive and fairer Scotland. We have four priority areas in which we believe that our actions can make a real difference.
First, we want to invest in our people and our infrastructure in a sustainable way, in contrast to the sharp reductions in public expenditure that will be faced on the election of either a Labour or a Conservative Government at the forthcoming general election.
Secondly, we want to foster a culture of innovation and research and development to promote the development of new technologies, products and working methods.
Thirdly, we aim to promote inclusive growth and create opportunities through a fair and inclusive jobs market and through cohesion in the regional economies of Scotland.
Finally, we are looking to promote Scotland on the international stage in order to boost our trade, investment and influence, and to develop the networks for undertaking international business activity, which is central to broadening the export opportunities for companies in Scotland.
We will continue with a range of Government policy interventions that are already helping companies and citizens across the country. Those include maintaining the most competitive business rates scheme in the United Kingdom; investing £11 billion in Scotland’s infrastructure, despite further cuts to our budget; and expanding the level of funded childcare from 475 hours to 600 hours per year to help those with young children to participate in the labour market. We will continue to build on those actions.
Does the cabinet secretary agree, having said that he would support full fiscal autonomy, that that would cost his budget £4 billion a year and 70,000 jobs across the Scottish economy? I remind him that those are not my words, but his.
I do not accept that. The Government believes—I have gone through this point many times with Jackie Baillie before, and I will no doubt have to do so many times again—that, when we have the ability to take the decisive decisions about our economy, to improve productivity and to deliver growth, we enhance the tax revenues and the public finances of Scotland and, as a consequence, we can support and sustain the public services on which people in our country depend. That is a very simple argument for Jackie Baillie to come to terms with.
Will the cabinet secretary take an intervention?
He is in his final minute.
I will be very happy to deal with interventions in my closing remarks on the debate.
In our approach to inclusive growth, we are also promoting fair work by establishing a fair work convention and encouraging employers, employees and trade unions to share and adopt best practice, including promoting, as the First Minister set out at First Minister’s question time today, the application of the living wage across workplaces in Scotland. The Government will continue to lead by example by advancing greater gender equality and ensuring that all staff covered by our own pay policy receive the living wage.
We challenge the UK Government’s unfair austerity agenda as it imposes the heaviest burden on the most vulnerable in our society. It is our belief that fairness and prosperity can and must go hand in hand, which is why we endorse an alternative approach that has fairness at its heart, protects critical public services and keeps public finances on a sustainable footing That is supported by our economic strategy for Scotland, which sets out our twin objectives of boosting economic growth and tackling inequality.
I move,
That the Parliament condemns the unfair approach that the UK Government is taking to reductions in public spending and the disproportionate impact that this is having on low-income households; endorses the approach of the Scottish Government, which has fairness at its heart and would see a 0.5% real increase in spending on public services every year from 2016-17 to 2019-20 while continuing to reduce debt over the next parliamentary session; welcomes the additional £180 billion of investment for protecting crucial public services that this will deliver compared with the UK Government’s plans; further welcomes the publication of Scotland’s Economic Strategy, and agrees that reducing inequality is not only important in itself, but is vital to establishing the conditions needed to deliver sustainable economic growth over the long term.
14:55
In 62 days, the people of Scotland and the United Kingdom face a choice between the Tories’ austerity plans, which would take us back to levels of public spending that we have not seen since the 1930s and since before Labour created the national health service, and a Labour Government that will extend the living wage, end zero-hours contracts, balance the books in a fair way and deliver more funding for our NHS.
From the recent Ashcroft poll, it is clear that Labour and the Tories are neck and neck. It is the biggest party that will form the Government—that is a fact. Scotland gets to pick the winner. The more Scottish National Party MPs there are, the fewer Labour MPs there will be. Quite simply, that means that a vote for the SNP lets the Tories get in by the back door.
To engage with something substantial that the member said, she talked about the Labour Party’s plans to extend the living wage. Given that the Labour Party claims that its plans for the minimum wage would increase that to £8, will she advise us when the minimum wage would rise to £8 and how that would compare with inflationary pressure?
I am happy to tell the member that we will increase the minimum wage substantially. Our plans are centred on making work pay and getting the country working. [Interruption.]
Order.
I will take no lessons from the SNP, whose MPs sat on their hands during an austerity debate at Westminster yesterday when they had the chance to end Tory austerity. What did they do? Nothing.
Will the member give way?
In a second. [Interruption.] There are lots of howls from SNP back benchers, but I will give way in a second—be patient.
I remind SNP members that it was of course SNP MPs who brought down the Labour Government in 1979 by voting with the Tories and that it was SNP MSPs who voted with the Tories from 2007 to 2011 in this Parliament. [Interruption.]
Order.
Of course, it was Alex Salmond who told us all to vote Liberal at the previous general election, and look where that got us. I will take no lectures from the SNP.
The SNP motion deals with austerity and the Scottish Government’s new economic strategy. I will start with the economic strategy document—a glossy and colourful publication that has the lofty aims of growing the economy and reducing inequality. Few people would fundamentally disagree with that, but there is disappointingly little detail about how that would be achieved. What we witness instead is a repeat of targets and commitments that have been given before. For goodness’ sake, the SNP has, by my counting, announced the Scottish business development bank five times, which takes recycling to a whole new level.
There is lots about austerity in the strategy, but nothing that tells us how we will achieve growth, investment, jobs and wealth; nothing about new tax powers or fiscal policy; nothing about debt, despite the shocking figures revealed in The Guardian about the scale of local government debt; and nothing about the deficit caused by the collapse in oil prices. Those are real challenges that our economy faces, but there is not a word about them in the strategy. It is an economic strategy for an alternate universe.
The member would realise, if she had read all the way to page 77 of the strategy document, that the detail and policy direction will be published in the coming months.
I await that with anticipation and great excitement. However, we have had eight years of SNP Government—where has that detail been over that time?
Of course, there is also corporation tax, which Mr Swinney did not mention. The SNP mantra was that it would cut corporation tax by 3p more than the Tories would. We were told that that was not a race to the bottom and not to worry about it, because it would be good for growth. It appears now that it is not so good for growth.
What about air passenger transport duty? That was to be cut and then abolished. I got to the bit of the report that says that the duty will be replaced by a new tax. Who thought about that? Again, there is no detail.
Then we come to double standards: declaring support for the living wage but making no mention of the promised summit on the issue and no mention of the fact that the SNP blocked Labour amendments to the Procurement Reform (Scotland) Bill that would have required all public sector contractors to pay the living wage. That is just an inconvenient truth.
All Labour members agree that we want a fairer society. However, there is not one redistributive tax policy in the strategy document. There is not one word about a top rate of income tax or anything that deals with income inequality.
A pattern is emerging. We always get warm words from the SNP, but we never get action. Businesses are crying out for practical steps to support them to grow, to access new markets and to have the pipeline of skills available to meet future needs.
I turn to austerity. The scale of the Tory austerity plans is breathtaking. The Office for Budget Responsibility states that the Tories want to return to 1930s levels of public spending. The independent Institute for Fiscal Studies says that the cuts proposed by the Tories are colossal. They would wreck Scotland’s public services and our NHS.
Will the member give way?
No—I have already given way to Mark McDonald.
That is why Labour MPs voted against Tory austerity plans yesterday and why it is so important that we prevent the Tories from being the largest party after the general election.
The SNP should be ashamed. SNP members dare to come here and lecture us about austerity today. A mere 24 hours ago, they sat on their hands and refused to back Labour in calling for an end to Tory austerity. That is breathtaking hypocrisy and is completely shameless. I look forward to John Swinney’s explanation.
I am grateful to the member for giving way. Why did Labour MPs troop through the lobby to vote for the same austerity agenda in the charter for budget responsibility as the Tories went through the lobby to vote for several weeks ago?
Try as Mr Swinney might to spin this, that is just not accurate. Yesterday, the SNP voted—[Interruption.]
Order.
By sitting on their hands, SNP members voted to continue Tory austerity.
It is increasingly clear that, if we want to stop the Tories’ austerity plans, we have to vote the Tories out. It is as simple as that. The SNP proposition that a vote for the SNP will stop austerity is utter nonsense. What the public will get from the SNP is austerity max—not only would the Tory austerity plans be the starting point but the SNP would add to that austerity.
By the cabinet secretary’s admission, the SNP wants to end the Barnett formula, which is the mechanism by which we share the United Kingdom’s resources. It is like having an insurance policy for when times are bad. Instead, the SNP wants full fiscal autonomy. In short, that is raising Scotland-only taxes for Scotland-only spending, which would mean an end to sharing risks and rewards across the UK and an end to things such as the UK pension.
The proposal is even worse than that. The cost of raising all our own taxes would mean that we needed to raise billions more simply to stand still. We would need to cut billions of pounds from our public services.
Nicola Sturgeon and John Swinney have admitted that scrapping the Barnett formula would cost Scotland £4 billion. Nicola Sturgeon said that in a speech to the Scottish Council for Development and Industry in March 2014 and John Swinney has said similar things in SNP press releases.
Of course, that was before oil revenues fell. The white paper forecast oil at $113 per barrel but, at the start of 2015, it was at below $50 per barrel. That would strip at least another £6 billion from the Scottish budget. That is half the funding for our NHS and is the entire schools budget. That would be austerity max—the SNP’s austerity max. There has been not one word about what the SNP would do about that. Would it raise taxes or cut services?
Mr Swinney is fond of telling us that he always balances the books, but he is remarkably silent about how he would balance the books when facing such a huge deficit in public revenues. Would he raise more taxes or cut services? Voters deserve to know before the election. I look forward to hearing Mr Swinney’s intervention now.
There is no answer. The truth is that the best way to avoid Tory austerity is to vote Labour. The SNP offers austerity max and will let the Tories back into number 10.
Labour’s plans for the economy are based on the fact that, when working families prosper, Scotland prospers too. We want to grow the economy and create jobs. We want people to have decent wages and to feel secure at work. We will call time on zero-hours contracts, increase the minimum wage and extend the living wage. Our economic plan will deliver rising living standards, more good jobs and stronger, more balanced growth. We will share the burden fairly, reverse the Tories’ tax cuts for millionaires and introduce a mansion tax on houses that are worth more than £2 million to help fund the national health service—in Scotland, that will provide an extra 1,000 nurses.
Every vote for the SNP in May risks another five years of the Tories and their failed austerity policies, but we also know that the SNP’s plan to bin Barnett would rip billions from Scottish public services. That is bad for jobs, bad for services, bad for pensions and bad for this country. The people of Scotland have a choice in May. The reality is that the only way to stop Tory austerity plans and SNP austerity max is to vote Labour.
Amendment S4M-12521.2 moved:
As an amendment to motion S4M-12521 in the name of John Swinney (Protecting Public Services and Boosting Scotland’s Economy), leave out from “condemns” to end and insert “rejects the UK Government’s failing austerity plan as set out in the Chancellor’s Autumn Statement; understands that the Office for Budget Responsibility has warned that this would take public spending back to a share of national income not seen since the late 1930s, before the NHS came into existence; notes that the Institute for Fiscal Studies has said that this would entail cuts on a colossal scale and has raised concerns that this could involve a fundamental reimagining of the role of the state; calls on the UK Government to instead adopt a different, fairer and more balanced approach, which involves a reversal of its £3 billion-a-year income tax cut for people earning over £150,000; recognises that a UK Labour government will ban exploitative zero-hours contracts, with rules introduced to give new rights to employees on these contracts; recognises the crucial role of the oil and gas industry to the success of the Scottish economy; notes that full fiscal autonomy, Scottish-only taxes for Scottish-only spending, would mean billions of pounds of cuts, and therefore rejects full fiscal autonomy in favour of the continuation of the Barnett formula to protect Scottish public services.”
As I reminded members yesterday, interventions from a sedentary position are neither welcome nor necessary. Please stand up if you have something to say.
15:06
Conservative members are always happy to debate the economy and to discuss what is happening at a UK level, and we are pleased to repeat that, under the coalition Government’s approach, the plan is working. The other parties told us that it would not work, and they do not like to hear it anywhere else in the chamber, but the plan is working, with growth of 3.5 per cent in 2014, a record employment level, the unemployment rate in Scotland at 5.4 per cent and a deficit chopped in half, from 10 to 5 per cent. Of course, there is more to do.
It is no surprise that, again, the reasonable, mild-mannered John Swinney cannot bring himself to give any credit to the UK Government—none whatsoever—but the SNP has gone one step further this week. The First Minister said:
“As a result of the actions we have taken, we have seen a period of sustained growth in Scotland’s economy over the last couple of years.”
According to her, all the sustained growth is down to the actions that the Scottish Government has taken. She saw no irony in the fact that, just minutes later, she said that we have no job-creating powers in Scotland and will not be getting any. It is sheer magic through which the Government has managed to create jobs and growth as, apparently, it has no job-creating powers.
I see Mike MacKenzie on his feet. I am always happy to give way to him.
Will Mr Brown acknowledge that, in the 30 years preceding 2007, the Scottish economy, however it is measured, marginally underperformed against the UK economy, but it has marginally outperformed the UK economy since 2007?
The member is dancing on the head of a pin, as he usually does, in desperate defence of the Scottish Government. He does everything in his power to put himself forward for ministerial office, and I wish him luck at the next reshuffle—I genuinely do. He would be a great addition to the team, but he will have to do slightly better than that if he wants to be raised up.
Mr Swinney says that all the growth is happening despite the UK Government, but Alex Johnstone made a key point in an intervention. Why do we not compare the UK’s position with that of other countries in Europe? We are getting growth of 3.5 per cent—predicted to be 3 per cent this year—but the eurozone as a whole is predicted to be at just under 1 per cent. That is quite a difference.
The unemployment rate is 5.4 per cent in Scotland, whereas there is double-digit unemployment in France, Italy and the eurozone as a whole, on average. There is a huge difference between what is happening in the UK and what is happening in competitor countries.
Will the member take an intervention?
Alex Rowley rose—
I will take Chic Brodie first and if I have time later I will take Alex Rowley’s intervention.
Mr Brown mentioned that the forecast is that GDP growth will be 3 per cent. Why is that different from what the Office for Budget Responsibility said in December, which was that growth would fall substantially and would be only 0.1 per cent above where it was at the time of the recession?
I certainly did not see an OBR report that said that we would not have growth this year and that there would be negative growth. If Chic Brodie can point to where the OBR report says that there will be negative growth, I would be happy to see that, but it would be out of kilter with every other report that I have seen and everything that I have heard from economists.
I move on to the second plank of the Government’s motion, in which it talks about the £180 billion that will appear from nowhere and which John Swinney described as involving borrowing “slightly more”. Borrowing £180 billion over the next few years is borrowing “slightly more”.
Will Gavin Brown give way?
Sure, if John Swinney wants to retract that and say that the figure is maybe a bit more than “slightly more”.
I retract nothing of what I said. I want Gavin Brown to explain to Parliament his justification for the chancellor having to borrow £150 billion more than he predicted in 2010.
John Swinney ignores six quarters of negative growth across the entire eurozone, which is a crisis across a continent.
Mr Swinney is not in a strong position when he talks about predictions for the economy. Just months ago, he said that we would collect £7 billion or £8 billion a year from oil revenues, and he had the audacity to describe that as a “cautious” estimate. It was not fantasy; it was a cautious estimate. How foolish does that look now?
Will the member take an intervention?
The member is in his last minute.
I am in my final minute, so I am afraid that I will not give way.
The idea that £180 billion is “slightly more” is absurd.
John Swinney has no idea when the Scottish Government would under its plans eliminate the deficit. I looked at its plans and gave them the most generous interpretation that I could, and it appears that the deficit might be eliminated in 2024, which is almost two full UK parliamentary sessions away. All that I ask the Deputy First Minister is what impact there would be on investors, the market and the rates that we would have to pay on borrowing if we said that it would be almost two full parliamentary sessions before we got anywhere near eliminating the deficit.
The Scottish Government’s economic strategy adds little to the programme, which is why I look forward so much to hearing in the coming months the details of what it intends to do with the economy.
I move amendment S4M-12521.1, to leave out from “condemns” to end and insert:
“welcomes the fact that the UK’s economic growth continues to be among the highest of the major developed world economies; welcomes the high employment situation across the UK and the deficit being reduced by a half since 2010; believes that measures taken by the UK Government, such as cutting employer national insurance contributions and maintaining the lowest level of corporation tax in the G7, are providing considerable benefits to businesses in Scotland; believes that measures such as raising the income tax threshold and freezing fuel duty have helped household budgets; notes the publication of Scotland’s Economic Strategy, but is disappointed by the content, which contains very few new initiatives that could help businesses in Scotland create jobs, grow and compete.”
15:13
I am worried about John Swinney, whose carefully crafted persona is that he is cool, reasonable, competent and safe. That is the public persona that he has worked hard to craft, unlike most nationalists.
That is a real public-private partnership.
I hear Stewart Stevenson talking over my shoulder.
However, in just a few short months, that persona has started to crumble. Let us take the performance on the economy. John Swinney said that the UK Government’s economic plan would fail, that there would be higher unemployment and lower employment, and that growth would not return to the economy. However, now what do we see? Employment is at a record high—it is up by 187,000 in Scotland since 2010. Wages are outstripping inflation and the UK is vying with the United States of America for the fastest growth among G7 countries. John Swinney got it wrong on the economy.
Then we have to look at the second oil boom. John Swinney boldly predicted that the price of a barrel of oil would remain at $110. He claimed that oil revenues would make an independent Scotland one of the richest countries in the world, but oil is half the price that he predicted, which means that he has fallen short by £155 million per day.
Will the member give way?
Will the member give way?
Not just now.
That would have decimated hospital, school, college and university budgets. Thankfully, the no vote in September saved us from feeling the effects of John Swinney’s reckless claims. Because we chose to remain in the UK, we can all focus on addressing the jobs crisis that the industry is facing in the north-east and throughout Scotland. I know that most members will take that seriously. He got it wrong on oil too.
As Mr Rennie knows, as a result of the no vote, fiscal powers on the oil and gas sector remain the responsibility of the Westminster Government. Does Mr Rennie agree that the Westminster Government should be putting all its effort into ensuring that investment and exploration are stimulated in the oil and gas industry? Is he pressing his colleagues for that action in the budget?
Yes and yes. I absolutely agree with Mark McDonald, probably not for the first time but maybe for the last.
The latest blow to Mr Swinney’s reputation was dealt by a most surprising source this week. His party leader abandoned his policy on corporation tax, with no explanation, on page 80 of 82 pages—the fag end of the document—on a wet Tuesday afternoon. The 3p cut in corporation tax was at the heart of the white paper and the heart of the referendum. Mr Swinney defended and advocated the cut, and now his leader has ditched it.
Does Mr Rennie find it unusual that the normally bullish claims about the 3 per cent corporation tax cut were not even mentioned in a 14-minute speech from the person who created the policy?
Mr Findlay might think that Mr Swinney was embarrassed by the prospect of having to explain the corporation tax policy, but I am sure that that is not the case and that Mr Swinney will give us a full explanation in summing up. I am sure that members will be delighted to hear whether there is an explanation.
Is the reason that the UK Government’s economic policy has created six times as many jobs in Scotland in less than a quarter of the time that Mr Swinney’s policy proposed? Is it that the evidence for the Scottish Government’s policy was so weak that it could never be made public? We tried repeatedly, including through the Scottish Information Commissioner, to get details about how many jobs would be lost in the first few years under such a policy. At one point, one of Mr Swinney’s officials said that releasing the information might lead to Opposition parties starting a debate. Heaven forfend that we should ever know the real reasons for the policy.
Mr Swinney has made three big errors—on oil, on the economy and now on corporation tax. His reputation is beginning to crumble.
Will the member take an intervention?
No—I have taken too many interventions.
I have a suggestion for how Mr Swinney can restore his reputation—he could adopt some of the Liberal Democrats’ proposed policies. Earlier this week, my colleague Danny Alexander published our plans to introduce a special rate of corporation tax on the banks. Now that Mr Swinney has abandoned his corporation tax policy, perhaps that might encourage him to support Danny Alexander’s corporation tax proposal, which would bring an extra £1 billion to help us to balance the UK’s books.
John Swinney and I might agree on some aspects, and especially on a fairer society. The Liberal Democrats agree with expanding childcare and we would like him to accelerate that expansion earlier. We also encourage him to adopt our policy of cutting tax for those who are on low and middle incomes. I know that SNP members have opposed that policy, so I hope that he reverses that position. I encourage John Swinney to listen to what the Liberal Democrats have to say on the economy, because that might be one way in which he might start to restore his reputation.
I move amendment S4M-12521.3, to leave out from “condemns” to end and insert:
“notes the publication of the Scottish Government’s new economic strategy and the abandonment of its previous policy to anchor its approach to the economy on a cut of 3p in the pound on corporation tax; further notes that the economic policy of the UK Government has created six times as many jobs in Scotland in less than a quarter of the time compared with the projections for the now-abandoned Scottish Government policy; understands that the Scottish Ministers defended to the Scottish Information Commissioner their right to withhold information on the cost in lost revenues of their corporation tax cut, including on the grounds set out by an official that it ‘may lead to opposition parties starting a debate’; considers that, now that the policy has been abandoned, ministers should publish the information on the lost revenues for the initial years of implementation forthwith; calls on the Scottish Government to indicate if its U-turn on corporation tax now means that it will support an increase in the corporation tax paid by banks in order to increase the contribution of the banking system to balancing the UK’s books, and further calls on the Scottish Government to change its position on a further aspect of creating a fairer society and to support a further cut in income tax for those on low and middle incomes by raising the personal allowance to £12,500.”
15:19
Members who have listened to Jackie Baillie talking about how the Labour Party is in absolute opposition to the Tory and Lib Dem coalition, and then watched as they tee’d up jokes and one-liners for each other, might have had some difficulty with reconciling those two positions.
Nonetheless, Mr Rennie talked about the personal allowance changes that the UK Government has put in place. The difficulty for Mr Rennie is that he views those measures in isolation and does not look at their interactions with other UK Government policy positions.
He will know that independent analysis of UK Government budgets has shown that the pressures that are faced by the lowest economic groupings in society are higher than those that are faced by people at the top end as a direct result of decisions that have been made. It is the cumulative effect of decisions that is at issue, not individual decisions such as the decision to raise the personal allowance.
In respect of the arguments that have been put forward thus far in the debate, it is fair to say that the Opposition parties want to rerun the referendum debate. It is open to them to do so; what I have great difficulty with is the fact that they want to do so from the absolute position of talking down Scotland and the potential of Scotland. We have heard on more than one occasion from the front benches, first, that Scotland is a subsidised nation and, secondly, that Scotland is somehow too poor and uniquely incapable of managing its own finances and resources to shape and grow its own economy.
Will the member take an intervention?
I will perhaps do so a little bit later.
What we have seen outlined by the Scottish Government and the First Minister is an economic strategy that sets out a narrative about equality and growth in the economy and demonstrates that the two need not be viewed in isolation but should be viewed as cohesive aims that complement and support each other.
Beyond that is a very important argument. Jackie Baillie was right to remind us of the shortness of the period before voters go to the polls. She says that voters face a choice between Labour and the Tories. If they are all for austerity, that is true. The difficulty that the Labour Party has is that it was not just the charter for budget responsibility that Labour MPs walked through the voting lobby to vote in favour of; they voted in favour of George Osborne’s budget at the same time. They trooped through the lobby to vote for George Osborne’s austerity budget for the coming year and for the charter for budget responsibility, which commits future UK Governments of whatever colour to £30 billion of austerity measures. Mr Findlay is trying desperately to reconcile his position with that of his party at the UK level, but even he must have been disappointed by the actions of his Westminster colleagues.
Will the member give way?
Will the member take an intervention?
I will give way to Jackie Baillie in a second. I asked Jackie Baillie what the Labour Party’s position on the minimum wage would result in—when it would deliver the £8 minimum wage that it has heralded. It would deliver the £8 minimum wage by 2020. At present—in 2015—the living wage is £7.85. That means that, in five years’ time, the Labour Party would have increased the minimum wage to 15p above the living wage. Can Jackie Baillie advise the chamber whether £8 will be a living wage in 2020?
I point out to Mark McDonald that what we believe in is not rerunning the independence referendum but finding the best form of devolution to deliver for Scotland.
I recall with a degree of fondness Mark McDonald’s vehement defence of and support for the corporation tax. Has he changed his mind? If so, can he tell us why?
I have always been on record as saying that I will support any measure that supports growth in the economy, particularly in key sectors.
We know, from the opinion polls, that the Labour Party is in a state of some panic and desperation. We can tell that it is desperate the minute it starts harking back to 1979. I was not born in 1979, but during the years in which I have been alive, in 1983, 1987, 1992 and 2010 Scottish voters went to the polls and voted Labour but got Tory. We know full well that the message that the Labour Party is trooping out—that Scotland voting for the Labour Party will somehow prevent the Tories—is simply rhetoric; it does not match up to the reality of election results.
Labour’s message also fails to disclose the fact that, under Labour, we would continue to see the same approach being taken to austerity; it would just be repackaged and rebadged. However much the Scottish Labour Party might try to deny it, Ed Balls is fully signed up to the austerity agenda, whereas the Scottish Government and the SNP have proposed a 0.5 per cent increase in public spending. Yes, that is a modest increase, but it would still allow £180 billion of additional expenditure at the UK level and £14 billion of additional expenditure at the Scottish level. It would allow us to take the action that we want to take to tackle inequalities, to support vulnerable citizens and, most important, to invest for future growth in the economy. That is the real choice that voters will face in May, and they are not going to be fooled by the rhetoric of the Labour Party.
15:25
There is no doubt that debates on the economy are always important, because the economy drives so much that is vital in our communities to making a difference to people’s lives. From that point of view, I looked closely at the document that the SNP Government published on Tuesday for some clues to the road map for the journey that the Scottish Government is going to take us on. We often hear people in these debates talking about the creation of a fairer and more equal Scotland. That is something that a lot of people agree on, but when I examine the detail of the document, I am left puzzled as to how it will be created.
There is talk in the document about the Scottish salmon getting accorded the label rouge in France and about the number of heritage sites that we have. These things are all very welcome, but I ask myself, what does that mean to constituents in my area? When I look round my area, at Cambuslang and at some of its areas of social deprivation, and I look at the document with all its glossy pictures and graphs, I ask myself: what is the Scottish Government doing to tackle social deprivation in Cambuslang?
As you journey from Bridgeton to Bearsden, life expectancy decreases. I ask myself: what in this document will tackle health inequalities? I look at attainment levels in education and the struggle that working-class kids continue to have to get to university. The fact that the SNP Government has cut more than 130,000 college places makes that an even greater hurdle. I look at the housing situation, with 150,000 people on social housing waiting lists, and I look at people in my constituency staying in overcrowded accommodation—something that blights their economic opportunity—and I ask myself: what is the SNP doing to tackle this crisis?
When I was vice convener of housing for Aberdeen City Council, we were able to start building the first council housing for a generation in the city of Aberdeen, as a result of the measures taken by this Scottish Government to remove the right to buy. Does Mr Kelly agree with that, and does he not lament the fact that the Labour Party never removed the right to buy in all its time in office?
I lament the fact that the SNP Government cut the housing budget by 29 per cent. That contributed to one of the biggest crises in social housing since the second world war.
There is no doubt that the impact of the Tory cuts since 2010, which have left families £1,600 worse off, have not helped the crisis that our communities face. I recently met staff of the local citizens advice bureau, and they can tell you that, as a result of the welfare cuts, they are getting many more referrals.
The issues in this debate must be how we move things forward and what we can do in practical terms. Obviously, the general election focuses on that. As part of the way forward, Labour is proposing a mansion tax to raise £3 billion, which we would use to promote economic growth. We are also proposing the introduction of a 50p tax rate to redistribute wealth in the economy and to help those who need it most.
From the Scottish Government, we would like to see more action on zero-hours contracts, tax avoidance and the living wage—all areas in which, regrettably, the Scottish Government voted down stronger amendments to the Procurement Reform (Scotland) Bill.
As we heard from Mr Swinney, the way forward from the SNP perspective is full fiscal autonomy. There is no doubt that—in the words of Arthur Montford—that would be a “disaster for Scotland”. To lose the Barnett consequentials of £4 billion would have a disastrous impact. Members should look at the publication this morning of the Audit Scotland report that shows how council budgets have been cut by 8.5 per cent in real terms. The impact of losing the Barnett formula would be to take another £1 billion out of council budgets.
Councils are faced with the prospect of cutting back on care packages and closing libraries. There are schools in my constituency that are not able to print out the homework and ask people to print it out at home. How can people print out the homework at home when some of them do not even have a computer printer? That is the reality of what is happening.
On the economy, we need a proper analysis first and foremost, not just a glossy document from the SNP, and then we need solutions that will work—measures that will make a difference, such as the living wage. We need to commit to those in the coming period so that we can make a difference for Scotland.
15:31
Before I get into my substantive remarks, I remind Mr Kelly who runs South Lanarkshire Council: it is a Labour-Tory coalition. I remind him that South Lanarkshire Council has failed at every point to take part in any of the grant schemes to build more council houses. Perhaps that is down to the fact that it has been so incompetent with its budgets over the past few years that it has had to fork out £72 million to settle equal pay claims.
Let us get to the nub of the matter. Somehow, we have got ourselves into a position in which we are almost apologising for wanting to care for the most vulnerable and disadvantaged people in our communities. It is as if public services have gone out of fashion. I wonder why that could be. Might it have something to do with the coalition’s and Labour’s austerity agenda? That hurts the vulnerable deeply. Perhaps it is to do with the UK Independence Party, “Benefits Street” programmes on television or Labour leaders suggesting that universal benefits represent a something-for-nothing culture.
Fortunately, the Scottish Government is not prepared to bow down to such pressures, which would make our lone parents demoralised and miserable and would put their children into abject poverty and cut their educational attainment from under their feet.
I agree with some of what Ms McKelvie has said but I ask her how a 10 per cent cut passed on by the UK Government to the Scottish Government becoming a 24 per cent cut to local government helps the situations that she describes.
Mr Findlay needs to go back and look at his figures because, earlier, he said that it was an 8 per cent cut. He obviously does not know what he is talking about.
Our disabled folk who, through no fault of their own, suffer debilitating conditions such as motor neurone disease, multiple sclerosis, Down’s syndrome or mental health problems are easy targets for the coalition and Labour. They attack the people who are least equipped to challenge. I see many lone parents in my constituency who cannae get a hoose because of South Lanarkshire Council. Not only do they face the challenges of benefits sanctions and cuts but they struggle to pay for heat and food.
The coalition, along with its pals in the Labour Party, seems to think that, once it has people down, it can easily grind them a bit further until they shut up or, in some cases, die. I think that “squeeze them until the pips squeak” is the phrase that was used this week.
When it is set out like that, not one member present will admit to buying into that mentality, but the reality is that many are doing exactly that. They are buying into the coalition’s and Labour’s agenda of ever-increasing austerity that is focused on those who are least able to fight it.
There is a real alternative. We know that money does not grow on trees, but the money that is available could be much better managed if control over it was brought here. I ask Mr Findlay whether the £100 billion for the renewal of Trident should be spent on bombs rather than bairns. What could we do with our share of that? We certainly would not be aiming to destroy half the world. Maybe the specialist early learning teachers that South Lanarkshire Council is laying off could be protected. Maybe we could target more resources at helping children with learning difficulties to become fulfilled and independent individuals.
Perhaps Ms McKelvie could remind us who allocates the budget—which has suffered such swingeing cuts since 2007—to South Lanarkshire Council?
Is that the same South Lanarkshire Council that is running away from its Labour pals in the Convention of Scottish Local Authorities because it does not like the deal that it got? Is it the same South Lanarkshire Council that has been so incompetent with its budget that it lost £40 million a few years ago? Nobody knew where it went. The council said that it was a paper exercise. No, it was not—it was a cut in services. Maybe the council should consider cutting its hospitality budget and not its early learning budget; maybe that is how it should be looking at things.
We should not be protecting bankers’ bonuses or tax exemptions for properties in Kensington and Chelsea. Members have already heard a lot about what we as a Government are doing and achieving within the powers that are available to us. The Labour Party asked us to look at tax evasion, the living wage and employment law. That is fine, but will it support the devolution of those powers to this Parliament? I do not think so.
The powers that we have are limited, but we are working on that. We need far more substantial and direct powers here in Scotland. Will Labour commit to devolving the living wage? I do not think so.
The UK was ranked 28th out of 34 OECD countries on income equality. The situation has not changed, regardless of the colour of the Government at Westminster. The present UK Government hits out at the poor and the vulnerable—it is easy. It hits out at immigrants and asylum seekers—that is easy, too, as UKIP has proven.
My message to members of those disadvantaged groups is that they should fight back with their vote on 7 May. They should not lie down and accept those attacks on their right to have a decent, fulfilling life. We should not need food banks, but we do. More than 50,000 people visited Trussell Trust food banks in Scotland between April and September last year. The message could not be simpler or more stark, nor could the division be clearer. People can back the austerity agenda of the Tory-Lib Dem coalition and Labour, whose mission is to extend misery and poverty, or they can support the drive for change to get a fresh look at how we can be all that we can be. We all need public services. They should be neither an apology nor a defence. They are the stuff of all our lives and we should be protecting them.
15:37
When I saw that the motion was on protecting public services and boosting Scotland’s economy, my first impression was that the cabinet secretary was having a joke. Excuse me, but is this the same cabinet secretary who, on his watch, masterminded the attack on the very services that boost Scotland’s economy?
In case the cabinet secretary has forgotten, local authorities are Scotland’s biggest employers, but most of Scotland’s cuts—which the cabinet secretary imposed—have been dumped on their doorsteps. There have been thousands of job losses, and there is more hardship to come. My authority is having to find a further £75 million to £80 million of cuts over the next three years.
Likewise, the NHS is a victim of the SNP’s mismanagement and underfunding, which hit the poor and the vulnerable hardest. As well as being unfair, health inequalities undermine our economy. Damaging public services restricts growth. Rather than develop a sensible and sustainable plan, the Scottish Government has been reluctant to admit that there are problems, so now the chickens are coming home to roost. This week, NHS Fife was forced to announce a root-and-branch review. It admitted that it does not have all the answers and that it is seeking outside help. Ministers should follow suit.
What has the SNP done for education? Especially in the most deprived areas, colleges have a major role to play as stepping stones to higher education and jobs. Deep cuts in staffing, resources and student numbers undermine action to tackle inequality and promote growth.
As for the police service, how can we protect it when Government policy insists on one arbitrary target but says to hell with everything else?
Of course there are tough decisions to be made, but refusing to face up to economic reality does not help. The SNP’s opposition to delivering a balanced long-term budget was cringeworthy and infantile posturing. It ignored the argument that balancing the books does not have to mean austerity. That can be done without strangling the economy and growth; indeed, growth is the key to balancing the books without forcing austerity on the UK. [Interruption.]
Mr Coffey should listen to this. This week, the auld alliance reared its ugly head when the SNP voted with the Tories against a proposal to end the UK’s failing austerity plan and to replace it with a different, fairer and more balanced approach. Despite the SNP’s retreat on corporation tax, it has still not embraced progressive policies, such as the 50p tax rate and the mansion tax. Its claim to support social justice is empty rhetoric unless it accepts that reducing inequality needs redistribution. After all, it has become increasingly clear since the SNP helped Thatcher to power that wealth does not just trickle down.
Despite what the SNP tries to pretend, Scotland has powers to achieve redistribution and it is getting more powers.
Will John Pentland give way?
It seems that the SNP will never be satisfied until—Mr McDonald should listen to this—it has ruined Scotland. It now wants to decimate public finances by removing the shared support and safety net of the Barnett formula. Almost without exception, the Barnett formula has benefited us, so we would be fools to reject it, especially when our fiscal gap is growing even wider. I say to Mr Swinney that even the First Minister has acknowledged that that would mean £4 billion in cuts, which would dwarf Tory austerity and threaten pensions. If the First Minister admits that that would mean £4 billion in cuts, that is probably an underestimate. The SNP may call that fiscal autonomy; I call it cutting off your nose to spite your face. It puts the SNP and Tories alongside each other as agents of austerity.
Will John Pentland take an intervention?
The only way to avoid Tory austerity and SNP austerity plus—[Interruption.] I want Mr Coffey to listen to what I am saying. The only way to avoid Tory austerity and SNP austerity plus is through a Labour Government.
Are you accepting an intervention? You are finished. Right. Thank you very much.
15:43
I want Mr Pentland to listen to this. All we ever get is Labour opposing everything and proposing nothing. We have heard numbers. This is not just about historical numbers; it is about a strategy that will achieve sustainable growth in the interests of the Scottish people. I have heard nothing from the Opposition about what alternative is being presented—not a thing.
The longer-term economic strategy, underpinned by our annual budgets and spend, depends of course on what we get as long as we are governed from down south, or on more fiscal power engendered down south. Based on that, we have to achieve the foundation of the aspirational, outward-looking and fairer Scotland that we all wish to see.
While I am talking about fairness, let us look at the Lib Dem amendment. The Lib Dems have the temerity to talk about having a fairer society. They want to increase the income tax threshold to £12,500. I checked the numbers with the Scottish Parliament information centre this morning. If somebody earns £25,000 a year, the benefit of that increase in the income tax threshold is £500, but a person on £100,000 will get a benefit in net income of £1,000. Where is the fairness in that?
Is Chic Brodie aware that when the tax threshold was substantially increased the higher-rate tax threshold was reduced in order to fund that and that, as a result, higher-rate taxpayers do not benefit from that increase?
The figure is £120,000, Mr Johnstone, not £100,000. The tapering starts at £100,000.
What we want in a strategy is greater growth in investment, more competitiveness, zero inequality and absolutely no austerity. Our solutions are rooted in history and we should learn from them, whether that means going back to when the Lloyd George Government introduced national insurance and the minimum wage in 1915, to Roosevelt’s new deal in the depression or Macmillan’s capital investment programme, which are all investments that provoked an economic foundation for recovery.
However, our economic recovery has to instil not only increased employment but more fairness and equality. That is what I believe the strategy does. It looks at merit; contribution and productivity; the further development of skills and learning, aligned to the strategy; experience; joint shared participation of capital and labour in the economic business place; and a diminution of the practices of cronyism and discrimination. If we create that level playing field, that has to be a final resting place as we set about reducing inequalities in the workplace and the associated issues around remuneration.
I am sure that my colleagues will speak in more depth about inequality and austerity, so I will focus on growth, investment, innovation and internationalisation. We will not escape austerity—in fact, we will become more mired in it—unless we accept the principle that capital spending will result in greater employment and increased income tax and VAT receipts, and so will reduce debt, thereby allowing the cycle of investment to continue. That is something that the UK Government should have done years ago but has failed to do.
Of course, that should be underpinned by a commitment to securing simultaneously the principle of people being paid a living wage. Within that, the 0.5 per cent real increase in spending on public services over the next three years has to be seen to be critical. That protection should encourage the public sector, in all its forms, to embrace the third sector and social enterprises by outsourcing to them non-core public service activities. By so doing, real productivity and innovation will be generated, and the disparities, needs and wants of ignored communities will be addressed. The Procurement Reform (Scotland) Bill and the Community Empowerment (Scotland) Bill will assist in that.
Stimulation of innovation in our focused sectors and markets, primarily, although not solely, through our universities and their research and development capabilities, is a key element on which our international economic foundations, global success and national income will be built.
Our global reputation for manufacturing, remanufacturing, engineering, food and drink, life sciences, tourism and new technologies demands a much more global approach, and the creation and extension of our campuses internationally, in particular, will promote the competitive advantage that we seek. That is outlined clearly in the strategy.
Having spent many of my business years in manufacturing, I am encouraged that the strategy requires a stronger role for the increased exporting of goods and services, and that manufacturing firms are more likely to innovate and invest in research and development and will be vehicles of change as we drive to open up more markets.
It is to be hoped that greater productivity and a further reduction in inequality will be achieved through greater equity, and financial and management participation in companies. That should not just be restricted to manufacturing. In all sectors, we recognise that our economic success will be charted by an equivalence in our approach to skills, be they achieved through vocational qualification or through academic qualification.
Our economic success will be built on the foundations that are inherent in this strategy: opportunity; equality and sharing; fairness; no discrimination; merit; skills and training; productivity; and innovation. Above all, this nation should not be afraid to fail; instead, we should challenge.
The strategy addresses those points and more, and I fully support it.
15:49
It is useful to examine the longer-term context in which this debate is taking place, from the immediate post-war period, when the UK was still the premier manufacturing country in the world, to now, when it is close to the bottom of the league of developed nations in that respect. It takes a special type of incompetence to throw away such a lead in such a short time. Labour had its version of incompetence; the Tories had theirs.
The whole period has been characterised by a sterile political debate between the two main UK parties. That ideological war, like all wars, has been extremely damaging, although new Labour effectively gave up that battle when it joined the ranks of the Tories.
Over this period, we have fallen behind most of our competitor nations in manufacturing capability, productivity and GDP per capita. While we have tortured ourselves in endlessly fighting the ideological battles of yesteryear, the rest of the world has moved on, investing in their industries, investing in their people and investing in their comparative advantages, becoming more competitive, more productive and more prosperous.
Over the past 30 years, the UK has been characterised by rising inequality and rising debt, with the UK public debt now having risen to an astonishing level approaching £1.5 trillion. Both Labour and the Tory-Lib Dem Government are culpable. Not long before the banking crisis, Gordon Brown made the amazing boast that he had ended boom and bust.
That is part of the reason why the Lib Dem amendment is absurd. Willie Rennie knows that Gordon Brown did not end the boom and bust of the business cycle and that we are now on the upwards leg of that cycle. Willie Rennie knows that much of the recovery of the coalition, of which his party is so proudly a member, has been bought on the backs of the working poor and he knows that it has been bought on the back of the proliferation of zero-hours contracts, austerity and increases in poverty, which have brought abject misery to disadvantaged people across the whole country. The austerity programme is merely a continuation of that sterile ideological debate that has taken the UK almost to the edge of the economic abyss.
The Tories and the Lib Dems boast that the deficit has reduced while at the same time trying to hide the fact that they have missed each and every one of their deficit-reduction targets, and fail all the time to tell the public that the debt itself continues to rise.
This SNP Government has moved on and is refining and improving its policy.
Under the SNP’s published plan, when would the overall debt stop rising?
I certainly accept that it may take a bit longer to pay off the debt. When it is finally paid off, if it is ever paid off, it will be just as when the war debt was paid off—nobody noticed.
This Government has moved on and is refining and improving its policy, while Willie Rennie is concentrating on last year’s battles.
Is Mike MacKenzie serious? Does he think that controlling the public debt is not important? Is that what he is saying?
I think that it is important, but the best way to control the public debt is to seek increasing growth—not to try to cut costs. This Government has moved on and is refining and improving its policy. As I was saying, Mr Rennie is concentrating on last year’s battles. He is looking backwards instead of forwards. That is why the Lib Dem vehicle keeps running off the road and is about to crash.
There is not much to say about the Tory amendment, except that the Tory idea of competitiveness is a race to the bottom in an economy that is characterised by ever-lower wages. That is the road to economic ruin.
The Labour amendment at least admits that austerity is not working. It is just a pity that Labour recently voted with the Tories, thereby ensuring austerity's continuation; it is just a pity that its economic plan is indistinguishable from that of the Tories.
The only alternative economic wisdom is that which is supplied by this SNP Government—learning lessons from more successful European neighbours and recognising that a fairer and more equal economy is also more successful in economic terms, that innovation and investment will see us become more competitive and productive and that Scotland’s people will repay many times over every penny that has been invested in them and their skills and education. We will send down enough SNP MPs to Westminster to bring that economic wisdom right into the heart of the UK establishment—not only for the sake of everyone in Scotland, but for our friends in England, too.
15:55
When I am in this chamber, I sometimes ask myself whether I am in a room full of parliamentarians who are debating the big issues for their constituents and their constituencies or in a room full of political activists who are putting the case for their own political parties. Sadly, today’s level of debate leads me to conclude the latter.
Our communities and our constituents face major issues. The debate’s focus should be on how we tackle those big challenges and how we move forward.
The Scottish Government’s economic strategy says that
“The ambition for a socially just, and more equal, Scotland, has been a central objective of this Government since 2007.”
If that is the case, we have to say that it has failed, because both the London and Edinburgh Governments have presided over a rise in poverty and inequality.
I tried to intervene during Willie Rennie and Gavin Brown’s speeches to make the point that while we are seeing a growth in jobs—any growth in jobs is welcome—many of the jobs are, as I said in my intervention on John Swinney, low paid. We are seeing in the economy much more part-time work and many more self-employed people. Therefore, the types of jobs are important. Indeed, the Deputy First Minister acknowledged that.
On inequality and poverty, over the past number of years we have seen food banks increase in communities the length and breadth of Scotland. In my constituency there are food banks in Ballingry, Rosyth and Inverkeithing, and there is a food parcel collection point in Kelty. Tonight, when I leave this chamber, I will be going to the opening of a food bank in Cowdenbeath. Levels of poverty and deprivation have been increasing. Although we should be celebrating the increase in job numbers and doing more to create jobs and support people, we must acknowledge the inequality in our communities. The people of Scotland acknowledge the inequality and poverty. The people of Scotland, regardless their politics or whether they voted no or yes in the referendum, expect their politicians to focus on those big issues.
Christina McKelvie took great delight in standing up and attacking South Lanarkshire Council. However, as the Scottish Government acknowledges, the local government settlement has, year on year, been a very difficult settlement. There are authorities with budget cuts of between 17 and 25 per cent. If members look, they will see that that is happening where there is greater poverty and deprivation.
I agree with a lot of what Alex Rowley is saying. Would he agree with me that we should forget the austerity policies and look towards the SNP policy of increasing the budget by half a per cent every year and perhaps thereby pass on some of the increase to councils and at least protect them from further cuts?
I say to Mike MacKenzie that, regardless who we blame for the global economic crash, when Labour left Government in 2010, we were coming out of recession. Unlike the Tory and Liberal London Administration, which believes that the way to tackle the issue is to cut public expenditure and create greater problems, Labour was growing the economy.
There is a difference in approach: there was a difference in approach in the previous Labour Government, and there is a difference in approach in the party that I represent.
Coming back to the Government’s strategy and issues such as inequality and poverty, I have to tell the chamber that the surgeries that I held over the weekend were some of the busiest I have had since becoming an MSP. The biggest difficulty that people were coming to me with was the lack of housing or that they were homeless and were having to live with their families, friends and so on. The fact is that we have a housing crisis. There are 180,000 people on council waiting lists in Scotland, and the cost of buying an average house has rocketed from £73,000 at the turn of the century to a current average of £179,000, which means that people who are in work and are earning have been priced out of the market. Soon there will be, as in Victorian times—in other words, before the building of public sector housing—as many poor households in the smaller private rented sector as there are in the larger public and social housing sector. We have to address that situation.
I am always banging on about Shelter’s call for 10,000 houses a year, but it is reckoned that it will take 60 years to clear the backlog. We should set alongside that the jobs and apprenticeships that can be created and the skills that can be learned. At the moment, Fife has a programme to build 2,700 council houses for rent over a five-year period; it has a great record of working with the private sector and of creating apprenticeships. However, the companies involved have told me that the whole building sector is heading for a skills crisis; in fact, last week, I heard of a company that could not recruit any electricians. We are not promoting skills, and now we have a skills shortage.
As a result, I want a much more focused housing programme. After he delivered his budget, I spoke to the cabinet secretary on this matter, and I welcomed the investment that he was making in housing. I will always welcome any investment in housing, but the point is that we need more.
We need to look at a new deal with local government and find out how we can work together.
You should come to a close, please.
I will conclude in a minute, Presiding Officer. I just want to highlight the Glasgow city deal, which has been able to mobilise £1.2 billion for all the authorities involved and is projected to create 20,000 new jobs. Let us cut out the party politicking for cheap points; let us stand up for our constituencies and have a real vision for Scotland; and let us tackle the issues that are impacting—
Please close, Mr Rowley.
—on our constituents every day. That is why they send us here, and that is what we get paid for.
I have a little bit of time in hand for members who take interventions, but not a huge amount. I call Stewart Stevenson.
16:03
I want to respond to Alex Rowley’s challenge by agreeing with him on much of the analysis. I will come to the conclusions a little bit later.
An announcement on schools that has been made today by the Scottish Government illustrates, I think, the approach that it is taking. As we know, the Government has reached agreement with all the local authorities to maintain teacher numbers, which is important if we are to train the next generation. The £100 million to improve educational attainment in Scotland’s most disadvantaged communities that was announced last month reinforces what we are doing, and the £21 million that has been announced today for the construction of new school facilities is very much to be welcomed. This Government is addressing the issue of raising the attainment levels of people in communities across Scotland, and the schools for the future programme will create 100 new schools over its length.
We know that the Scottish Government has a view about what should be happening in the UK and the effects that that should have in Scotland; indeed, John Swinney referred to the £180 billion more that we should be spending. It is worth looking at what the OBR has to say about the UK Government’s policy; it says that it will result in cuts of around £94 billion in day-to-day spending on public services. Of course, that does not mean very much—I have never seen £94 billion sitting in a pile—but when we think about it as £1,800 a head we realise why there is such a fiscal drag on the domestic economy for far too many people in our country.
I have a proposal, although I am not certain whether it will be welcomed by the cabinet secretary. In planning our expenditure, we might think about projects that have a particular characteristic that I have not heard discussed very much. We should probably try to spend more of our money on smaller projects, which would enable more of the money to be retained in communities. The big projects will always attract international competition, which brings with it the risk that more of the money will go elsewhere. With smaller projects, more of the money is likely to stay in our local communities, which would perhaps address the issues behind some of the points that Alex Rowley made.
Although that analysis seems very plausible, I put it to Stewart Stevenson that experience tells us that contracts tend to go to contractors who have the longest balance sheet. Those are by definition the biggest contractors, who may well just displace the smaller businesses that should be winning the contracts.
Nigel Don is perfectly correct: the strategy is not without risk and we cannot, under competition law, cut large companies out of bidding for small contracts. Inevitably, however, if one has to transport people and goods across the country to work on a small contract, the overhead costs rise, so there is an intrinsic advantage in looking at small contracts.
I will talk about tertiary education, having said a little bit about primary and secondary education. I absolutely welcome the increase in modern apprenticeship places from 15,000 to 25,000, and the objective to raise that number to 30,000. Alex Rowley mentioned a shortage of skilled electricians. Engineering companies in my constituency report skills shortages too, mainly because people are poached for other, more highly paid posts. The focus on delivering employability through the modern apprenticeship scheme and through our colleges is extremely good news.
It is always interesting in a debate when one finds that the amendments from all the Opposition parties simply seek to delete everything that the Government says in its motion after the words, “That the Parliament”. That tells us something about the nature of the debate, but nonetheless I will attempt to create some consensus.
Let us look at which bits the Opposition amendments seek to take out of the motion. All the amendments seek to remove the words
“welcomes the additional £180 billion of investment”
and
“endorses the approach of the Scottish Government”—[Interruption.]
We hear from members on the Tory benches that they do not welcome £180 billion of investment.
We have heard in the debate about some of the effects that we are seeing. We heard a bit about the minimum wage, which did not rise in line with inflation in three of the last four years of the Westminster Labour Government. The Labour amendment states that the party
“will ban exploitative zero-hours contracts, with rules introduced to give new rights to employees on these contracts”.
Jackie Baillie, contrary to her claim in her speech that the Labour Party is abolishing zero-hours contracts, is simply creating a new version of zero-hours contracts for the future. She can argue for that if she wishes, but I have not heard that argument.
The Labour amendment also states that the party
“rejects full fiscal autonomy in favour of the continuation of the Barnett formula”.
However, Ed Balls said in 2011 that the Barnett formula
“was never intended to be long term”,
and added:
“We are getting to the point where it needs to be looked at again”.
The ambiguities in Labour’s position on all that are substantial indeed.
I have been reading today about blue Labour and Jon Cruddas, who was elected to Westminster on the same day that I came here in June 2001 and has just been praising the Tories’ City agenda.
This Government has a substantial record of achievement in plugging many of the problems that are created by Westminster. For example, we are plugging the gap in the council tax benefit budget—
The member should draw to a close, please.
We are also plugging the gap on the bedroom tax.
I am delighted with what we are doing with more powers. My delight could soar to greater levels, and I look forward to that happening.
16:09
The word “proud” can sometimes be an overstatement and its use can be unfounded, but when it comes to the small business bonus scheme I can safely say that I am proud of the SNP Government. To show how the scheme has impacted on small businesses across Scotland, I will give an example of a business in my constituency of Clydebank and Milngavie.
When I was in a small photography shop in my constituency, the owner told me that not having to pay business rates was the most significant and positive factor for his business. He had been operating the business single-handed from one location in Clydebank, but when the small business bonus scheme was introduced it allowed him to expand his business and open another shop in a different location. Although each shop employs only one person, nevertheless the scheme by the Scottish Government to reduce costs for small businesses resulted in my constituent contributing to growing our economy.
My constituent’s business involved modest numbers, but he doubled his workforce and took occupancy of a shop that had been lying dormant for a long time. That helped to reinvigorate the local area, which brings a lot of benefits in its own right. I suggest that similar examples can be seen across Scotland. I am sure that colleagues know of small family businesses in their areas that have benefited greatly from the small business bonus scheme.
I should say that the business that I own, which is run by my son, does not qualify for the scheme as it distributes from three locations across Scotland, and combining the rates of all three takes the business beyond the qualifying threshold for the scheme. However, that does not mean that the scheme has not had a positive impact on my business. Given the increase in the number of people in employment and the increase in the number of new businesses opening, I have no doubt that my business has benefited from increased spending power.
Without a doubt, we have all enjoyed the fruits of a more buoyant economy than we would have had without the small business bonus scheme. If the scheme had not been introduced, large numbers of businesses would undoubtedly have had to close, causing a downward spiral that would have had a hugely negative impact on the economy as a whole and small businesses in particular.
It is my experience in the business world that when a business has extra resources or is able to reduce costs and obtain additional revenue, it often has a number of options available to it. It can invest additional revenue in employing additional members of staff; it can purchase new services or equipment; or it can move to bigger and better premises. All those options have a positive impact on the economy and add to growth. Very few businesspeople who have additional revenue will spend it on themselves.
Austerity does not work, in either the short or the long term. We can balance the books without burning our best assets, which are the workforce. The general public are just like a workforce in that, when they have a bit of extra money to spend, that is exactly what they do—spend. I am not for one minute suggesting that we can spend our way out of trouble, but we can take a long-term approach to bring matters into balance through balancing spending against borrowing. After all, it was the Scots who invented the overdraft, and they did not invent it for nothing.
That is why it makes sense to have a modest 0.5 per cent increase in departmental spending across the UK, as the Scottish Government proposes. That would not only reduce debt, but permit a further £180 billion of investment across the UK over the next four years compared with the current UK Government’s plans, and it would be £80 billion more than the Labour Party proposes.
There is no question but that that would have a positive impact on the economy and help counter the coalition’s austerity agenda, which is hurting the most vulnerable in our society. The Tory-Lib Dem coalition’s tax and benefit reforms have hit the poorest 10 per cent of households the hardest. The Child Poverty Action Group has predicted that up to an additional 100,000 Scottish children could be pushed into poverty by 2020 as a result of the UK Government’s welfare reforms.
Sadly, food banks have become the norm for too many people in the country. Before 2010, food banks were a rarity. According to the Trussell Trust, more than 51,000 people, including 15,000 children, visited its food banks in Scotland between April and September 2014. Who would have thought that a food bank would be located in prosperous Milngavie? It is hard to believe.
The Labour Party voted with the Tories for a further £30 billion of cuts over the next two years, so it has pinned its colours firmly to the austerity mast.
If we do not help the most vulnerable in our society, how do we build a sustainable growing economy and an equal and fairer country?
Please bring your remarks to a close, Mr Paterson.
Certainly, Presiding Officer.
I fully endorse the vision and proposals outlined by the Scottish Government and I commend the motion to Parliament.
16:16
The Scottish Government states that its focus is on protecting public services, but the continuous pressure on health and social care caused by our aging population means that resources are being stretched thinner and thinner. Of course I agree with the idea of protecting public services, but I do not understand some of the priorities that the Scottish Government has set.
The Government motion states that “reducing inequality”—an interesting phrase—
“is not only important in itself, but is vital”.
However, it remains to be seen how the Scottish Government will reduce inequality. There is not a single redistributive policy proposed by the SNP.
The SNP has declared its support for the living wage, but in reality the SNP blocked the Labour Party’s amendments to the Procurement Reform (Scotland) Act 2014, which would have required all public sector contractors to pay the living wage. I do not understand why the SNP did that.
Will the member give way?
I think that there must be something wrong with Mr McDonald’s chair—he stands up every time an Opposition member speaks.
I merely seek to probe with Mr Malik whether raising the minimum wage to £8, which would be 15p above the living wage, by 2020 would be helpful. I note that Jackie Baillie is telling him the answer, and I am sure that he will be able to communicate it to me.
I am surprised that Mr McDonald does not know the answer. Perhaps he knows it and is just being a nuisance.
In the background is the overall state of the Scottish economy. Falling oil revenues have had a massive impact on the north-east of Scotland, and continually low oil prices may cause long-term structural damage. Scotland’s economy needs to weather the storm and avoid the abandonment of oil fields that may be economically viable in the future. That can only be done within the much more broadly based economy of the UK, by keeping the Barnett formula and implementing policies that redistribute from rich to poor.
The bankers bonus tax, the mansion tax and the reintroduction of the 50p tax rate are all part of Labour’s vision for a fairer country. The SNP’s vision for Scotland-only taxes means less spending on Scottish public services, not more. I do not know where the SNP gets the idea that it will have more money.
I overwhelmingly agree with Gordon Brown’s call for a major house-building programme in order to stimulate the Scottish economy. At 3,563, the figure for new-build starts in the last quarter is still far below demand. In addition, the number of approvals given for new social rented homes was only 198, down by 22 per cent on the same quarter in 2013. There are more than 150,000 people waiting on council and housing association waiting lists for a home of their own. I have constituents who have been waiting on lists for years. They have experienced extreme levels of overcrowding that have affected their children’s education, health and social skills and denied them the basic requirement of privacy. There is a shortage of homes across the board, for single people as well as for families. Shelter Scotland estimates that at least 10,000 new homes for social rent need to be built every year for decades to come.
I invite the Scottish Government to give us solid policies on the Scottish economy, not just empty, meaningless words. The Scottish Government talks about “inequality”, and as I said at the start of my speech, that is an interesting word. I regularly visit families who are living in overcrowded situations—families of 17 living in four-room homes who have been waiting for a house for years and have had to put up with dampness and squalid conditions. I have met disabled people who live upstairs and cannot get a house on the ground floor. There are not enough houses with sufficient rooms, particularly for minority communities, who suffer an additional disadvantage.
Wanting to deal with inequalities is easier said than done. Delivery is important, but the Government needs to take the job more seriously. It talks about inequality, but that is not just about housing, even in the public sector. I would be interested in whether the Deputy First Minister can name one public service that actually reflects the needs of the population of Scotland today in terms of equality issues.
Our final speaker in the open debate is Richard Lyle. After that, we will turn to the closing speeches.
16:22
I congratulate Jackie Baillie on not moving her amendment.
Let us look at the agendas of the Governments on both sides of the border. I will look at the Westminster coalition Government’s austerity agenda first, and then at the Scottish Government, where the story is different indeed.
Over the past five years, the coalition Government at Westminster has presided over an agenda of austerity and cutbacks in spending. It is an agenda that has hurt the most vulnerable in our society more than any other group, and that is truly shameful for its record in government.
According to the Child Poverty Action Group, by 2020, 100,000 more children in Scotland could be pushed into poverty due to the UK Government’s welfare reforms. The extent of the problem is deep and widespread. The figures show that. As has already been said, in 2013-14, Trussell Trust food banks in Scotland provided help to 71,428 people, which is an increase of 400 per cent on the previous year. Shockingly, 22,387—or 30 per cent—of the people who were helped in 2013-14 were children, and 100,000 more children in Scotland could be pushed into poverty.
Nonetheless, the Prime Minister and his Tory and Liberal colleagues in Westminster say that their long-term economic plan is working. My question is, who is it working for? It is certainly not working for Scotland’s children or for the most vulnerable in Scotland, such as the disabled, who are also losing out as a result of the Westminster agenda. In Scotland alone, it is estimated that more than half those who claim disability living allowance will see their benefits cut by at least £1,100 a year. That money is a lifeline to many of our people, but the UK Government does not understand that, as it is a world away from Westminster’s London-centric focus.
We may find ourselves asking what the alternative is. Is it the Labour Party? The Labour Party is supposed to be the party for the working class but, left to its own devices, it has made it clear in no uncertain terms that it intends to carry on with the Tory cuts that are inflicting real pain and hardship on families across Scotland. Although I am sure that those on the Labour benches will have much to say on that, we need only look at their recent voting record.
More cuts of £30 billion over the next two years have been put forward by the Tories and backed up by Labour: still better together. The people of Scotland will have their say in May about whom they want to represent them in Westminster, and I hope that we will send a strong team of SNP MPs down to Westminster. We will send those MPs down not only to demand the further powers that we were promised to help build and grow our economy, but to change course and turn the car around on the road to further austerity, with a call for more investment and a different outlook from that of the coalition Government and its slash-and-burn economic approach, which Labour would follow if it formed the Government. That is Westminster for you: Tory, Labour; Labour, Tory. They all have the same austerity agenda.
The Scottish Government has a real alternative proposal, not to continue austerity but rather to increase spending to 2019-20. As has been said, a 0.5 per cent increase in departmental spending could reduce debt and allow for a further £180 billion of investment across the UK over the next four years. That is much at odds with the UK Government’s plans and much improves on Labour’s plans.
Having reflected on the Westminster Government’s actions, it is only right that we look at the Scottish Government’s, too. Its actions, by contrast, could not be any more different. The Scottish Government has had to deal with five years of austerity and a 10 per cent real-terms cut to the fiscal budget, with a proposed further cut of £25 billion in UK public spending over the next three years from the current UK Government. Those cuts will affect those on low incomes the most. Despite that, the Scottish Government has committed to increase the NHS’s revenue budget in real terms for the remainder of this parliamentary session—and for each and every year of the next one, too. It has not just protected the NHS but actually increased the health resource budget in spite of the cuts.
The Scottish Government is also doing what it can to mitigate the effects of Westminster’s welfare cuts, which will cost families in Scotland £6 billion by 2015-16. It has put in place £35 million to top-up discretionary housing payments to mitigate the effects of the bedroom tax, and it has put in place the £38 million Scottish welfare fund to administer community care grants and crisis grants. In April 2014, the then Deputy First Minister announced the Scottish independent living fund, after Westminster decided to close the UK fund. That scheme safeguards support for more than 3,000 disabled people in Scotland and builds on existing care. Investment of £5.5 million led to the fund re-opening to new users, and has ensured its long-term future.
From investing in skills, training and education and working to close the attainment gap to protecting and investing in our NHS, tackling inequality in Scotland and mitigating Westminster’s welfare cuts, the Scottish Government provides the alternative to austerity and the alternative to the Tories and Labour. In May, I hope that the SNP will provide an alternative for the people of Scotland.
In the few seconds that I have left, I say to Alex Rowley that I remember when he used to come to North Lanarkshire Council. What did Labour ever do for housing in the 36 years that I was a councillor? Nothing.
We come to closing speeches and I remind all members who participated in the debate that they should be back in the chamber.
16:28
My political beliefs, my connection with communities, my upbringing and my surroundings drive the work that I do in this place, and that is probably the case for every member. That is why we are here. We are trying to make the world a better place. It is why I have argued for investing in childcare. I have asked the Government repeatedly over a number of years to increase investment in childcare and I am pleased that some progress is being made. There has not been as much progress as I would like, but that is one of my driving forces. I see kids who have not had the best start in life and I think that they deserve a better start in life.
It is why I have argued for taking hundreds of thousands people out of tax altogether. I do not think that it is reasonable that anyone who is paid the minimum wage should pay income tax. The threshold should be brought right up and we have made big progress towards achieving that. It helps to make work pay, it incentivises people, and it makes their lives better. Last week, I met a man in the Borders who earns roughly £12,000 a year. He has seen a big difference in his pay packet, but I do not think that he should be paying any tax at all. That is one of my great ambitions.
It is also why I have argued for getting the economy back on track. I am pleased that we have made progress with 187,000 jobs since 2010.
Will the member take an intervention?
Not just now; I am trying to make a point.
That is why we are in politics. We all have different views about how we get to roughly the same destination; we want to make the place fairer and we want a stronger economy. Those are the things that drive us, but we have different ways of doing that. We should not castigate each other for having those different views; we should respect them. We can criticise when we think that people have got it wrong, but let us not impugn people’s motives for being in this place. It is important that debates such as today’s give us the opportunity to thrash things out. Politics is one of the great forces in society that make our lives better. The fact that we have heated debates in the chamber is a good thing because, overall, it drives people to make this a better place.
There has been a lot of talk about inequality today. The Institute of Fiscal Studies recently produced a report called “Living Standards: Recent Trends and Future Challenges”. Page 13 of that report says clearly:
“Income inequality then fell rapidly in the wake of the recession. The 90/10 ratio was 3.9 in 2012–13, its lowest level since the late 1980s.”
I am sure that other people could come up with lots of other statistics and that the statistic that I pick out of that report may be contradicted in certain ways by others. However, let us not just say that the UK Government has increased inequality, because there is no doubt that we have made a big difference in some areas. The tax threshold is one of our greatest achievements. It has taken people out of paying tax altogether. In Scotland, 236,000 people have been taken out of paying tax altogether. That is a great thing, which we should all celebrate.
As I said earlier, Mr Rennie views that in isolation when it has to interact with other things such as the raising of VAT to 20 per cent and some of the benefit changes that have been made. That means that some of the people whom he is talking about are seeing negative impacts as a result of the cumulative effects of those measures.
I do not accept that they are seeing negative impacts, but I recognise that, to get the deficit under control, we had to do some other things. Denying that we need to get the deficit under control is not looking after our kids. Our children and grandchildren will not thank us if we continue to build up debts for the future and leave them lumbered with huge interest rates and bond yields that will burden them for future years. Past generations have done that and I do not think that we should do it.
I am grateful that we have got to this point. However, although I accept that I would not want to foist a debt on my children or grandchildren, surely the size of the debt numerically is not the important bit. What is important is its affordability relative to the country’s income and the person’s income. Surely that is the point. If we increase someone’s income, their debt becomes more affordable.
I accept that. It is not about size alone, but the size of the debt has an impact on its affordability, as I am sure that Nigel Don recognises. We need to create a robust economy.
That is why, when we did not manage to keep on track with deficit reduction as we would have liked to because of the European economy, the market still had confidence in us. We had a long-term economic plan that would have a long-term benefit for the country. The member is absolutely right about that.
Will the member give way?
The member is in his final minute I am afraid.
I apologise to Mr Rowley; I will not be able to take his intervention.
It would be remiss of me if I did not observe one important fact about today. Not one SNP member has talked about corporation tax. Not one. For something that was a central part of the referendum campaign—
It was not a central part.
Despite what the SNP members are grumbling, the 3p cut in corporation tax was a central part of the referendum campaign, so I would have thought that at least one SNP member might have provided at least a little bit of an explanation as to why there has been such a handbrake turn and such a reversal in policy. Perhaps John Swinney will do that in summing up.
16:34
I have spoken in similar debates in the past, and I have heard all the same speeches again today. Why should I let the side down? I will give much the same speech as I have given previously.
As I have said before, I admire John Swinney. I hope that that does not embarrass him. He is the best finance minister that the Scottish Government has ever had. He is the man who has been responsible for ensuring that a tight budget has been made to work for Scotland. He has used the powers that have been devolved to the Parliament to achieve that, and I am confident that he will do so with the additional powers that are coming. The problem is that John Swinney has spoiled it all—as he has done before—by saying that, of course, in an independent Scotland money would flow like water and he would spend it as quickly as he could get his hands on it. Unfortunately, that does not work.
I rarely agree with Jackie Baillie, but occasionally I find something to agree with her on. In her opening speech, she described the Government’s prospective economic policy as
“an economic strategy for an alternate universe.”
I could not agree more.
The fact is that the Government is presenting a false prospectus to the Scottish electorate. It imagines that it can talk about Labour spending plans and try to outflank Labour on the left but with a broader economic policy that is based on Conservative tax policies—there is going to be no increased tax; there is just going to be more spend. Yet, the fact is that the £180 billion that the Government says that it would invest—in the UK economy, I believe, rather than simply in Scotland—would cost us money. The cost of borrowing £180 billion for 10 years, at today’s 10-year bond rate, would be about £35 billion. That is £35 billion of interest payments that would not be spent on hospitals, schools or public services.
Will the member take an intervention?
No, thank you.
That is the problem with that idea, which was detailed by my good friend Chic Brodie, who believes in all my Conservative economic theories. He believes that, by investing in the economy and expanding the economy, we can create jobs, wealth and a greater tax yield and fund better public services. The problem is that the creative economic thinking for which Chic Brodie is famous does not acknowledge the fact that we would have to borrow the money up front and that, if we could not pay back the £35 billion over 10 years, we would not have a penny to spend.
Will the member give way?
Will the member give way?
No, thank you.
Even John Swinney, in his opening speech, referred to the fact that Chancellor George Osborne adjusted his policy and loosened the economic bind when it was correct to do so. However, Mr Swinney failed to compare adequately the direction in which our economy has travelled to the direction of those in other parts of the world, including just across the Channel, in France. François Hollande was elected President on the basis of promises that he would flood the economy with resource, expand the French economy and turn France into a boom nation in the post-recession era. Today, France has hit the skids and it is we, in Britain, who have enjoyed 3.5 per cent growth in the past 12 months and seen our borrowing requirement drop from 10 per cent of GDP to 5 per cent of GDP. While John Swinney is no longer projecting his plan B, the achievements of plan A—according to Willie Rennie’s figures—mean that it has outperformed John Swinney’s plan B by a factor of 6.
In September, Alex Salmond made some brave predictions about the price of oil. Three months later, he was proved dramatically wrong. John Swinney has today made projections about the prevailing economic weather in 2024 and he expects us to believe them. The prospect that the SNP has set out today is based on hit and hope. It is based on an alternative economic strategy that has been tried and has failed across Europe and the world.
George Osborne has delivered a key economic strategy at a point of economic crisis for our nation. In the space of five years, he has taken us from the point of economic collapse—where no one wanted to know what was going on and the Labour chancellor left a note when he left office that said, “There’s nae mair money”—to a position today where we can project our way out of this crisis.
We have delivered on behalf of the UK economy and, yes, we have delivered for the Scottish economy, too.
Draw to a close, please.
There is much to do, but a great deal has already been done. We cannot afford to spoil it by accepting this false economic prospectus.
16:41
On Wednesday the First Minister launched her economic policy, and like most things in her first 100 or so days, it went off with a whimper. It was a flat announcement that passed most people by. Of course, following the launch the spin doctors took over and we eventually found out, through briefings to the media, that one of the central planks of the Scottish Government’s economic policy—one of the central arguments that it has deployed over the past decade—had bitten the dust: namely, the devolution of corporation tax so that the Scottish Government could levy
“the most competitive business taxes in Europe”,
starting with a cut of 3 per cent lower than anything that Osborne would set. However, there was not a word on that in Honest John’s speech or from any of the rest of them.
Mr Findlay—avoid using first names and nicknames, please.
Will do, Presiding Officer.
As early as 2005, in her conference speech, Nicola Sturgeon was a great enthusiast:
“We’ll cut corporation tax because we know from our European competitors, like Ireland and Sweden, that it’s the way to grow our nation’s wealth.”
said she, and almost every SNP MSP has championed the policy. Not one of them—not one—has had the backbone to stand up and say that it was wrong, particularly at a time of austerity and when public services are under such threat.
Will Neil Findlay take an intervention?
I am always willing to take an intervention from a Liberal Democrat, Mr Brodie.
I remind Mr Findlay that some people leave their party because of their principles, but others leave their principles because of their party.
We are talking about backbone, so how would Mr Findlay have voted on the Trident agreement to spend £100 billion—or would he have been absent, like many Labour members were? Also, how would he have voted on the austerity cuts of £30 billion?
We are debating the economy. However, Mr Brodie may wish to know that I am a member of the Campaign for Nuclear Disarmament, so the clue is there. The difference is that when I disagree with my party, I am willing to say so, unlike the sheep and the sycophants in the SNP seats.
Corporation tax was one of the SNP’s big post-election demands. We can recall Alex Salmond when he bounced into London after the 2011 election with a list of six asks. He said that
“lower corporation tax would be the ‘best available weapon’ for an independent Scotland to be competitive”.
It would lead to a “jobs boom,” said he. He told us that
“modelling shows the policy would create 27,000 jobs in Scotland and increase GDP by over 1% in the medium term.”
There were no greater champions of that policy than the Friedmanites in the Cabinet, led by Mr Swinney who said that
“Control over corporation tax would enable us to boost investment, bringing jobs to communities across Scotland, grow the economy and take the right decisions for Scotland.”
He said of his paper on the subject that
“There is clear evidence from around the world of the benefits from lowering burdens on business—and this 54-page document sets out the compelling evidence in more detail than ever before.
Lower corporation tax is a vital source of competitive advantage in an integrated global economy, helping to attract new businesses and highly-skilled jobs. A competitive corporation tax regime has been a feature of the economic success of many countries, and we want Scotland to have the same opportunities to bring in jobs and boost growth.”
Hear, hear.
“Hear, hear”? Mr Paterson’s party has abandoned the policy.
Of course, endorsements from Souter and Murdoch followed, but no other credible commentator would endorse it. Stephen Boyd, the respected economist of the Scottish Trades Union Congress, called the Scottish Government’s policy document
“an excruciatingly awful piece of work”
in which
“every argument presented was easily debunked.”
Joseph Stiglitz, one of the First Minister’s economic advisers, said:
“Some of you have been told that lowering tax rates on corporations will lead to more investment.
The fact is that’s not true. It is just a gift to the corporations increasing inequality in our society.”
Richard Murphy of the tax justice network said:
“these people really are in La La land and it’s time they woke up and saw the reality of the harm they’re really proposing to the ordinary people who will suffer cuts in education, health care, pensions and other essential services as a result of their mad thinking.”
However, they ploughed on until this week. Who did they send out to defend that huge U-turn on “Scotland 2015” on Wednesday night? It was not Mr Swinney or the First Minister but none other than the man who will say anything and do anything—as we have seen today—to become a minister. Step forward, Mark McDonald. He was sent out to defend dumping a policy that he once championed. This is the man who said in a debate:
“At least Patrick Harvie’s position on corporation tax policy is consistent, although he and I might disagree on it.”—[Official Report, 7 January 2014; c 26164.]
Consistency is not a charge that we would ever level at Mr McDonald or Mr Swinney.
Will Neil Findlay give way?
No thank you—not at the moment.
Come on.
I will—[Interruption.]
Order.
I will let you in—[Interruption.]
Order, please.
Come on. [Interruption.]
Order!
No, no, I will let you in when I finish my quotation, Mr McDonald. [Interruption.]
Order.
I give Mr McDonald some credit because he at least had the decency to look as though he would rather have had root-canal treatment from the world’s worst dentist than defend the policy U-turn on television, but defend it he did.
I would certainly rather have root-canal treatment than listen to Mr Findlay. Perhaps he can advise us whether, in all the years when Gordon Brown, as Chancellor of the Exchequer, was reducing corporation tax, he supported that approach being taken by the Labour Party.
That was when the economy was growing. [Laughter.]
Order, please. [Interruption.] Order.
This is a time of austerity. I say to Mr McDonald that it is simple: why would we rip money out of the economy when it is going downwards? Surely that makes sense even to him. However, I am sure that the whips will reward him for his work.
Not one SNP member mentioned the corporation tax policy in their speeches, nor did they mention a policy of redistribution from rich to poor. Mark McDonald said that a Labour Government would be bound by the coalition’s OBR charter.
Will Neil Findlay give way?
Not at the moment.
The member is in his last minute.
No Parliament can bind its successor, so Mr McDonald knows that that argument is nonsense.
Christina McKelvie rightly raised issues of poverty and inequality. We probably agree more than we disagree on those issues, but the SNP cannot address them when it cuts council budgets by 24 per cent. Councils are the front line in the fight against poverty and inequality, as John Pentland said and Alex Rowley rightly evidenced from his constituency. Food banks, the social housing crisis and the jobs crisis are huge issues that we cannot allow local government not to address.
Will Neil Findlay give way?
I am in my last minute.
Mr Findlay must draw to a close.
The Government said that it supported tax cuts but now says that it does not. It opposed a 50p rate of tax but who knows now? It cut 130,000 college places but now wants to invest in skills.
You must close.
We need a Labour Government that will have a 50p tax rate, introduce a bankers bonus tax and mansion tax, extend the living wage and minimum wage, end abusive zero-hours contracts and borrow to invest.
Mr Findlay, I need you to close.
That is a credible plan for a fairer Scotland and it requires us to kick that lot in the Tory party out as soon as we can.
Before I call John Swinney to wind up the debate, I remind all members that they must show respect for one another in the chamber.
You have until 5 o’clock, Mr Swinney.
16:49
I want to start by referring to a comment that Mr Pentland made—it was about the only remark that he made with which I agreed. He said that there are choices to be made in political life about the priorities that we support. One of this Government’s priorities would be not to renew the Trident nuclear missile system and to save the public of this country £100 billion of expenditure on a completely needless piece of weaponry. When Mr Findlay talked about the austerity climate that he is so concerned about, he did not utter a word about whether he believed that the priority of the next Parliament should be to renew the Trident missile system or whether we should secure that saving and whether that represents the position of his party. We know that his party is gung-ho about spending £100 billion on renewing the Trident missile system.
There are choices to be made in political life. I have made choices in my role as the finance minister in Scotland over the past eight years. Between 2007-08 and 2012-13, the budget that has been available to me has fallen by 4.8 per cent in real terms, whereas the budget that has been available to local government has decreased by 2.6 per cent in real terms. Therefore, as a result of the choices that we have made as an Administration, local government has been protected from some of the cuts that have been inflicted on this Government. Mr Findlay is welcome to stand up and congratulate me on that.
If the cabinet secretary is protecting local government, why are councils having to make excessive cuts and lose jobs year on year? Why are our services being closed? If that is protection, Mr Swinney needs to wake up and see what is happening in local government.
That is happening because Mr Findlay’s party went into an alliance with the Tories to stop Scotland being in control of our own affairs. [Interruption.]
Order, please.
If Mr Findlay wants to find out about the performance of local authorities, he need only look at “An overview of local government in Scotland 2015”, which came out this morning, in which the Accounts Commission says:
“Councils have managed the financial pressures well so far. Available performance information indicates that services have been improved or maintained.”
It goes on to say, on page 11:
“it is clear that councils in England have faced more severe cuts”.
Let us look at budget performance in Scotland. The principal ask of the Labour Party with regard to this year’s budget was to give more money to the health service. We gave more money to the health service. If we take the health service out of public expenditure and look at the remainder—because the Labour Party agrees with us on health spending—the share of our budget that is devoted to local government, which was 55.7 per cent, is now 57.2 per cent. The local government settlement has given fair priority to local government.
I do not in any way disguise the financial challenges that local government faces, but we face those challenges, too—everyone in the public sector faces them, because of austerity. That is why we want to do something about it. The Scottish Government’s plan to increase real spending by 0.5 per cent per annum from 2016-17 to 2019-20 is an entirely sustainable proposition. Public sector borrowing and public sector debt will be falling as a share of GDP by the end of the next session of Parliament. A deficit of 2 per cent, which is what our plan would result in, is sustainable and consistent with debt falling as a share of GDP. Interestingly, a deficit of that magnitude would be smaller than the average deficit in the UK over the past 60 years.
We have talked about full fiscal autonomy. What assessment has John Swinney made of the impact of full fiscal autonomy—which is the SNP’s policy—on the deficit and on services such as health, education and pensions?
What Jackie Baillie must understand is that, as I have explained to her many times before, with fiscal autonomy comes the ability to boost and expand the economy, which would give us the ability to invest in our public services. That is the answer.
I will look at the wider assessment, as there has been a lot of critique from Mr Rennie and Mr Brown of the implications of our alternative approach to austerity. Let me read to members a quote from the director of the National Institute of Economic and Social Research. He said:
“there is quite a lot of room for manoeuvre in terms of plans to get the deficit down over the next Parliament. Even what Nicola Sturgeon is proposing, which would involve spending quite a lot more and borrowing quite a lot more than what the Conservatives are proposing, would still result in a falling deficit and falling debt over the Parliament, so it would be fiscally sustainable
.”
That should be recognised across the chamber.
Colleagues across the chamber have asked about the Government’s position on corporation tax. I hate to disappoint Mr Findlay, who seemed to be getting himself worked up into a terrible lather about the matter, but the Government remains committed to lower corporation tax. That is the Government’s position and that is what is stated on page 80 of “Scotland’s Economic Strategy”. [Interruption.]
Order.
We have set out our approach to reduce corporation tax in a targeted way to support investment in capital, which is entirely consistent with the remainder of our economic strategy.
John Swinney has supported a blanket reduction in corporation tax for almost a decade. When did he change his mind and why?
The Government has reviewed our economic strategy to make it more targeted on boosting innovation, internationalisation and infrastructure in our country. That is why we believe that a more targeted approach is essential.
I will complete my response to Mr Findlay. If he had turned over the page on corporation tax in “Scotland’s Economic Strategy” from which he read—if he had read the corporation tax point first of all, he would have realised that we remain committed to lower corporation tax—he would have read on page 81 of that document that the Government believes that we should have
“Responsibility for employment rights, including the National Minimum Wage”.
That was my position in the Smith commission, of course. It would have been nice if the Labour Party had bothered to support that to enable us to tackle some of those issues.
Mr Rennie invited me to redeem myself by learning some lessons from the Liberal Democrats’ record. Therefore, let me share with Parliament some elements of the record of the Liberal Democrats, who have been associated with the Conservatives in a coalition Government that looks like it will give them a lot of electoral success as a consequence.
As of the third quarter of 2014, GDP per capita in the United Kingdom was 1.8 per cent below pre-recession levels. That is what the Liberal Democrats have delivered. Real wages are 4.1 per cent below their 2008 levels. That is what the Liberal Democrats have delivered. The Institute for Fiscal Studies has found that tax and benefits changes that the UK Government has introduced have harmed the poorest 10 per cent of households more than any other section of the population. That is what the Liberal Democrats have delivered. The Child Poverty Action Group believes that an additional 100,000 children in Scotland could be living in relative poverty, after housing costs, because of the UK Government’s actions. That is what the Liberal Democrats have delivered.
Taxes have been cut, pensions are up, there is more childcare and the economy is back on track. That is what the Lib Dems have done, and John Swinney needs to recognise that.
If Mr Rennie tells that to the poorest 10 per cent of the population, who have borne the greatest bit of the burden of the UK Government’s austerity programme, they will laugh in his face at the absurdity of his remarks.
Jackie Baillie tried to suggest in her speech that the Labour Party would have nothing to do with austerity. That was so gently expressed that we almost thought that she had come to a conclusion that was different from that of her colleagues in the UK Labour Party. However, the UK Labour Party trooped into the lobbies of the House of Commons to vote for the charter for budget responsibility, which will commit the Labour Party to £30 billion-worth of cuts. Jackie Baillie should have given her pleading speech to the Labour Party in London rather than coming here after the event, when the decision has been taken.
Could the SNP and the cabinet secretary explain why, yesterday, when we had a chance to oppose Tory austerity measures, SNP MPs sat on their hands and did nothing?
For two reasons. The first is that, although the Labour motion was committing to sensible, nice Labour cuts as opposed to horrible Tory cuts, they are still cuts, whether Tory or Labour—or is it the other way around? I cannot tell the difference.
The other reason is that yesterday’s motion was posturing by the Labour Party, because, when it mattered, the Labour Party went into the lobbies and put into law that the cuts must be made. That is the absurdity that the Labour Party has become, and we will remind the people of Scotland of that right up until 7 May.