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Chamber and committees

Meeting of the Parliament

Meeting date: Wednesday, September 6, 2017

Agenda: Portfolio Question Time, Programme for Government 2017-18, Business Motions, Parliamentary Bureau Motion, Decision Time, Generations Working Together


Portfolio Question Time

North Sea Oil Revenues

To ask the Scottish Government what the North Sea oil revenues were for 2016-17, and how this compares to the projections in its 2013 document, “Scotland’s Future”. (S5O-01195)

The Cabinet Secretary for Finance and the Constitution (Derek Mackay)

“Scotland’s Future” made it clear that

“Tax revenues from oil and gas production will depend on a range of different factors, including future production in the North Sea, wholesale oil and gas prices and profitability.”

The Scottish Government presented a range of forecasts for oil and gas revenues, based on information that was in line with external projections at the time. No organisation forecast the subsequent sharp decline in the oil price, which led to a period of record low profitability in the North Sea and a fall in oil and gas revenues.

There is—encouragingly—increasing evidence of cautious optimism returning to the oil and gas sector. The Scottish Government will continue to do everything within its powers to support the industry and its workforce as the sector emerges from the downturn.

Jamie Greene

The cabinet secretary failed to tell the Parliament that “Scotland’s Future” predicted up to £8 billion in oil revenues, although the actual number was just £208 million, just 2.7 per cent of the forecast number. I was hoping for an apology from the cabinet secretary.

Oil revenues are not the great panacea that was set out in that document and Scotland has an 8.3 per cent deficit. Given the impact of that on inward investment into Scotland, when does the cabinet secretary think that Scotland’s deficit will be reduced to below 3 per cent of gross domestic product?

Derek Mackay

First, Scotland’s notional deficit is reducing. On the oil and gas forecasts, I ask Mr Greene whether he makes the same criticism of the United Kingdom Government, whose forecasts were higher than the Scottish Government’s? Is Mr Greene not aware of the UK Government’s assessment at the time? [Interruption.]

The Tories scoff while the industry asks for action. On oil and gas, there has been too little, too late, and 40 years of mismanagement of Scotland’s resources have ensured that we have lost out to the tune of £328 billion. The Tory Government is failing industry completely. That is in sharp contrast with the position in independent Norway, which has reserves of hundreds of billions of pounds that it can invest in its public services, while we wait for action from the UK Government on oil and gas.

Barclay Review of Non-domestic Rates

To ask the Scottish Government when it will respond to the recommendations of the Barclay review of non-domestic rates. (S5O-01196)

I propose to update the Parliament in a statement next week and I have committed to publishing an implementation plan by the end of 2017.

Liam McArthur

The cabinet secretary will be aware that many people in the pub and hotel trade, including key businesses in Orkney, my constituency, have seen their rates bills rise exponentially in recent months. He will, therefore, understand their frustration that the Barclay review appears to offer little light at the end of the tunnel.

Does the cabinet secretary accept that an assessment that is based on turnover rather than such businesses’ full accounts is likely to penalise those who have invested and want to grow their business? Does he recognise that such an approach will do nothing to help to generate jobs, wages and tax revenues? In responding to the Barclay review next week, will he undertake to find a more appropriate way of taxing pubs and hotels, which remain a linchpin of the tourism sector and so vital to the economy of Orkney and Scotland as a whole?

Derek Mackay

I am disappointed that Mr McArthur either understands and is misleading us about—I am sure that that is not the case—or does not understand the methodology that the assessors choose to use in assessing the hospitality sector, particularly licensed premises. The methodology is a matter for the assessors, who are independent of the Scottish Government.

I intervened to support the hospitality sector following the revaluation, having taken early action before that on the poundage, the small business bonus and the large business supplement. I think that the real-terms cap for hospitality was well received, and I propose to make an announcement about that as well as about non-domestic rates next week, when I hope—with the Parliament’s agreement—to make a statement.

The Barclay review suggests introducing rates relief for nurseries. Will the cabinet secretary take forward that recommendation to help to make childcare more affordable?

Yes, I will. Further detail will follow in the statement that I hope to give to Parliament.

Barclay Review of Non-domestic Rates

3. Murdo Fraser (Mid Scotland and Fife) (Con)

I think that I may know the answer to this question already.

To ask the Scottish Government when it will publish its response to the Barclay review of non-domestic rates. (S5O-01197)

I hope next week.

Murdo Fraser

There are many sensible recommendations in the Barclay review, but one issue that has raised concern is the proposal to levy business rates on charitable bodies, including local authority-provided leisure centres, swimming pools, gyms and other sports clubs. Will the cabinet secretary tell us how such a proposal, which would lead to such bodies having to increase their user charges, squares with Government policy to encourage active lifestyles and tackle obesity?

Derek Mackay

Not today, Mr Fraser—not today—but, in the statement that I will outline to Parliament, I hope to cover all the issues on the recommendations in the Barclay report.

What I will do is to continue to engage with stakeholders and consult, as Mr Fraser would expect. I encourage all political parties, not least the Conservatives, to offer me a submission before next week. Then, perhaps, I can consider the constructive suggestions that might well be forthcoming from other political parties—especially since the Tories, I have become aware, did not make a submission to the Barclay review.

Did you?

Derek Mackay

I do not need to make a submission to the Barclay review; I am the minister and responsible for finance in the Scottish Government. It seems to have passed the Tories by.

I will engage constructively with all the other political parties. If they want to put a submission to me to consider before I make the statement to Parliament, I am all ears. On this and many other issues, however, the Tories make a hell of a lot of noise, but not a lot of progress.

Jackie Baillie (Dumbarton) (Lab)

I am very glad that the finance secretary is all ears because, when I last engaged with him on business rates, he told me that the cap of 12.5 per cent applies in the current financial year only and that he would consider further after the Barclay report. Now, of course, he has the Barclay report. I suspect that he is not going to tell me today, but let me ask anyway: will the cap end on 31 March, yes or no?

Derek Mackay

I have already said that I will give a full statement to Parliament. I hope to do so next week, subject to the agreement of the Parliament’s business managers. I look forward to the comprehensive and all-encompassing submission from the Labour Party. The Labour Party did not make a submission to the Barclay review either.

Members: Oh!

Derek Mackay

That is right.

The Scottish Government delivered much-needed relief to the hospitality sector, as well as a range of other interventions—amounting to over £600 million in business rates support to this country—all of which were opposed by the Conservatives and the Labour Party, while the Scottish National Party stood up for business.

“Government Expenditure & Revenue Scotland 2016-17”

To ask the Scottish Government, in light of the recent commentary on GERS figures, what its position is on the recent GERS report and the robustness of the findings within it. (S5O-01198)

The Cabinet Secretary for Finance and the Constitution (Derek Mackay)

GERS provides estimates of revenue raised in Scotland and spending for Scotland under the current constitutional arrangements. It is a national statistics publication that has been independently assessed and found to be produced in accordance with the “Code of Practice for Official Statistics”. That assessment covers a number of areas, including the quality of the statistics and their suitability to the needs of users.

Richard Lyle

The cabinet secretary will be aware of the Office for National Statistics publication that shows that Scotland’s notional fiscal position is broadly similar to the United Kingdom average, when London and the south-east of England are excluded. Does he agree that that is a clear demonstration of the failure of the UK economic policy that prioritises one city at the expense of all other areas?

Derek Mackay

Yes, I agree with that statement. For too long, the Westminster Government has focused investment in London. Despite that, Scotland’s revenue per head is the fourth highest in the United Kingdom and Scotland’s notional deficit as a share of gross domestic product is better than that of Wales, Northern Ireland and many English regions.

James Kelly (Glasgow) (Lab)

The cabinet secretary will be aware of the importance of growth in Scotland compared with growth in the UK as far as the block grant adjustment for future Scottish budgets is concerned. Does he agree that a concern associated with the latest GERS figures is that we saw that tax revenues have grown by 1.5 per cent in the rest of the UK but have increased by only 0.92 per cent in Scotland? If that trend continues, it could have a detrimental effect on the block grant adjustment. What action is the cabinet secretary going to take to ensure that the growth rate in tax revenues increases and that, therefore, economic growth also increases?

Derek Mackay

I am sure that Mr Kelly will welcome the Government’s economic strategy as well as the measures that were outlined in the programme for government yesterday. I am sure that he will also welcome record high employment, near record low unemployment, the fact that progress on GDP is outstripping that in the rest of the UK—we had almost four times the rate of GDP growth in the last quarter that the rest of the UK had—record foreign direct investment, improvements in productivity and, of course, North Sea revenues rising once again.

This Government is engaged in a range of economic and industrial interventions to support our economy and improve productivity. That will, in turn, help to grow our economy so that we have the resources to deliver our valued public services.

Brexit (Impact on Public Finances)

To ask the Scottish Government what action it is taking to address the impact of Brexit on Scotland’s public finances. (S5O-01199)

The Minister for UK Negotiations on Scotland’s Place in Europe (Michael Russell)

Brexit threatens around 80,000 Scottish jobs and could cost our economy more than £11 billion a year by 2030. That presents a significant risk to Scotland’s public finances, and it is therefore essential for the Scottish Government to have a direct role in the negotiations to ensure that any Brexit deal is in the interests of Scotland’s economy and public services.

We have confirmed that we will be passing on the current United Kingdom Government guarantees on European Union funding in full to Scottish stakeholders to provide stability and certainty for key sectors of the Scottish economy. We will continue to press the UK Government to confirm how those guarantees will operate in practice and to state what the replacement funding arrangements will be once the UK has left the EU.

Graeme Dey

What concerns does the minister have about the financial implications of the UK Government’s attempt in the European Union (Withdrawal) Bill to reverse devolution and give Westminster control over devolved policy areas such as fishing, agriculture and the environment?

Michael Russell

As the First Minister indicated in her statement yesterday, the proposals in the withdrawal bill are unacceptable to the Scottish Government. That is the position that the Welsh Government has taken, too. Clearly, if frameworks were to be established without consultation—that is the proposal from the UK Government—the financial implications of those frameworks would also cause considerable worry. The best way to take this issue forward is for the withdrawal bill to be amended so that it would be acceptable to the Scottish Government, and we could make the appropriate recommendation to this chamber. I hope that the UK Government is listening to that reasonable point of view.

“Government Expenditure & Revenue Scotland 2016-17”

To ask the Scottish Government what assessment it has made of the recent GERS figures. (S5O-01200)

The Cabinet Secretary for Finance and the Constitution (Derek Mackay)

GERS provides estimates of revenue raised in Scotland and spending for Scotland, under the current constitutional arrangements. The results show that the lower oil price had an impact on North Sea revenues and the wider economy last year. However, it is encouraging to see an improvement in the overall fiscal balance and to see that onshore revenues grew at their fastest rate in cash terms in nearly 20 years.

However, our long-term economic success is now threatened by Brexit, which risks reducing household incomes, employment and funding for public services. That is why we continue to press for the Scottish Government to have a direct role in the Brexit negotiations.

Edward Mountain

The GERS figures show that, thanks to the funding settlement that Scotland has with the United Kingdom Government, public spending in Scotland is £1,400 higher than the UK average. If it is still the Scottish Government’s policy to dismantle that funding settlement, what level of economic growth would be required, and over what timescale?

Derek Mackay

The Scottish Government has made it clear through its economic strategy that it wants to grow the economy. Mr Mountain is trying to jump from pretending that those figures under the current constitutional arrangements relate to independence, when he should know that the Fraser of Allander institute has pointed out that they tell us about the current constitutional arrangements and nothing else.

Over the summer, we might do things that we do not always have the time to do, such as check out the Scotland Office twitter feed, which I had a wee look at. When it came down to who is responsible for the Scottish economy, the Scotland Office pointed out that the UK Government has responsibility for the economy, jobs, opportunity and currency, while the Scottish Government has responsibility for skills and enterprise.

All the actions that this Government is taking are helping us to deliver GDP growth that is outstripping the UK, higher employment levels, more foreign direct investment, improvement in productivity, investment in digital and North Sea revenues that are increasing once again—those are all the result of this Government’s actions. Anyone who looks at the GERS figures and concludes that everything is fine and should be left as it is should look again. We could do so much more with the powers of independence.

Does the cabinet secretary agree that the key risks to Scottish public spending come from the UK Government’s austerity programme?

Derek Mackay

I find myself in agreement with that comment. That is not just a philosophical argument; it is the reality that the UK Government has cut Scotland’s discretionary budget by £2.8 billion in real terms since 2010-11. That is funding for the day-to-day public services of Scotland, and they will be further cut if the Tories get their way, by more than £600 million in real terms between 2016-17 and 2019-20. [Interruption.] I hear Murdo Fraser say that that is scaremongering. It is not—it is the reality under the Conservatives, which will be opposed by the SNP every step of the way.

Brexit (Shared Governance)

To ask the Scottish Government what work it has undertaken in preparation for new schemes of shared governance in the United Kingdom that may result from Brexit. (S5O-01201)

The Minister for UK Negotiations on Scotland’s Place in Europe (Michael Russell)

As we made clear in “Scotland’s Place in Europe”, the Scottish Government recognises that it may be necessary to establish arrangements for co-operation across the UK in some areas currently covered by European Union law. We are currently assessing where such needs may exist and, together with the Deputy First Minister, I am in discussions with the First Secretary of State and the Secretary of State for Scotland with a view to agreeing principles that are a necessary starting point for co-operation on those matters.

Adam Tomkins

That is an answer that the minister could have given several months ago. The question is, what specific proposals for new regimes of shared governance in the United Kingdom has the Scottish Government brought forward since June 2016?

Michael Russell

It is the UK Government that has embarked upon this project of leaving the EU. [Interruption.] If it wishes to change the schemes of shared governance, it should bring those forward. [Interruption.] Presiding Officer, it is important that there is debate and dialogue about that issue and that it is possible for the Government’s point of view to be heard—then Mr Tomkins can shout what he likes from the sidelines.

The reality is that the UK Government has come forward with a bill that is unacceptable, that will not work, that breaches the principles of devolution and that, unfortunately, will create circumstances in which the powers of this Parliament will be considerably diminished. I for one will not accept that, and I do not think that the responsible parties in this Parliament will accept it. If the Scottish Conservatives are now so reduced to being the poodle of the UK Government that they would accept even that, I think that the people of Scotland will draw their own conclusions.

Richard Lochhead (Moray) (SNP)

Observing the intergovernment negotiations over Brexit from a distance, it appears that, even though they are often in the same room, the UK ministers are not actually listening to the ministers from the devolved Administrations. Therefore, when it comes to talk of shared governance and new schemes to make that happen, will the minister give us an assurance that any shared governance will be based on mutual agreement between the devolved Administrations and the UK Government, and not be a means by which the UK Government can undermine Scottish devolution?

Michael Russell

The member is right. The term “shared governance” is very interesting. It has been introduced into the debate, I think for the first time, by Mr Tomkins. The UK Government—[Interruption.]

The UK Government has never proposed shared governance and indeed my discussions with the UK Government on issues around this bill have made it clear that there can be no discussion of shared governance, so I am afraid that some misleading is going on here.

The reality is that the Scottish Government is absolutely willing to sit down and discuss the principles that would govern frameworks and to move forward together through joint agreement on those issues. However, there has been no such proposal from the UK Government. I regret that, but I certainly will not be pressured, either by the UK Government or by Professor Tomkins shouting from the sidelines, into betraying this Parliament or devolution.

If she can be brief, I will squeeze in Pauline McNeill.

Pauline McNeill (Glasgow) (Lab)

The House of Lords put together an excellent report on the impact of Brexit on the devolved nations. I have been pursuing for some time the question of what say Scotland might get on a future immigration policy. I would like to know from the minister what specific talks he has had with the UK Government and whether he sees any light at the end of the tunnel on this important matter, given our heavy reliance on EU immigration.

Michael Russell

That is a very good point indeed. The Scottish Government published its response to the UK Government proposals on migration a couple of months ago. I think that every one of us is astonished, shocked and deeply worried by the Home Office proposals leaked today.

The issue of migration was raised on a number of occasions in the joint ministerial committee. We made no progress because the UK Government did not wish to discuss the idea of migration. It regarded it as reserved exclusively to itself. While there is a Prime Minister who is an extreme hardliner on issues of migration, that will probably continue to be the case.

I look to work with all those parties in this chamber that wish to go in the same direction, to make two things clear. First, there must be discussion of these issues with the UK Government and secondly, we must be prepared to say openly and clearly that migration is a positive benefit to Scotland. It makes our society richer; it contributes financially; it is culturally and socially important to us; and those voices that are now talking about migration in the negative terms that we hear are utterly unacceptable.

I am absolutely certain that I can work with the member on the issue because I know that she absolutely holds true to the same views that I have expressed, as do the other members of the Labour Party and many others in the chamber. Regrettably, I have not heard those views recently from the Tory Party.

My apologies to Andy Wightman and Gail Ross as I am unable to include their questions.

Economy, Jobs and Fair Work

Question 1 has not been lodged.

Fair Work Framework (NHS Lothian)

To ask the Scottish Government whether the fair work framework applies to NHS Lothian. (S5O-01206)

Yes. All employers are encouraged to adopt and promote the principles of the fair work framework. That includes all national health service boards.

Alison Johnstone

The framework speaks of

“giving opportunities for hours of work that can align with family life and caring commitments”.

However, the minister may be aware that computerised rostering in certain NHS departments and wards has removed the flexibility that has enabled many long-serving NHS employees to combine work and family life. The withdrawal of that flexibility is leaving staff with no alternative in many situations but to leave the NHS. It is very difficult for them to afford shift-friendly childcare, for example. Those staff leaving is the last thing that we need or want, so will the minister help by making sure that the framework policies are being delivered on the ground in the NHS?

Jamie Hepburn

The Government takes very seriously the issue of family-friendly flexible working. That is why, for example, we fund and are a full member of the family-friendly working Scotland partnership.

In relation to the concerns that Alison Johnstone has raised about the impact on the overall workforce, I would observe that we have more staff in the workforce now than we have had in the past. Nonetheless, I take on board her point. As an Administration, we promote flexible working arrangements to our own workforce. If there is a particular issue that she has identified in NHS Lothian, I will be happy to hear from her about that. Of course, NHS Lothian is an employer in its own right, but she can write to me and I will be happy to investigate the matter.

Oil and Gas Industry

To ask the Scottish Government what support it can offer to companies affected by the downturn in the North Sea oil and gas industry that are not based in the north-east. (S5O-01207)

The Minister for Business, Innovation and Energy (Paul Wheelhouse)

I attended Offshore Europe 2017 on Tuesday with the Cabinet Secretary for Economy, Jobs and Fair Work, Keith Brown. At that event we met individuals and companies operating across the whole of Scotland that were showcasing a range of technologies, products and services that are used in the oil and gas industry both in the North Sea and globally. Many of those companies are benefiting from support and account management services that are provided by Scottish Enterprise and Highlands and Islands Enterprise. That supplements relevant support that they receive through the business gateway services that are delivered through local authorities.

In addition, our £12 million transition training fund has funded training opportunities for more than 2,400 individuals in the sector who have been faced with redundancy. Additional training programmes have been procured by the fund to create more than 700 employment opportunities across Scotland.

We have also provided a further £12.5 million to support innovation and business resilience; that support is available to businesses across Scotland. It includes £10 million of SE funding to help firms take forward vital research and development that supports innovation and improved productivity. To date, around 111 innovation projects, with a total project value of £43 million, have benefited from increased funding of around £16 million by the Scottish Government so far. We have also provided targeted support for business resilience reviews from industry experts, with over £2.5 million invested in that commitment to date.

Our competitive non-domestic rates package also targets support where it is most needed, including around £660 million of rates relief this year. In accordance with the Community Empowerment (Scotland) Act 2015, councils are now able to apply further targeted reductions in business rates, in response to their local economies’ needs.

Alex Cole-Hamilton

I thank the cabinet secretary for his answer, and I am grateful for the time that his colleague Keith Brown gave me when we met in June to discuss the difficulties that were faced by Edgen Murray Europe, which is a significant employer in my constituency that manufactures steel components exclusively for the oil industry. It has just seen a prohibitive rise in business rates during one of the worst periods in its history. Not being based in the north-east, it does not qualify for the kind of support that firms that are based there currently do. It is not alone. What additional help can the Government offer to those companies that are based outside of the north-east but depend on the oil and gas sector and are struggling in the current environment?

Paul Wheelhouse

Certainly I would be happy to discuss the needs of the business in Alex Cole-Hamilton’s constituency that he mentions. Keith Brown and I are involved closely in the work of the Scottish steel task force, and we are looking to support businesses not only in the oil and gas industry but in the steel industry and more widely in the economy. There might be measures that we can take to give support through that route.

With regard to business rates, the member will have heard the finance secretary refer to his statement, which is coming up shortly in Parliament. We will also see more in response to the Barclay review. I hope that, between the work that the finance secretary can do on business rates and the work that the economy team can do to support individual businesses using the enterprise agencies, we can support the important employer in the Edinburgh Western that Alex Cole-Hamilton mentions.

Clare Adamson (Motherwell and Wishaw) (SNP)

Does the cabinet secretary agree that the United Kingdom Government’s lack of support for the oil and gas industry, which was most recently evidenced by its failure to appointment an oil and gas ambassador, is shameful and harmful to the workforce in that industry?

Paul Wheelhouse

In January 2016—in a pre-election mode, perhaps—Prime Minister David Cameron gave a UK Government commitment to appoint an oil and gas ambassador to help ensure the best possible access for Scottish and UK companies to markets overseas. That has clearly not been fulfilled, which was a source of embarrassment to Richard Harrington when he appeared in Aberdeen last week.

Scottish Development International, importantly, continues to work with Scottish companies to offer significant financial incentives and other assistance to help businesses access international markets. However, the lack of UK Government support is concerning, particularly when the industry has set itself an ambitious target to generate additional revenue of over £290 billion by extending the life of the North Sea and maximising supply chain sales to international export markets. It is important that the UK and Scottish Governments get our act together collectively. I am confident that we are doing everything that we can; we need to see the UK Government follow through as well.

Youth Employment

To ask the Scottish Government how the youth employment rate in Scotland compares to the United Kingdom as a whole and the rest of the European Union. (S5O-01208)

The Minister for Employability and Training (Jamie Hepburn)

Scotland performs strongly on youth employment, compared against both the United Kingdom and the rest of the European Union. The latest statistics, which were published by the Office for National Statistics on 16 August and cover April to June 2017, show that Scotland’s youth employment rate is 5.3 percentage points higher than that for the UK as a whole. The most recently available internationally comparable data show that Scotland has the third highest youth employment rate of the 28 EU countries. Scotland’s youth unemployment rate was the third lowest of the 28 EU countries in quarter 2 of 2017, compared with quarter 2 of 2007, when it was the 14th highest.

I thank the minister for that positive response. Will he provide detail on what support is being given to young people in Scotland to help them to find work?

Jamie Hepburn

Each year, over £8 billion is spent in Scotland, between the Scottish Government and its agencies and local government, on all forms and across all stages of learning and training. That ensures that our young people are best placed to take advantage of opportunities in the workforce. The latest annual participation measure report, which was published last month, shows that our policies are working, with 91.1 per cent of 16 to 19-year-olds participating in learning, training or work.

As I have just set out, the labour market is performing well in Scotland, and our focus now is on helping those who face the greatest barriers to work. We are doing that through our youth employment strategy, which is implementing the recommendations of the commission for developing Scotland’s young workforce, and through a range of other measures. For example, since 2011, we have provided the Scottish Council for Voluntary Organisations with more than £50 million to deliver the community jobs Scotland programme, which has supported more than 7,500 young people into job training opportunities across all 32 local authority areas.

With the aim of providing long-term investment for maximum social return, we have also invested £36.44 million since 2008 in Inspiring Scotland’s 14:19 fund. Working with third sector organisations, that fund has to date supported 27,000 young people into positive destinations. Of course, we continue to support local authorities to deliver activity agreements, which are a key component of the opportunities for all offer. Last year, we saw an increase in progressions from activity agreements to positive destinations.

There are clear positive signs, but all members can be assured that the issue remains an important focus of my work.

Does the minister agree that youth unemployment remains a significant challenge? If so, how does he justify the cuts to schools and training in this year’s budget?

Jamie Hepburn

First of all, I welcome Mr Halcro Johnston to his role. This is the first opportunity that we have had to interact with each other in that regard.

I have just set out a considerable range of activity that we are undertaking. I of course concede that, given our on-going commitment to the agenda, we need to focus on particular areas relating to youth unemployment, but we are moving in the right direction. We continue to invest significant resource in training objectives. For example, this year we will increase the number of modern apprenticeship places available, with additional revenue going to that.

Despite Mr Halcro Johnston’s failure to welcome where we are right now, he can be reassured that, as I said to all members, the issue remains a considerable focus of my role.

Property Market (Effect on Economy)

To ask the Scottish Government how the performance of the economy is affected by the property market. (S5O-01209)

The Cabinet Secretary for Economy, Jobs and Fair Work (Keith Brown)

The property market plays an important role in the Scottish economy. During 2016, the real estate sector accounted for 10.6 per cent of Scotland’s economy in terms of gross value added and grew by 1.7 per cent in real terms. That measure covers not only services that are provided by estate agents but the economic value that is added from rented and owner-occupied housing, as well as commercial property. I am happy to provide more detailed information on those sub-sectors if they are behind the member’s question.

Additionally, Scottish Government statistics show that more than £8.3 billion was spent in 2016 on the construction of new dwellings and improvements to dwellings. A well-functioning property market also contributes indirectly to economic performance, as the availability of affordable housing improves the functioning of the labour market by enabling thousands of households to take advantage of job opportunities in different parts of Scotland.

Gordon Lindhurst

This summer, the Scottish housing market was in a serious slowdown and was reportedly stagnating in July. Government policies such as land and buildings transaction tax are stifling investment in the middle of and at the higher end of the market, which is resulting in a lack of mobility to allow people to purchase lower-priced homes. Does the cabinet secretary agree that, to improve the economy, the Government needs to fully reform its approach to taxation and taxes such as LBTT?

Keith Brown

Questions about LBTT are really for my colleague Derek Mackay. However, Gordon Lindhurst mentioned housing statistics, and he will have seen the prosperity index, which was published recently. It said that more stable growth in house prices in Scotland than in the rest of the United Kingdom contributes to greater affordability of housing. It also said that, during the first seven months of this year, residential transactions with a value of more than £40,000 were up by an annual 5 per cent in Scotland compared with 4 per cent in Wales and 3 per cent in Northern Ireland. In England, those figures were down by 6 per cent. There is therefore some evidence of success and of the fact that LBTT advantages those who are further down the housing chain, which is good for employment, as I said.

I have one final thing to say on housing growth and how it affects the economy. I have been overwhelmed by Conservative congratulations and good wishes on the completion of the Queensferry crossing, and Conservative members will know that chambers of commerce in Fife and developers are keen to see how they can maximise the Scottish Government investment in that infrastructure project to the benefit of the housing market. I would have thought that Conservative members would welcome that.

I have a question about LBTT for the cabinet secretary. Will the on-going monitoring of LBTT by the Scottish Fiscal Commission take into consideration the impact of the property market on the economy?

That question might really be for the other cabinet secretary.

Keith Brown

Yes—I just repeat that Derek Mackay is responsible for LBTT.

Because of its previous devolved taxes forecasting role, and for other reasons, the Scottish Government closely monitors LBTT transactions and the revenue that they bring monthly. As has been mentioned, the position depends on conditions in the housing market and the wider economy.

As the member knows, the Scottish Fiscal Commission is independent of the Government. It is therefore a matter for the commission to determine its approach to fulfilling its remit. It published its forecast evaluation report for 2016-17 and outlined its current approach to forecasting in separate publications on Tuesday.

As I said in response to the member who asked the previous question, LBTT minimises the impact on the property market by ensuring that everyone who buys a property that costs less than £325,000 pays no tax or less tax than they would under the UK stamp duty land tax. The Scottish Government has taken up to 10,000 house purchases out of tax, which would be a tax cut in Tory language, as we have a zero per cent tax threshold of £145,000.

Those measures are meant to help the housing market in Scotland, and particularly the affordable housing market, in addition to what we are doing with social housing. The Scottish Government has a good track record.

Capital Acceleration Programme

To ask the Scottish Government what the impact has been of the capital acceleration programme. (S5O-01210)

The Minister for Business, Innovation and Energy (Paul Wheelhouse)

The Scottish Government’s £100 million capital stimulus helped to support jobs and business activity across the Scottish economy at a time when economic uncertainty was heightened as a result of the European Union referendum. Such investment, which includes £10 million to support the delivery of capital projects for local economic development, provides the assets and infrastructure that will support future economic growth in Scotland.

Jackson Carlaw

I thank the minister for that response and, while he is still in his seat, I congratulate the Cabinet Secretary for Finance and the Constitution on his recent 40th birthday—he does not look a day over 50.

When the capital acceleration fund was launched, the cabinet secretary indicated that there would be an additional £100 million of funding in that financial year. Will the minister confirm how much of that £100 million was accessed? Will that funding continue to be available in the forthcoming year and in future years? If not, why not?

Paul Wheelhouse

I am sure that the member’s congratulations were well received by the finance secretary on his double-20, as he put it.

When we announced the spending, our intention was to accelerate spending and ensure a quick stimulus to local economies across Scotland. As at 31 March this year, £86 million had been spent, and the balance of £14 million is expected to be spent during the current financial year.

For some projects, a commitment was given to ensure that there was legal closure on the deal and that funding was committed for the current financial year, which is why spend did not happen before March 2017. We are looking for those impacts to come forward.

It is not possible to monitor the economic impact of some of the projects in which the spend is yet to occur in this financial year but, in response to a question from Jackie Baillie, Derek Mackay supplied a detailed list on 7 July that might help Jackson Carlaw. It sets out quite a lot of detail about the composition of each of the projects that have been commissioned and, where it can be done at this stage, the anticipated impact on employment. I hope that that will help the member to understand the nature of the projects and the expected economic impact in the longer term.

Scottish Growth Scheme

To ask the Scottish Government how the economy and jobs are being supported through initiatives such as the Scottish growth scheme. (S5O-01211)

The Cabinet Secretary for Economy, Jobs and Fair Work (Keith Brown)

As the First Minister set out in the programme for government yesterday, the Scottish Government continues to take action across a range of areas to support the Scottish economy and jobs. The Scottish growth scheme supports the economy and jobs by providing access to finance for companies that want to fund growth and export expansion. We launched the first product under the scheme—the Scottish-European growth co-investment programme—on 16 June. It is a £200 million initiative that brings together investment from the Scottish Government through Scottish Enterprise, from the European Investment Fund and from private sector fund managers. We expect to make announcements about further products shortly.

Liz Smith

The Government launched the Scottish growth scheme a year ago and trumpeted it as a £500 million vote of confidence in Scottish business. However, just a couple of weeks ago, The Sunday Times reported that the scheme has yet to pay out cash to any business. Will the cabinet secretary confirm when cash from the scheme will actually be made available to Scottish business?

Keith Brown

The finance that I mentioned is being made available now, but there are other parties allocating that cash, some of which we are in discussion with, and they are part of the process. That will also depend on the nature of the application and what further work is to be done for it.

It is positive that we are making the finance available. It adds confidence in the Scottish economy and is partly why, for example, gross domestic product is growing in Scotland at four times the rate of that in the rest of the United Kingdom. I would like to hear what the Scottish Tories have to say to the UK Government about how it must up its game to match what we are doing in Scotland in terms of GDP and growth.

It is important that we continue to provide such measures, and the growth scheme is important. I say to Liz Smith that applicants are engaging with the Scottish Government to access the funding, but we have to go through the diligence process. As soon as we have done that, we will make the information available to Parliament.

Willie Rennie (North East Fife) (LD)

The Scottish growth scheme was announced with great urgency last year. Is the cabinet secretary saying that money has been given out from the scheme? That is not what I understand to be the case. Will he clarify the situation? Has money been spent or has it not?

Keith Brown

If Willie Rennie had listened to my answer, he would have heard me say that we are engaging with applicants to the fund, which takes time. The process will also depend on the applicants themselves.

It is unfortunate that Willie Rennie takes his cue these days from the Conservatives in refusing to acknowledge the benefits to the Scottish economy of things such as the new bridge to Fife. I thought that he might have been interested in that, as it has been contributing to growth in Scotland. It would be good if he acknowledged such things from time to time instead of hanging on to the coat tails of the Tories, which seems to be his preferred method of operation.