Budget (Scotland) (No 2) Bill: Stage 3
We come now to stage 3 proceedings on the Budget (Scotland) (No 2) Bill. As there are no amendments to the bill, we will go straight into the general debate on motion S1M-1628, in the name of Angus MacKay.
Before I call the minister, I would like to point out a minor editorial change to the motion that has been published. It should read that the bill "be passed" rather than that it "is passed". We must get our grammar right.
Would members who are not taking part in this debate please clear the chamber quickly and quietly?
I had planned to begin today with
"We few, we happy few"
but I see that, unlike in previous discussions on finance and local government, members are still seated throughout the chamber. I hope that they will remain with us for the duration of the debate on this important topic.
Today's is the final debate in this year's budget process. It has been a long process, frustrating at times, but a fairly valuable learning experience for everyone involved. The key point that emerges is that this Executive is delivering a record £18.4 billion budget for Scotland, for the first time, in our own Parliament. That in itself should be a rewarding achievement for everyone concerned.
The process began last April with the publication of the first annual expenditure report. That document set out the broad strategic direction that the Executive intended to take and showed our plans for 2001-02. As well as setting out our expenditure plans, the annual expenditure report was our first attempt to draw those outside the usual parliamentary groups into the budget setting process. We deliberately set out to get a wider range of views; the 170 written responses that we received demonstrate that that was achieved.
To reinforce the involvement of those who are not usually active in the budget process, we took further steps—including four meeting days in Dumfries, Aberdeen, Gourock and Fort William. Those meetings highlighted the impact of the budget on those areas and gave people the chance to raise issues that affect them locally, but which had perhaps not registered in a national budget setting process. The meetings were well attended and raised issues including local government, transport and the elderly. The days brought an important regional and local balance to the budget process, so I am happy to give Parliament a commitment that we will repeat them this year.
Once we had considered the views received from the consultation, we got down to the difficult business of creating a budget for 2001-02 and, as a result of the spending review, setting out our plans for 2002-03 and 2003 04. The spending review delivered record levels of public expenditure; by 2003-04, public expenditure in Scotland will rise above £22 billion. That record public expenditure is built on the success of the Government's macroeconomic framework, which has delivered very sound public finance alongside the essential foundations of low inflation and interest rates to achieve high and stable growth and employment in Scotland and the UK. In Scotland, that has resulted in low unemployment and sound growth. All those things allowed the chancellor to deliver a review that guaranteed additional resources for priority areas.
I will not give way at this stage.
In Scotland, health, education, transport and local government have all benefited from the record level of increase in public expenditure. In addition to the double-digit increases that the main spending programmes received, the spending review allowed us to act prudently and create a reserve.
The fact that we have a reserve has generated some grievous excitement on the SNP benches. Let me set the record straight on the reserve. First, the Executive's rights of access to the UK reserve remain as before. They are the same as those of English departments and are set out in section 9 of the statement of funding policy.
Secondly, access to our own reserve will be through a three-stage process. Departments will normally approach me with requests for additional funding; final decisions on such requests will be taken at Cabinet and the budget revisions that result from Cabinet decisions will come to Parliament for approval.
Thirdly, our reserve is small and is designed to deal with emergencies and one-off non-recurring items. That way the reserve in future years is protected. If we use the reserve for recurring items, the reserve is diminished in this year and all future years. Doing so—as I think Andrew Wilson has suggested—would not be prudent.
I welcome that clarification. Given the minister's previous statements on the reserve, it is a step in the right direction. Will he confirm that the reserve is a recurring item of expenditure in that allocations will be made to it year in, year out? Will he also tell us what the difference is between a reserve in Scotland that can be used for small, one-off emergencies and making application to the UK reserve, which is also for small, one-off emergencies? If there is a Scottish reserve, under what circumstances would the UK reserve be applied to?
The whole point of having a reserve is to deal with unforeseen circumstances. It is slightly bizarre of Mr Wilson to ask me to predict those unforeseen circumstances today. On his other point, the reserve cannot be recurring if, as he has suggested, we commit it on a recurring basis to funding, for example, free personal care. The whole point of the reserve is that it exists to deal with the unforeseen.
I was not asking the deputy minister to say what the unforeseen circumstances might be—the point I was making is that a UK reserve exists to deal with small, unforeseen circumstances. What is the difference between applying to the UK reserve in those circumstances and applying to a Scottish reserve? If we, unlike other Government departments in the UK, have a reserve, under what circumstances can we then apply to the UK reserve?
When the emergency happens, I will let Andrew Wilson know.
The budget meets the needs of the Scottish people. It provides for NHS Direct, to provide everyone with access to medical advice 24 hours a day; for internet and e-mail access for all schools and improving all school pupils' access to modern computers; and for enhancement of the trunk road network to improve people's journeys. Those are just three concrete ways in which the budget will change and improve the lives of people in Scotland—they will affect the lives of everyone in Scotland for the better.
However, the budget process is about more than additional allocations to programmes, welcome and substantial though they are. It is also about ensuring that we get maximum benefit out of all our funding. The baseline budget for the current year rose from £17.6 billion to £18.4 billion as a result of the spending review—a welcome additional resource.
I have set out our best value and budget review programme because it is essential that our overall spending pattern matches our policy priorities and that the fixed budget delivers more. In other words, although it is important to allocate the £800 million extra, it is even more critical to have a thorough, recurring and properly constructed process to review the £17.6 billion baseline, which constitutes the vast majority of our expenditure.
The best value approach will consider the whole range of Executive spending and will scrutinise what we are spending, why we are spending it and what that spending delivers. We will examine cross-cutting issues such as digital Scotland as well as areas of programme spending. Best value will aim to deliver more for the existing spending or the current service for less. The purpose is to create flexibility within a fixed budget so that we can meet more of the needs of the Scottish people—not for the sake of it, but so that we can tailor more of our money to our key priorities: supporting employment and training, tackling crime, beating drugs and improving our economy.
Will the minister give way?
Will the minister give way?
I will give way to Mr Davidson.
On Friday, when the First Minister visited Aberdeen, he spoke at the business breakfast run by the chamber of commerce. The convener of Aberdeenshire Council asked him about local government spending. The Minister for Finance and Local Government talks about flexibility in operation, but the convener of the council was complaining about the lack of flexibility—by the time additional burdens have been met, the council will have received an increase of only 1 per cent. Would the minister like to comment on that, given that the two points do not seem to agree?
I think that I am experiencing a personal "Groundhog Day"—I thought the local government finance debate was yesterday. Mr Davidson seems to be stuck in a time warp.
Is it not part of the budget?
Of course it is, but we had more than an hour and a half to discuss the subject yesterday. If the member does not mind, today, I will concentrate on the totality of the budget.
I give way to Mr Wilson.
I thank the minister for allowing me to intervene—and on a more relevant point. Why has it taken the Executive 18 months to implement the idea of best value in the Scottish budget? Why did the Executive not seek to make those improvements on its entry to office, given that it was the SNP policy and we would have been delighted for the Executive to copy it?
I am aware that the SNP has fallen into the habit of claiming every successful policy that the Executive promotes—that is no wonder, because we are a very successful Executive. However, it took me less than two months to introduce the concept of the best value and budget review group, which built on the sensible and direct suggestion made by my predecessor, Mr Jack McConnell, that we should address best value. The member will find that both finance ministers in the Parliament so far have taken the issue of best value very seriously in both theory and practice.
We are considering a new budget process, which is based on four principles. The process considers public service delivery to meet the needs of citizens, rather than service providers. It ensures that public services are of the highest quality and efficiency and must match the best anywhere in the world in their ability to innovate, share good ideas, control costs and, above all, deliver. We are seeking to ensure that information and communications technology is harnessed to improve public services. We are also trying to ensure more joined-up working, geared towards promoting a culture of improvement and innovation in public services.
Those principles have underpinned the budget process and will provide the foundation for the next budget process. We will continue to consult to identify people's needs. We will continue to work to ensure that best value delivers efficient and truly world-class services. Our modernising agenda, backed up by real investment, will continue to harness information technology. We will continue to develop our cross-cutting agenda to deal with issues such as drugs, social inclusion and equality, that do not fit easily into traditional departmental structures.
As many members are aware, the process has been long but rewarding. It is a process that has delivered a budget bill of some quality and impact to this chamber. I am proud that, again, this partnership Executive, this Lib-Lab coalition, is using this budget to deliver on our policy priorities and our commitment to achieving social justice in Scotland. The bill will make a substantial difference to the lives of everyone in Scotland, and I commend it to all members.
I move,
That the Parliament agrees that the Budget (Scotland) (No 2) Bill be passed.
The SNP will not put any obstacle in the way of the bill today, even though we believe it is a poor shadow of what budget legislation ought to be in a Scottish Parliament. In saying that, I am making particular reference to the lack of financial powers that the Executive has at its disposal to benefit the people of Scotland. The minister acknowledged as much with his recent announcement of a working party to scrounge around the deeper recesses of departmental spending to find any little pots of money that are squirreled away to fund what passes for discretionary spending by the Executive on matters such as student support, teachers' pay and, perhaps, personal care for the elderly.
As my colleague Andrew Wilson intimated, I recall members pouring scorn on SNP plans to release value from the Scottish block in a systematic way to fund the abolition of tuition fees and the restoration of maintenance grants. It would seem that the minister has been panicked into adopting SNP policy. Better late than never, I suppose. The minister could make a useful start by taking an axe to the overblown structure of spin doctors and special advisers, who would be on short rations by now if they were paid by results. A self-denying ordinance on glossy brochures would also be a good way of cutting the crap, as one of the same indelicately put it.
For the sake of argument, let us assume for the next few minutes that this Parliament was vested with fiscal autonomy rather than the less-than-parish-council powers that it has to make do with. For a start, we would be referring to the real economy out there, how to manage its growth and how much of our national income to devote to spending on public services.
I understand the direction that Mr Ingram is taking, but for the sake of reality, could we spend a few moments considering the actual powers and the actual budget, because the nationalists have not spent much time doing that at any stage?
I want to discuss the impact that this Parliament can have on people in Scotland. If the minister wants to talk about his powers in this Parliament, that is fine.
You must speak to the motion, Mr Ingram.
Yes.
Some of Mr Ingram's party's spokesmen talked about housing debt this morning. Will he clarify for the Parliament how he would deal with the housing debt and how he would pay for it under the rules with which the minister has asked us to deal with it?
The Presiding Officer has just told me to speak to the motion.
You have to speak to the motion, Mr Ingram.
Yesterday, the Government released the latest gross domestic product figures for the Scottish economy, which showed growth of only 1.6 per cent in the year to the third quarter of 2000, compared with 3.4 per cent for the UK as a whole. That confirms that the Scottish economy is crawling along at a sluggish rate under new Labour, far below our potential and well behind the rest of the UK, while other small nations' economies race ahead.
Will the member give way?
Not just now.
As was highlighted in last week's debate on the Borders textile industry, manufacturing in Scotland has been particularly badly affected. The sector as a whole has been in recession for three of the past four quarters—so much for the benefits of a Scottish Chancellor of the Exchequer.
Will the member give way?
I am sorry, but I have to get on.
The fact remains that UK economic policy remains driven by the needs first, last and always, of the south-east of England, centred on the City of London. That is why we have consistently had exchange rate levels that hamstring the competitiveness of our manufacturing industry. The culture of greed has also been pandered to, with successive Governments cutting income tax, which benefits the wealthy most while maintaining, and even increasing, the overall tax burden through stealthy indirect taxation, which hurts the least-well-off most. I am sure that a majority in the Parliament would support significant moves to redress that balance and increase investment in public services well beyond the narrow scope of the bill.
It remains a fact that, at the end of the budget period, the Government will devote less of the nation's gross domestic product to public spending than was spent when the Tories left office.
I am sorry; I have taken several interventions.
That issue represents a double whammy for the hundreds of thousands of people—many on below-average earnings—who deliver the vital public services on which our society depends. We know that public spending from the Scottish budget—about 50 per cent of it—focuses heavily on public sector pay. As growth in GDP is accounted for by growth in profits and salaries, it is clear that if public spending lags behind GDP growth and falls as an overall share, public sector pay and employment will be subject to severe pressure, even in what the minister claims is a period of record cash spending.
What measures would a fiscally autonomous or independent Scottish Parliament implement to turn round those trends sustainably? We need look no further than across the North sea to the example of our fellow beneficiary of oil and gas fields under its waters—Norway. After 25 years of oil and gas extraction from the North sea, we are still only at the midway point of extracting recoverable reserves. The Treasury in London has been paid £160 billion. Scotland's per capita contribution to the UK has far outweighed any benefits that we have accrued from the much hyped higher identifiable public spending per head, which in any case is now being subjected to the ever tightening Barnett squeeze.
Will the member take an intervention?
No I will not, because I am reaching the end of my time.
The unionist propaganda put about by our opponents that an independent Scotland could not pay its way in the world or would be poorer for getting rid of the London connection is not only unpatriotic but patently untrue.
Will the member take an intervention?
Sit down please, minister. It is my turn to talk to you.
In the next two years, Scotland will contribute a combined surplus of revenue over expenditure through the exchequer that will amount to £7.7 billion. Instead of allowing that surplus to be squandered as it has been over the past 25 years, we should invest a large chunk of it in an oil fund, as the Norwegians do.
I have said that I will take no more interventions. I am summing up.
The Norwegian fund was started in 1995 and is worth £30 billion—a third of Norway's annual GDP. By 2006, the total value of the fund will overtake the value of Norway's share of the remaining North sea oil reserves.
Fiscal autonomy would allow us to do the same. The SNP's proposals for a future generations fund along the lines of the Norwegian model show that income from such a fund could be worth more than £1 billion a year within five years, and much more than that in the future. Through such a measure, the Parliament could make a difference to the lives of every family and individual in Scotland.
Like the SNP, the Conservatives will not impede the bill, as we have said. However, as I have said, the budget process failed this year. The committees did not have the opportunity for scrutiny that they should have had. I appreciate that the problem lies in the comprehensive spending review, but perhaps when the Deputy Minister for Finance and Local Government winds up he will share with us the Executive's views about how the process can be made effective.
The Minister for Finance and Local Government talked about best value. It is interesting that he did not go into great detail about how the Administration's spending will be dealt with to obtain best value. I look forward to further comment on that. I wonder, given recent comments—especially from spokesmen for the Executive—whether he believes that the problems in local services in Scotland are due to poor management by councils or due to the poor way the Executive co-operates with councils.
There has been much this morning from Margaret Curran and others about how well the Executive co-operates with councils, but that is not the message that we are getting on the ground. Perhaps the minister might enlighten us about whether the Executive is considering the introduction of the tartan tax. It would be helpful if we knew about that, so that we can prepare Scotland for the shock—as it would turn Scotland into the most highly taxed part of the UK.
I am grateful for the opportunity to clarify that we have absolutely no intention of introducing any kind of increase in income tax. Following the 1978-style election broadcast from Mr Ingram, perhaps Mr Davidson would be interested in joining me in speculating at what level Mr Ingram thinks income tax should be set.
A more appropriate question for Mr Ingram would be how the SNP would pay for Scotland's share of the national debt that is spent on behalf of all of us in the UK if Scotland became independent.
Order. Members will remember the last time we considered this subject, when I had words on the matter of party political broadcasts. I am quite prepared to allow large illustrative examples, provided they lead analytically towards the motion before the chamber.
Am I allowed to talk about Scottish taxation at all?
Yes.
Thank you.
On the subject of Scottish taxation, we would abolish the graduation tax and return to the uniform business rate. Why should Scottish businesses pay a higher poundage than the rest of the UK? After the election, when we are restored to power, we will introduce a rates relief package throughout the UK for essential small rural businesses.
New Labour has frequently stated that "Things can only get better." The question is, for whom? Is it for criminals, as new Labour's spending on law and order has been quite pitiful? Our police forces remain under-resourced, despite the pressure on them to deliver their service. Police numbers are down. This week, the SNP came out with a comment about 1,000 new officers; when we were last in power, we put 2,000 additional officers into the Scottish police forces.
The member is correct to say that there are fewer police officers on the beat today than when the Conservatives left office, but does he not take any responsibility for that, given that that comes as a result of the Labour party copying his party's spending plans?
It has not done so on that subject. We made a commitment to restore police numbers early on and we will continue to be committed to that. It has always been a serious matter for us that the Scottish people should live in a safe and just society.
If this Administration were to achieve a record number of police officers during its period in power, would Mr Davidson welcome that as an outstanding achievement that is well in excess of anything achieved by any previous Government in Scotland?
What I would applaud is the achievement of what the police have asked for, which is that long before 2004 the Government restores police numbers to the level they were at when we left power.
The SNP will support us—I am not sure about the Liberals—when we say what a shame it is that there is nothing in the budget on funding for Sutherland. I will come to that later. Much has been said about several issues that relate to different parts of the spending, but the issue is not so much about tax collection as about spending what is already in hand. In the health budget alone, there must be a clearer indication that there is spending of the underspend from last year; our trusts in particular are very short of money.
David Davidson refers—not for the first time—to an underspend. Will he confirm that he recognises that every penny that was carried over from last year's health budget to this one is either being spent on continuing capital projects or has been allocated to areas of health expenditure such as delayed discharge and other older people's services, and the needs of drug users? Given that his party is on record in the news releases as saying that it would pay for free personal care by utilising that money, can he tell us what he would have done?
It is what else we would have done. We would have reduced bureaucracy in the administration of the health service by the abolition of the health boards, as we think they have outstayed their welcome. We would have co-ordinated the social care and health budgets and delivered them uniformly. There are many thousands of millions of pounds involved in that process. I am sure that we could make a major saving there.
Michael Portillo advocates cuts of £8 billion in his proposed UK budget. The Scottish consolidated fund's share of those cuts would be about £400 million a year. After David Davidson has spent the extra money to implement the recommendations of the Sutherland report as well as all the other things that he has promised, where will the £400 million-worth of net cuts come from?
If Alex Neil looks carefully at the comments that have been made—the press is well aware of them and there are lists and lists of them on the internet—he will find detailed discussion on how money will be saved, where it will be saved and where extra resources will be gained. We remain committed to ensuring that there will be real-terms increases in public services when we are returned to power.
Is my time getting on a bit, Presiding Officer?
You have an amplitude of time. I would suggest another two or three minutes.
That is very kind of you.
The other thing I am a bit concerned about is that when we track the spending proposals the minister and his team give us, we seem to get back to the recycling of information. The health minister told us of another £100 million this week, on drugs spending—which it is quite clear is what was announced to the chamber in September 2000. If we are to have clarity and transparency in the budget process, the minister will need to get a hold of some of his colleagues and ensure that they make it clear that they are only redefining an existing spend.
It is not often that I come to the rescue of the Executive, but that is completely unfair. As Mr Davidson must be aware, Mr Gray made it quite clear in his announcement this week that he was detailing how the £100 million would be spent, and he referred to the fact that that money had initially been announced last September. Why does Mr Davidson not just read what the minister said?
If that is the case, the minister should ensure that the press reports him accurately.
Will Mr Davidson give way?
I am sorry, but the Presiding Officer has asked me to wind up.
Angus MacKay talked about infrastructure, but I am afraid that Labour is still not back to the same level of infrastructure spending that the Conservatives promised at the last election. Scotland's taxpayers and motorists have borne a huge burden of taxation under Labour, and Scottish business groans under the bureaucratic burden while our public services are being squeezed. Much of the largesse in the budget comes from increased taxation across the board, on everything from pensions to petrol.
New Labour has introduced new taxes on marriage, on mortgages—despite the 0.25 per cent reduction in the interest rate this afternoon—on petrol and on pensions. The list goes on. Since the general election, Gordon Brown has raised the tax burden by £25 billion. Ordinary families in Scotland are paying almost £700 a year more in tax and those burdens will be increased by council tax increases across Scotland. Savings are down by two thirds and the tax burden is up by 6 per cent.
The Conservatives will help by slashing taxation on savings. High taxation under Labour makes the cost of doing business higher and, unless addressed, will put at risk future jobs, growth and prosperity. Under Labour, Scots work harder, pay more and get less.
I am happy to support Angus MacKay's budget. It is a good starting point for the activities of the Executive and the Parliament. Its presentation has been improved through the efforts of my predecessors on the Finance Committee but, as a new member of the Finance Committee, I would like to pursue further improvements. We have already started to do things better than they are done at Westminster, but the presentation of the budget, although doubtless comprehensible and satisfactory to ministers and civil servants, is not comprehensible or satisfactory to the Parliament.
The budget is the collective wisdom of the ministers as to how their £16 billion, or whatever it is, should be spent in the best interests of Scotland, and the Parliament must be able to scrutinise it. David Davidson mentioned that there may be particular reasons why it is difficult to scrutinise the budget this year, because additional money came from the Chancellor of the Exchequer during the year. However, we must present the figures in such a way that not just MSPs, but interested people outside, can scrutinise them.
The McCrone money for improved pay and conditions for teachers, for example, should figure in the budget. As far as I can see, it does not. If I have missed it, I am sure that the minister or somebody else will be happy to tell me so. I accept that, for tactical negotiating reasons, the Executive was not too keen to publish a figure because then the teachers would have known what to ask for, but it should be possible to track an issue like that. The reforms that arose from the Cubie report—the end of student fees and the start of grants to students from the endowment fund—should also appear, in future years if not the coming one. It should be possible to track policies through the document, which is not possible at the moment.
My second suggestion could perhaps be implemented through the committees, rather than the plenary. I will take an example at random. The document says that an Executive aim is nearly to double the number of closed-circuit television cameras for public control, safety and so on. In a well-organised establishment, we would get a report that told us whether, once the number of cameras was doubled, crime had halved or safety had improved. Such a report should be produced and presented to the committees—the Audit Committee or the relevant justice committee.
The Executive is keen on social justice, which is important. Although there is a budget line for social justice, the items that are being paid for and the new projects that are related to it are not clear. We should bring together, in a sensible way, all the money that goes on trying to improve the lives of our communities, rich or poor.
If a considerable number of members took the view that, for example, we should put more money into diversion from prison and less money into prisons—we are moving in that direction, but say that some people wanted it to happen more—the figures should be clear, so that they could press on the issue with knowledge of the figures.
There is always an argument about the balance of expenditure between the criminal side of tackling drugs—enforcement and detection—and the medical side—treatment and trying to get people off drugs. That is an important political issue and the figures should be set out clearly. In particular, it is wrong that the development department covers so much Government activity. That should be reconsidered.
Finally—I have spoken to the minister about this—I am keen that the Finance Committee should examine the funding of the voluntary sector, which is broken up between different bits of the budget. We must consider how the sector is dealt with to ensure that there is a partnership between central and local government, charities, the lottery and all sorts of other people, including the voluntary sector itself. That would be a good thing for the Finance Committee to examine and would improve the presentation of the budget, making it more sensible. Then we would know what was spent on the voluntary sector.
We can still improve the system, but the minister deserves credit for the progress so far. The budget is a fair basis for the Executive's and the Parliament's activity.
We move to the open debate. Five members want to speak and they can reasonably expect to have five minutes, or even a bit more.
We are completing this year's budget cycle today. As was mentioned, it is the first time that we have used the financial issues advisory group budget procedure. Donald Gorrie is right and I am sure that the Finance Committee, with the minister's support, will examine the budget process and streamline it further.
We must recognise how things have changed. I was told that in the whole of Scotland, only one academic—I should say that he was from Aberdeen—regularly contacted the Scottish Executive finance department about the budget. The process has now been opened up and requests for more information are coming in—although not thick and fast—and suggestions for the budget to be presented in a more transparent way.
Communicating financial information in easy-to-understand and attractive ways that hold the reader's attention is not straightforward. I see that we have our usual mass turnout in the chamber. Developing information that is accessible to the general public—from grannies to teenagers—as well as to the financial anoraks among us is one of the more important statements about the kind of Parliament and Executive that we want.
We want to know how the spending—as the minister said, the record spending this year of some £18.4 billion—translates into better services. We should talk not only about inputs and outputs, such as an increased number of teachers, but about the real outcomes, such as reduced illiteracy, increased numeracy, improvement in Scotland's appalling health statistics and raised productivity. Those outcomes will enable us to move away from being the heart disease capital of the world and towards, for instance, being a world leader in the use and exploitation of digital technology, in the front rank of the emerging global e-world.
We want to know about those outcomes. I was pleased that the minister emphasised how we can use new technology to drive forward the modernising government agenda to give us that level of information. That should give Donald Gorrie the cross-cutting information that he wants, so that he can see more easily how we are spending money on, for example, the drugs issue.
There is record spending in many different sectors this year. Local government has received an increase of 10.5 per cent in real terms over the next three years. That will allow local authorities to continue to repair the ravages of the Tory years and provide the services that contribute to improving the quality of life of Scotland's citizens.
I am grateful to Elaine Thomson for giving way. Is it a matter of regret to her that it will take until 2002 for the Labour party to deliver the same level of funding to local government that it had when the Tories left office?
I am told that that is not entirely accurate. There are some record increases in spending. Local authorities will announce budgets this year that are a considerable improvement on many previous years.
There is a 20 per cent increase in the communities budget, which will target money at our poorest communities through the better neighbourhood services fund, which will receive about £90 million over the next three years.
By 2003-04 record education spending across the Scottish budget will top some £5 billion. That is £1,000 for every woman, man and child in Scotland. That investment in the future will allow Scotland to succeed in today's and tomorrow's economies.
I will briefly address Adam Ingram's speech. It is disappointing that we constantly hear from the SNP that oil money will resolve everything. That does not recognise that the position that many of the Scandinavian nations are in with their oil fields—especially Norway—is different from the position that the United Kingdom is in with its continental shelf. It is not reasonable to propose that we base the budget on oil revenues.
Is the SNP really saying that we should open and close hospitals—
No, I do not feel like giving way.
Is the SNP proposing that we should open and close hospitals according to whether the price of oil is $8 per barrel or $32 per barrel? Actually, I want the SNP to answer some of my questions, so I will finish the next one and let Andrew Wilson in. Is the SNP proposing Scandinavian rates of income tax of about 40 or 50 per cent?
The whole point of a future generations fund is that at times of plenty—such as at present—money is put away to allow an income stream in perpetuity. Norway has enjoyed such an income stream from North sea oil, whereas in Scotland that income has come and gone under successive Westminster Administrations.
On Elaine Thomson's second point, the SNP position matches that of the Westminster Conservative MP, David Davis. The people of Scotland should be allowed to levy a 40 per cent income tax rate if they choose to do so. Although that is not the position we are outlining in today's debate, they should be allowed that choice.
Oil revenues are used to help reduce the country's national debt—something that Norway does not have—as well as putting extra money into the budget. I have not received an answer to my question. Does the SNP support 40 or 50 per cent tax rates?
The budget will begin to tackle inequalities and reduce the gap between rich and poor, and between urban and rural communities. Most important, the budget allocated today represents a huge increase in spending this year and in future years.
Adam Ingram mentioned last year's discrepancy in gross domestic product growth between Scotland and the rest of the UK. We grew at 50 per cent of the UK rate, which is important for the budget. If there were no such output gap—which is currently about 10 per cent in terms of GDP per head—the value of the Scottish economy would be about £7 billion a year higher. Furthermore, the public purse's share of that additional output would be £3 billion a year. If the output gap between Scotland and the rest of the UK can be closed, next year's budget could be £21.5 billion instead of £18.5 billion. Every member should be concerned about that gap between Scotland and the UK, which has existed for years—[Interruption.] No doubt that is Gordon Brown on the phone looking for advice. Every member should be concerned that the output gap is getting wider, not narrower.
It is important that we try to spend as much as possible of that £18.5 billion on generating economic growth in Scotland. I will give one small example, from the Scottish Enterprise budget, of where I believe our priorities are wrong. The gateway programme for start-up companies that was introduced by Scottish Enterprise last year gives each of those companies a computer worth £500, whether it needs or wants one. That is a complete and utter waste of money.
In comparison, only 1 per cent of the Scottish Enterprise budget is spent on export promotion in Scotland. The £6 million or £7 million that we spend through Scottish Trade International on promoting all Scotland's exports is less than the Danes spend on promoting the export of their bacon. If we reviewed that expenditure, we could get a bigger bang for the buck and use some of it to close the output gap between Scotland and the rest of the UK.
I repeat that we should not underestimate the importance of the output gap. As a nationalist I do not believe that we will close the gap until we get independence, which is another argument. However, if we can close it, Scotland will be better off to the tune of £7 billion every year.
I will pick up a couple of points that were raised by the minister and by the First Minister in his speech on the programme for government last week. I hope that the minister will respond in his winding-up speech. These are genuine questions, not attempts to score political points—although once we get the answers, I will no doubt try to score political points.
My first question is about access to the United Kingdom reserve. We know that we will have a reserve in Scotland as part of the Scottish budget, but how, when and under what circumstances do we get access to the UK reserve, which is a substantial chunk of money?
The second question that I would like the minister to answer concerns the budget review group that was set up recently as a result—I think—of the First Minister's unilateral promises on the Sutherland report. Can the minister tell us the remit of the budget review group? When will it report? What is the scope of the reallocation of funding that the group is looking at? Who is on the group? Will the outcome of its deliberations affect the content of the bill, particularly schedule 1?
Those are the key points that I would like the minister to address in his winding-up speech. I would love to go on to explain how, in an independent Scotland, we would use the oil and be much better off, but I will leave that for another day when I have a bigger audience.
It is a mark of the success of the Minister for Finance and Local Government and his counterpart at Westminster that only seven Opposition members are participating in the debate. Even David Davidson, who is normally an effective speaker, betrayed the fact that his heart was not in some of the criticisms that he was making. I will reflect on the differences between the Labour approach to economic policy over the past three or four years, and that of the previous Conservative Government, as they raise some interesting issues for the Scottish Parliament.
Under the Conservatives at Westminster, economic policy was geared towards financial management. In particular, it was geared towards monetary policy and the control of monetary policy. By contrast, when Labour took power at Westminster, responsibility for the exchange rate was handed over to the Bank of England so that it could take an independent approach, and the Treasury's role was transformed. Recent press comment has suggested that Gordon Brown is too powerful and that he is interfering in different areas, but he has fundamentally redefined the role of the Treasury.
The traditional Treasury role was to say no. Its responsibility was to deny resources that were needed in the health, education and benefits sectors. By progressively transforming people's lives through the introduction of initiatives such as the new deal, examining the benefit rates and considering ways in which the country's resources can be mobilised to meet social needs, Labour has displayed a markedly different approach from that adopted by the Conservatives.
Is Des McNulty saying that Gordon Brown is the chancellor who likes to say yes? If so, why did he say no to Sutherland?
One of the characteristics of devolution is that we make up our own minds about how we allocate the money that Gordon Brown's successful economic management has secured. If one looks across the range of things that we have been able to invest in in Scotland, between now and 2003-04 there will be growth of 14 per cent in real terms. That is an achievement of stability and sound economic management.
The challenge for us is not simply to take Gordon Brown's money and decide under which budget head it should be allocated; it is to think creatively about how economic and financial management can meet different kinds of objectives. The Government has wedded itself to social justice—that is what we are about and what we are seeking to achieve. Over the next two or three years, I want there to be, in the way budgets are laid out and money is spent, a more transparent mechanism for achieving social justice and a better system of distribution.
One point of correction—and I hope that it is not too flip—is that it is not Gordon Brown's money, but the people's.
If the Labour party is committed to social justice, why is it devoting less of the nation's wealth to public services this year than was being spent when the Conservatives left office?
Could you wind up please, Mr McNulty?
I repeat the point that there is a 14 per cent increase in spending in real terms and that there is a contrast between that and the £16 billion that the Tories, who are the real Opposition, want to take out of public services.
I have a criticism of the approach that the Government is adopting. The way in which our budget has been allocated means that there is a risk that issues will be driven by initiatives and addressed by the allocation of specific amounts of money. It is important that, in our budgetary management, we find ways of making our approach as joined-up as possible. That is not helped by departmentalism and a mechanism that simply allocates money to departments and to initiatives introduced by individual ministers. Ministers must be asked how they are taking forward the joined-up agenda, whether they can pool resources and whether there is a positive mechanism to allow them to get what Alex Neil calls a bigger bang for their buck. They can do that only by thinking creatively about how their budgets are managed.
I was struck by the minister's comments about the roadshow. Indeed, Mr McConnell came to Dumfries and, although it is always welcome to have ministers travelling around Scotland, if the public are to have faith in the gesture, they must be able to see a connection between what is fed into that process and what comes out. They must believe that their inputs make a difference. In Dumfries, for instance, people want the Government to change its funding proposals for the A75 and, if they were asked by the Government, they would say that that is the sort of thing that they want money to be spent on.
I agree with a point that Des McNulty made towards the end of his speech. He talked about the initiatives and funds that are available under various guises and which local authorities and other organisations may bid for. People are spending an enormous amount of time and effort bidding for a bit of money that, at the end of the day, must be matched. While there is a superficial attraction for the Executive in being able to announce that it is launching a new fund for this, that and the other, that ties a lot of people's time up and achieves only one or two objectives rather than the whole set.
I want to concentrate on information and communications technology. I feel strongly that budgeting processes in the Executive do not sit well with the acquisition of information and communications technologies. Such acquisition does not necessarily fit into the stovepipe approach that is often adopted in the budgeting process, in which it is difficult to account for the difference that moving towards e-government or e-delivery would make to the bottom line.
That process does not allow services to be evaluated against their respective provision costs in a big-picture way. People are too often drawn to existing budgetary measures, rather than towards promoting process engineering as the way forward. If we are to put e-government at the heart of the process, we must be able to look at things in a bigger-picture way, rather than regarding them as part of a stovepipe budgeting process. That includes taking new approaches. One of the interesting issues that the Enterprise and Lifelong Learning Committee discussed yesterday was the use of Government procurement as a basis for creating and leveraging demand, leading to private sector investment in ICT. As the Minister for Enterprise and Lifelong Learning accepted at that meeting, that will require fundamental rethinking of the procurement process. It needs more than just messing around at the edges.
If we are to go forward with information and communications technology, we have to think differently about how we relate to the budget process, even if we do not go as far as to implement an idea that I am still reasonably minded to endorse; that people should not get money unless they have satisfied certain criteria that relate to the electronic delivery of services.
I welcome the fact that an iterative process is developing between the Minister for Finance and Local Government—as was developing with the previous Minister for Finance—and the Finance Committee, after its 18 or 20 months of existence. That is helping to move the budget process forward effectively. We have not reached the end of the journey yet—there is a long way to go—but there is a welcome desire to move forward.
Before coming on to some of the budget issues, I found it astonishing to listen to what Adam Ingram said about the oil fund investment. I have a picture in my mind of Adam Ingram and Andrew Wilson in their dreams. Their worst nightmare is about being in charge of the Scottish economy and opening their newspapers one morning to find that the oil price has dropped to a new low because oil is no longer required. I am not claiming that the SNP says that its budget is based entirely on the price of oil, but it is irrational to say that a futures fund can be set up before the national debt is drawn down, as the Chancellor of the Exchequer is doing.
The setting up of such a fund is precisely what the Norwegian Government has done. In good times, with the plentiful supply of North sea oil, it is possible to invest. Ireland is copying that policy. Is not it a good idea that not only this generation, but future generations, should benefit from the bounty of North sea oil?
It seems rather bizarre, starting from a position of debt, to start a separate investment fund. If the national debt could be drawn down, the amount of interest that would have to be paid on it would reduce. That is an investment. If we went into a recession—we hope that we will not—and if public expenditure had to be maintained from such a fund, national debt could be expanded.
I am grateful to Dr Simpson for giving way a second time. Has it occurred to him that the interest on the Norwegian national debt is less than the annual return on Norway's investment fund?
I want to move on, as we are getting into a sterile debate.
The Conservatives' position on the budget is even more of a nightmare. Their combined proposals of tax cuts and increased public expenditure seem bizarre in an English context. In a Scottish context, in which the Conservatives now seem to be committed to universal free care and abolishing means testing for almost everything, their proposals seem quite beyond belief.
The cross-cutting issues are the most important. The minister referred to that in his speech. In health, for example, it is important that we do not look only at the 15 per cent increase in real terms over three years and the effect that that will have on the health service, but that—as the Scottish Council Foundation suggests—we consider the health impact of every budget. That is a positive thing to do. For example, measures such as central heating for the elderly have a health impact. I would like the budget and the budget statement to say for each element of the budget what the impact is on health. The Executive is very good at saying what its cross-cutting spending on drugs is. I would like such information to be laid out for each element of the budget so that we know what the target is for each department and what it will spend.
That practice could be extended to other areas, so that we could see the impact of the social justice targets that the Government is rightly setting itself, and how that links with the UK budget for objectives such as the elimination of child poverty. The Scottish people should be able to see integrated partnership working in practice. We should not be afraid of referring to the UK budget in our budget papers.
In conclusion, I welcome the budget as it is laid out. I welcome the progress that we are making on the budget process, but I do not believe that we have reached the end of that journey. We have a long way to go.
The Opposition spokesmen have demonstrated rather painfully how difficult it can be to see the wood among the trees when dealing with budgetary issues, but I hope that the chamber will forgive me if I speak deliberately about trees. There are a number of references in the bill—in section 3 and schedule 4—to the Forestry Commission. As I was partly responsible for the difficult circumstances that led to the previous Minister for Finance being dubbed "Lumberjack" by some unkind Opposition members, I draw members' attention to the anomalous position of the Scottish part of the Forestry Commission, which has caused some fairly serious budgetary problems this year and could well do so again next year.
The headquarters of the Forestry Commission is in Edinburgh. Most of Britain's woods are in Scotland, as is the vast majority of the Forest Enterprise estate. That should be good news, because until 1999 Forest Enterprise was a nice little earner, which more than covered the costs of the work of the Forest Authority and support for private sector planting and management.
However, as members will be aware, world timber prices collapsed in 1998-99, and Forest Enterprise can now barely break even, so grants for new planting and for native woodlands and so on depend now on funding from the taxpayer. That creates significant budgetary problems in Scotland. The Forestry Commission is a UK quango, with Chinese walls between its Scottish, English and Welsh components. It emerged last year that the English part of the Forestry Commission had access to extra funding from the UK Treasury reserve when things got difficult. Therefore, UK taxpayers—including Scots and Welsh taxpayers—are giving more support to England's comparatively small forestry sector, while the larger Scottish forest has to depend on its share of the Scottish Executive's Barnett block. Wales is in the same position as Scotland.
I will not disclose what happened in private discussions in Whitehall last year, but I happen to know that it took very hard work and a very long time to get £2.3 million extra from the UK Treasury reserve to compensate the Scottish Executive for part of that distortion. I observe merely that the commitment in the UK Labour party's manifesto was not to sell off large chunks of Forest Enterprise woods. The UK Government has an obligation to heed that undertaking on behalf of the whole United Kingdom, including Scotland. I urge the Minister for Finance and Local Government to take a tough line this year on behalf of the Parliament and of an industry that is very important to the economy and environment of rural Scotland.
Finally, I repeat the opinion that the position of the Forestry Commission as a distinctly anomalous United Kingdom quango ought to be reconsidered. The Parliament and the Executive should be able to take direct responsibility for the important Scottish components of the Forestry Commission, without the need for an obscure, complicated and unaccountable UK quango. As things stand, things have been difficult and there may be more to do on that issue in the future.
Having concentrated on the trees, I strongly support the wood in the form of the budget.
We now move to winding-up speeches, which will have to be kept to time. Donald Gorrie and Annabel Goldie have four minutes each.
I want to raise a point that I think has not been raised. I think that our ministers and the Parliament, through its committees, must negotiate with or take on the Treasury because of the very foolish rules that the Treasury applies to quite a lot of British public finance transactions, especially in relation to the use of capital and what the Treasury counts against public expenditure. The Treasury counts local authority self-financed expenditure, but that is entirely irrelevant to the national scene. It is money raised and spent locally at the wish of local voters and it has no effect across the board nationally. Our water authorities are quangos—they are public bodies—whereas the English water authorities are companies and are, therefore, out of the picture.
There are many other anomalies and rules that prevent us from acting sensibly. Successive Governments have invented schemes, such as the private finance initiative and the public-private partnership. Those schemes are often not a good bargain for the public, but are mechanisms for getting round the Treasury rules. Life is quite difficult anyway, but it is not at all helpful to make it harder because of some damned stupid rules. The Treasury must wake up—we are no longer living in the days when it existed to stop Charles II spending on his mistresses money that Parliament had voted for the fleet. We have progressed a little beyond that.
Much of public accountancy in this country aims to ensure that money is wasted legally—people do not worry whether money is spent cleverly or not, so long as it is spent legally. We must grow up and take a more intelligent approach, but we are often prevented from doing so by the Treasury. I know that the Treasury is not within the Parliament's control, but I hope that Angus MacKay will speak to Gordon Brown, who I am sure is a good friend of Angus MacKay's, and urge him to get a grip on those out-of-date rules, which often inhibit us from doing what we would like to do.
The debate has shown that there is no great opposition to the bill as it stands. The budget is a reasonable stab at what the Scottish Executive—or Government—and Parliament think we should be spending, but I am sure that we can improve its presentation, as other members have said.
I commend the minister for having got a good grip on the subject. I am sure that his officials work hard at the budget, but they must develop and become more transparent, rather than remaining opaque. I do not know whether individuals can be transparent or opaque, but members know what I mean.
We will all support the budget, but we must continue to struggle to get more intelligent rules out of the Treasury, so that we can run our affairs more sensibly.
I begin not with figures but with words. I see from the proposed change to the motion that the budget bill will "be passed". I suggest that that wording is defective. If the motion is agreed to, it will be a statement of laudable future intent, but it does not seem to me to convey immediate effect, although I presume that the Executive's desire is to pass the bill today. While I am not here to help the Executive, I submit that a better-phrased motion would read "that the Parliament agrees to pass" the bill.
I do not know whether my comments will help, but it occurs to me that the bill will require royal assent—that is when it will be passed.
We are indebted to Mr Wilson, but can we continue?
Presiding Officer, I lob those thoughts to you for your consideration.
The background to the budget process and the final stage of the bill still bears repeating. That process was inadequate because there was insufficient disaggregation, which meant that the Parliament's committees were unable to do their intended or proper job of scrutinising thoroughly proposed expenditure in each area of activity. That seems to me to be a serious criticism of the whole budget process. I hope that it will be addressed in the future.
The bill seems to be deficient because of that initial inadequacy. As the minister said, we are dealing with £18.4 billion of public money, which has been made possible only on the back of high taxation—tax on marriages, tax on mortgages, tax on petrol, tax on pensions, tax on business and a higher rate poundage in Scotland than in England. The public are entitled to know what the budget is about. The public are entitled to ask what they have in exchange for the tax take. As far as we can gather, they have 180,000 on the waiting list for the waiting list, and fewer police than they had in 1997. In addition, crime has gone up, prisons are closing and tuition fees are becoming a graduate tax to be repaid when graduates' earnings reach £10,000. It seems to me that that is a dismal message for the public and that aspects of the budget process and the bill deserve serious criticism. If the public were acutely aware of the specific content of the bill, they would be deeply concerned.
Without adequate disaggregation, what can we tell about the bill? Not a lot—but we can tell that the Executive's administration budget is to increase by 6 per cent. I say to the minister that I do not find that an especially attractive area of proposed expenditure. It is a sorry message for the people of Scotland to hear. Do they want to hear that expenditure on the Executive is going up to £213 million?
As my friend Mr David Davidson said, the Conservatives do not intend to stand in the way of the bill, but that is not to say that we do not have serious reservations about the process that has accompanied it.
It is with great pleasure that I sum up the debate on behalf of the SNP. The confidence in which SNP members hold their finance team is shown by the fact that they are willing to let us take part in the debate unaided.
We will have to consider the structure of the budget process in detail. The minister raised that point at stage 2 in committee and, although I cannot speak on behalf of the Finance Committee, I certainly think that that issue should be considered—especially as we have had a rather rapid progression through the stages at this time of the year. For example, stage 2 questions that were raised in committee have yet to be answered; we are now at stage 3. Clearly, those questions could be allowed to pass because they were not germane to the passing of the bill, but such a situation is not desirable.
In his opening speech, the minister referred to the fact that we were enjoying the outcomes of sound management of the economy. He said that, in his view, the Scottish economy was undergoing "sound growth". That is a surprise to me, given that figures released by the Executive yesterday showed that the manufacturing sector in Scotland was in recession and that the Scottish economy was in fact growing less than half as quickly as the economy of the rest of the UK. If that is sound growth, it makes me very upset indeed. What would the Executive consider to be fast growth?
The minister's view might have something to do with the fact that the Minister for Enterprise and Lifelong Learning, who is no longer here, has set an Executive target for inward investment—to drop from 19,300 jobs to 8,000 jobs. That struck me as a rather unambitious target for Wendy Alexander.
I am grateful to the minister for the comments that he made on the reserve. I think that we now have clarification that it is in fact a recurring line in the budget—despite his contradiction of that point at stage 2.
An interesting and pressing contribution was made by Mr Home Robertson on forestry—and I speak as someone who has an interest in forestry as a former employee of the Forestry Commission, which members will tell from my ruddy appearance. Mr Home Robertson raised an important point on access to the UK reserve to pay for the shortfall in the Scottish budget because of the forestry crisis. When he sums up, will the minister address that point and tell us how he will apply to that reserve in future, given that in his own budget he now has a reserve of his own for the first time? Surely the response of the Treasury will be—fairly reasonably—that he should access his own reserve. That is the contradiction inherent in the question that remains outstanding from the question-and-answer session that we had with the minister earlier in the debate.
We welcome the idea of the best value review. I noted with interest the comments in The Sunday Times of 21 January, in which a senior source in the Scottish Executive team said:
"Colleagues have signed up to the general principle of better use of money".
I have to say that that will be alarming to no one. I should be interested to hear the answer to the question that I put at stage 2: which colleagues oppose the idea of the better use of money? Who were the foxes in the Cabinet that were against the idea of using the people's money better? Is the minister really paying people to brief the Sunday papers with that kind of thing?
Turning to the budget itself, I believe that it would be churlish not to recognise many of the improvements in funding. We need to look closely at what will be delivered in consequence. In a normal Parliament, the budget debate would be a wide-ranging assessment of how we raise and allocate money. That cannot be done here because we have fewer financial powers than any other Parliament on earth. We have no power to borrow. I suggest that the Minister for Finance and Local Government looks closely at the suggestion made by Sutherlands ING, the best-performing bond issuer in the market, that the Government should have borrowing powers in Scotland so that it can allocate the people's money more efficiently.
As Annabel Goldie said, it is important to look at the outcomes of the budget rather than just the inputs. Despite the fact that this is a record year in cash spending, like every other year, the outcomes in public services are not improving. I am glad that the Minister for Justice has arrived because, for example, record spending on justice is delivering fewer police on the streets than we had when the Conservatives left office. Homelessness under Labour is at record levels—nearly 3,000 more people registered as homeless since Labour came to power. NHS waiting lists—a key measure in Labour's election manifesto—will be higher at the general election in May than when Labour took office. So waiting lists and homelessness have risen and there are fewer police on the streets—three outcomes of supposed record spending by the Labour party.
I am delighted to give way.
The member is on his last minute.
I would have been delighted to give way. We can deal with the matter by correspondence—that will be terrific.
The budget outcomes that we must look at are important. The Finance Committee will play a part in that. I ask the deputy minister to answer some of the points raised this afternoon, particularly on the Scottish reserve in relation to the UK reserve, and John Home Robertson's excellent point on forestry. Perhaps future budget debates will create greater interest if the Parliament has some normal powers, so that we can also allocate some of the tax that we raise.
Thank you. That situation was my fault because I forgot to remind the member that it was his last minute.
Many important points have been made in the debate, as well as the usual flights of fancy from the SNP, while the Conservatives continue to try to disguise from the Scottish public the impact of their £16 billion spending cuts and how that will hit Scottish people.
As I said in the stage 1 debate, the bill highlights the achievements of the Scottish Government over the past year. It reflects a record level of public expenditure made possible by the sound stewardship of the economy by the Labour Government. A fair share of the UK's wealth comes to Scotland through the continuing success of the Barnett formula in delivering for Scotland. That fair share is without the need for an annual round of detailed and damaging negotiations—the very thing that the SNP seeks in trying to undermine the Barnett formula.
The spending review has provided increases of £800 million in the year to come, £1.9 billion in 2002-03 and a further £3 billion in 2003 04. As Angus MacKay indicated in opening the debate, we are delivering record levels of resources for key programmes.
A number of points were made in the debate; I will try to respond to as many as I can. Adam Ingram began with a stunning, stimulating and truly scintillating contribution. Then he accused the Executive of grubbing around looking for savings and a moment later tried to claim credit for the policy of looking for savings. The only people who are grubbing around looking for anything are the SNP, grubbing around looking for policies to declare to the Parliament on anything of importance.
Then we had the usual position adopted by the SNP in the chamber, debating the things over which we do not have powers but not focusing on the things over which we have enormous powers—calling for full fiscal powers as if that was some panacea for all the ills of Scotland and we would then live in a land of milk and honey with nothing to worry about. SNP members never face up to the contradiction in their position these days, when they try to appear very cuddly to the Scottish people, saying, "Vote for the SNP—that does not mean independence, as you will get a subsequent shot to vote again when you can reject independence." In essence, the SNP is preparing to sell to the Scottish population a position where it might have to manage the budget that we have in the devolved settlement, yet SNP members never, ever in the chamber face up to stating the difficult choices in a Scottish budget they would make on stated SNP priorities—although, in fact, they have not been stated. Instead they move on to Norway, where the perfect answer to all our problems lies. We will be flowing with oil, which will solve all difficulties. Yet the SNP knows perfectly well that academic analysis shows that even if all the oil revenues were retained in Scotland, there would still be a £2.5 billion deficit—
Will the minister give way?
No. I have quite a lot to get through. [Members: "Go on."] I will finish my point. There will still be a £2.5 billion deficit between the SNP's fanciful plans and reality.
The SNP is delighted that the Deputy Minister for Finance and Local Government is devoting so much of his speech to attacking the party of which he is so afraid. The figures to which he refers are out of date. On the current analysis, Scotland is contributing significantly more in taxation revenues to the UK Treasury than it receives in spending. That is something that the Secretary of State for Scotland refused to deny.
The figures are far from being out of date—they are exactly up to date. As Elaine Thomson said, imagine the spectacle of Andrew Wilson as the Scottish finance minister. He would get up particularly early every morning to read the predictions of oil prices in the financial pages and would then have to phone the Scottish Executive headquarters to tell officials to cancel that hospital, that school and that road programme because the oil price had suddenly collapsed. It is a nonsense, he knows it is a nonsense and thankfully the Scottish people know that it is a nonsense, which is why they have never supported the SNP in government.
I will turn to the Conservatives. I see that David Davidson had to leave early—he was obviously unable to face the criticism of his speech. When will the Tories come clean on their plans for the future of Scotland? Annabel Goldie specifically said that she would not mention figures in her speech—no wonder. The Conservatives are proposing, at UK level, £16 billion of cuts in the public services that people would enjoy under a Labour Government. The Conservatives must tell us where the axe would fall. Will it be on the extra 15 per cent that we plan to spend on health, the extra 13 per cent that we plan to spend on justice, the extra 45 per cent that we plan to spend on transport, the extra 17 per cent that we plan to spend on education, arts and sport or the extra 20 per cent that we plan to spend on communities? It is said that even Mickey Mouse would be embarrassed by the Conservative figures. Perhaps it is time for some answers.
I thank the minister for the courtesy of allowing me to clarify the position. It is perfectly clear that most informed commentators regard the much-touted figure of £16 billion as entirely speculative and a malicious invention of the Labour party. That is borne out by respected commentators such as Evan Davis of BBC's "Newsnight", who said:
"The Tories are telling the truth and only by wilfully misreading the Conservatives' spending plans can you call it £16 billion."
The figure that has been costed is £8 billion. It is no wonder that the minister is unhappy and reluctant to hear comment on the subject, because heading the tally of that £8 billion is a £1.8 billion reduction in the costs of government. That will raise a cheer from the voters. Reducing fraud by £1 billion—[Interruption.]
Miss Goldie—
I am unable to continue, but I hope that I have managed to destabilise some of the minister's bile and vitriol. [Interruption.]
Order. I appeal to members not to hold conversations in the chamber. It is becoming difficult to hear the speeches.
I notice that Annabel Goldie did not seek to answer the question, but simply revealed that in her estimation there would be £8 billion of cuts, as if that were in some way acceptable. I will stick to our figures, which have been worked out carefully. We will continue to tell the people of the United Kingdom that the Tories plan £16 billion of cuts, although they will not say which vital public services will collapse as a consequence.
Des McNulty contrasted the progress that has been made by the Labour Government at UK level and the previous decline under the Tories. He highlighted how Gordon Brown has released new resources into the economy to tackle many of the social issues that have plagued us for many years. In so doing, the Chancellor of the Exchequer has turned round the economy, making more wealth available to tackle important social issues.
Richard Simpson and David Mundell raised an interesting point about the way in which we develop our budgets in Scotland and the extent of our capacity to join up services more effectively. That is an issue which we want to consider very carefully. The Executive tends to allocate money quickly out to the silos of expenditure—education, health, transport and so on. Perhaps we need to develop new techniques to consider the things that connect all the services. That is a matter to which we will pay close attention in the coming period.
I return to the essential facts, which are so unpalatable to the Opposition parties in the Scottish Parliament. The Budget (Scotland) (No 2) Bill will increase the health budget by 15 per cent, the justice budget by 13 per cent, the transport budget by a massive 45 per cent, the education, arts and sport budget by 17 per cent and the communities budget by 20 per cent. Those gains and improvements are without precedent in modern times. It is a record budget that does not promise but which delivers £800 million extra this coming year, £1.9 billion extra the year after and £3 billion extra in 2003-04.
On top of that, we have demonstrated our commitment to getting more out of existing funding. We have backed up that commitment by taking the first steps to a robust best value process. I commend the achievements that I have outlined to the Parliament, and commend the bill that will deliver them.