Independent Budget Review
Resumed debate.
We now continue with the debate on the independent budget review.
14:57
This morning, we heard much noise and fury from the Opposition about the Government’s failure to be more specific at this stage about where the impact of Westminster cuts will fall. In the absence of specific details from Westminster, they are, in effect, asking the Government to do back-of-a-fag-packet calculations which, of course, they would go on to criticise just as much.
However, we have not heard from any of the Opposition members who have spoken in the debate what their red-line issues might be. They are happy to vent their spleens on the suggestions that the independent budget review panel has made, but the idea of being responsible enough to explain how else budget cuts could be made is totally alien to them. They are bereft of ideas, bereft of credibility and bereft of purpose.
This morning, George Foulkes asked us to look at alternatives to cuts, so let me do just that. What Opposition members refuse to understand is that there is an alternative to being forced to swallow the cuts that are being forced our way from London. As long as the Scottish Government’s budget is set outside Scottish borders, we will never have the powers that we need to grow our economy, but it does not have to be that way.
With full control over our own finances and the Scottish Government’s hands on the economic levers, we could protect the most vital services, grow the Scottish economy and achieve a combination of investment and cuts that is right and appropriate for Scotland, rather than for the desires of a Tory Chancellor of the Exchequer. As long as we are left to set our budget on the basis of how much of Scotland’s money Westminster decides to return to us, we will simply not have the flexibility that any normal Government around the world would expect.
At the weekend, Unison general secretary Dave Prentis described the independent budget review as “ice cream van economics” and said that a proper review of the budget does not look at a Government’s finances and say, as youngsters do at the ice-cream van, “We’ve got this much—what can we get for it?” He is absolutely right. A Government with the powers of a normal country would be able to assess which services it needs and to find ways to finance them.
Unless I am much mistaken, it was the Scottish Government that commissioned the independent budget review that the member is now rubbishing.
I am not rubbishing the independent budget review; I am saying that there is an alternative, which is what we will put to the Scottish people next May.
It is the Scottish Government’s lack of financial powers that has put us in precisely the situation that Dave Prentis finds so objectionable. Perhaps he will begin to press MSPs in the Labour Party, which his union funds, to support real financial powers for Holyrood—but perhaps that is too much to hope for.
That severe cuts are coming is an indisputable fact, but with control of Scotland’s resources we could stimulate economic growth, thus ensuring that people in Scotland benefit from the success of industries that are based here. The oil industry in my part of the world should have a key part to play in Scotland’s recovery, with significant new finds over the summer and an estimated £45.1 billion in revenue expected to be generated between now and 2015.
Instead of flowing to the Treasury, that wealth should be creating a long-term platform for investment in Scotland. Norway has avoided entering recession in the current downturn thanks to its £186 billion oil fund, and it is instructive how Nobel prize-winning economist Professor Joseph Stiglitz recently forcefully described the need for Scotland to follow suit with its own oil fund as “imperative”. Can we rely on any of the Westminster parties to save rather than squander our national resources? Not a bit of it.
As the renewables industry in Scotland develops, it too has the potential to provide real growth, but we need the power to ensure that it is Scotland that benefits. We have paid a heavy price for the lost opportunity that Scotland’s oil previously represented, and we cannot allow the same thing to happen again. That is why the First Minister’s announcement on Scottish Water yesterday was so exciting. With full financial control, and encouraging growth in new and existing sectors, we can negate the need for some of the coming cuts in the long term.
In the short term, however, and as long as we do not have the financial powers that we need, those cuts are unavoidable. The independent budget review does not make for comfortable reading, but it has laid out some of the options that are available and it will be down to MSPs of all parties to find a way to make the savings that are required.
I can only hope that as the budget approaches we will see a greater willingness to accept that reality than we have seen so far today. The fantasy politics of making extravagant spending commitments, as Labour members have done over recent months, while refusing to identify what must be sacrificed, is completely untenable and will not wash with the people of Scotland. They deserve better—
Will the member give way?
I am in my last minute.
The people of Scotland deserve better from their politicians, and we can only hope that the empty rhetoric from those on the Labour benches today is replaced with serious engagement with John Swinney in the weeks to come. The people of Scotland deserve nothing less.
15:03
Unlike the previous speaker, I welcome the report of the independent budget review panel. We would probably acknowledge that many of the proposals in the report have been mooted before, but it helpfully brings together all the different suggestions and points to the scale of the task ahead.
It is right to reflect on that challenge: a 12.5 per cent reduction, which is £4.3 billion in real terms, and 16 years up to 2025-26 for the budget to return to 2009-10 levels. As Tom McCabe said, this is probably about as serious as it gets.
What followed the publication of the report was fascinating, with back-benchers, cabinet secretaries and the First Minister himself all commenting. Within hours of the publication of the independent budget review, we had John Swinney ruling out most of the recommendations. Thereafter, a source from the First Minister said that the SNP would consider reducing funding for eye tests and not proceeding with the next phase of free prescriptions. Then, we had Nicola Sturgeon saying that the NHS budget would be ring fenced before John Swinney again clarified what she actually meant to say.
I will share with the chamber some of the comments that were made. Anne McLaughlin—who, I am pleased to see, is in the chamber today—said in an SNP press release:
“We are phasing out prescription charges and we have ring fenced the NHS budget”.
Nicola Sturgeon said in The Scotsman:
“I want to give you an absolute assurance [that] the government, just as we have done this year, will in future years seek to continue to protect the NHS budget”.
Well—this year 4,000 staff are being cut and 1,500 nurses are being cut. That is the kind of protection that we can expect from Nicola Sturgeon.
Will Jackie Baillie give way?
I am just coming to John Swinney. Pressed on “Newsnight Scotland” about the Cabinet Secretary for Health and Wellbeing’s comments about ring fencing, John Swinney said:
“What I have said throughout this process is that the Scottish Government is committed to pass on the Barnett consequentials.”
He went on to say that
“There is a fundamental difference between that commitment and ring-fencing.”
Another day, another version of the truth.
I take Jackie Baillie back to her comment about the health budget in the current financial year and ask her what measures were proposed by the Labour Party in the budget negotiations this year to increase the health budget.
We have consistently argued that it is about priorities, as has the Health and Sport Committee. [Interruption.] Mr Swinney can laugh, but I think that it is the wrong priority for the Government to spend £30 million on distinction awards for a small number of senior consultants when it spends only £20 million on tackling hospital-acquired infections. That is an example of exactly what I am talking about.
Will the member take an intervention?
No. I have heard enough from Mr Swinney.
Labour’s position is clear. We will allocate all the Barnett consequentials arising from the UK Government’s health decisions to the health budget in Scotland, which is exactly the same position that has been adopted by the Scottish Government. It is dishonest of some SNP members to present what the Government is proposing as ring fencing the entire health budget because, as John Swinney pointed out, it is not.
The independent budget review points to the scale of the reduction that will be required in other portfolios if the health budget is ring fenced—not a cut of 12.5 per cent, but a cut of 20.2 per cent. Health is not about what is in a single budget line; it is much wider than that. Early intervention programmes for children contribute to long-term health and wellbeing. Employment contributes to a person’s long-term health and wellbeing. Provision of care services to enable people to remain in their own homes is also better for the individual and it saves the NHS money because, if we do not do that, we accelerate older people ending up in hospital. Let us look at health in that wider context and recognise that it is about much more than one narrow budget line.
I turn now to budget information. This morning, John Swinney said that we need to work together in Scotland for Scotland’s long-term interests. I agree; however, it is difficult to do so when we are working blindfolded. To deny Parliament the opportunity to consider budget information now is to deny us the opportunity to work together. I trust Andrew Goudie’s analysis of the budget and I urge the cabinet secretary to publish now. To leave it to the last minute is irresponsible. The SNP can provide best-case and worst-case scenarios and can remove a little of the uncertainty. In town halls and health boards across Scotland, finance staff are trying to crunch the numbers and would welcome guidance, and the cabinet secretary can deliver 99 per cent certainty. They are now engaged in talking to people about estimates, so why cannot he?
John Swinney also said that he will wait until he publishes the budget to outline the Scottish Government’s pay policy. I question why there should be that delay. He cannot blame the UK coalition, because its information on pay policy has been out in the public domain for some time. He cannot use the same excuse that he has used for not publishing the budget. Why cannot he give us the pay policy earlier than November?
John Swinney also told us this morning about his efforts to engage with people in the public, private and voluntary sectors. That is laudable, but I understand that the town hall meetings are invitation only. It would appear that Jeremy Purvis did not know about the meeting in his area and that David Whitton does not know about the meeting that is taking place in Kirkintilloch. Has John Swinney told the trade unions? Are the general public allowed in?
Finally, I ask the cabinet secretary why we need to wait until November to hear about his plans for efficiency savings. Efficiency savings in health have exceeded the 2 per cent target in the last few years, but the majority of public bodies say that the obvious efficiencies have now been realised. Will he put up the percentage of efficiencies to be realised and insist that they are not recycled but brought back to the centre? The Finance Committee asked the cabinet secretary that question in June and he has still not responded.
The SNP cannot talk about partnership or co-operation if it does not share the budget information about the budget, pay policy and plans for efficiencies. We stand ready to work with the Scottish Government, as do other Opposition parties in the chamber, but instead the Government postures about having more powers and independence which, frankly, is fantasy. There is less money around and we need to address that.
15:11
The IBR report suggests proposals for Government expenditure and how public spending can be planned on the basis of the restricted finances that we will have available to use on behalf of Scotland’s people. To me, and to many other members throughout the chamber—although there are not as many members in the chamber as I thought there might be for such an important debate—that means looking at how best we can serve all of society and be inclusive of those who are most vulnerable to the vagaries of the capitalist system because they live on the financial margins. I therefore choose to highlight the quote in the report from Korpi and Palme, which relates to the arguments vis-à-vis means testing versus universalism. They state:
“universal policies may increase the preference for redistribution”—
which should please some people, if they would like to follow it—
“by generating a more cohesive group identity. Thus, for example, Scandinavian countries have highly redistributive tax systems that are based around universal rather than means-tested benefits.”
Along those lines, I have been happy that the Scottish Government has, when possible, chosen to go down that route. However, this Parliament obviously does not currently have control over the levers of the finances of state, which would allow for full implementation of such a programme.
Would Mr Kidd care to share with us what the tax take would be in Scotland and therefore what hard-working Scots would have to pay under the system that he describes? The nations that he refers to have a significantly higher tax rate than Scotland.
Yes, they have a higher tax rate than Scotland, and when Scotland has the opportunity to decide for itself, the Scottish people will vote for whom they would like to represent them. That could be for a Government such as there is in Norway or it could be for a Government such as we have in the UK. I find the latter unlikely, but it is possible. It is down to the people to vote for what they want. That is what the Scottish National Party stands for.
However, we do not have full control over the levers of the finances of state, which would allow us to have full implementation of such a programme, if that was chosen and if the people decided that that was what they would like to see.
Other routes therefore have to be assessed, such as eligibility through passporting, which is very important to carers. I would like to mention the role of the Scottish Government and, indeed, the Scottish Parliament in the delivery of services to a large and vital group in our society: the 600,000 or so carers in Scotland. “Caring Together”—the carers strategy that was announced this summer by the Minister for Public Health and Sport, Shona Robison—is a welcome £5 million commitment from the Government for a 10-point carers strategy supporting a new deal for the voluntary sector in supporting respite for carers of all ages.
In conjunction with COSLA, health boards, NGOs and third sector organisations, the Scottish Government has, in the face of what is expected to be a drastic reduction in public spending, committed to helping to support carers through increasingly difficult times. The strategy, which has been developed with carers, will make a valuable contribution not only to their everyday lives but to the lives of cared-for people across Scotland. That is vital, given that successive Westminster Governments have maintained the carer’s allowance at the lowest possible level. In fact, at just £53.90 a week—up a paltry 80p since last year—it is the lowest of all state benefits. The previous Labour Government and the current Conservative-Liberal Democrat Government have maintained the allowance at that level, but I believe that whatever Government we had in an independent Scotland would ensure that carers were better treated and not left to survive on such a ridiculously small amount of money.
As a result, I was delighted to hear the cabinet secretary’s statement this morning that equality will be one of the checks and balances that the Scottish Government will ensure that departments use in compiling their budgets. Although every element of Government will look to ensure continued delivery of services, it is essential that those at the bottom of the economic heap who are always the most vulnerable at times of economic stringency are protected from getting into even worse financial straits.
I know—as anyone who has been in the chamber today knows—that there will be differences of opinion over how the forthcoming Scottish budget should be divvied up, and that there will be competing claims on the smaller cake that will be available. There will be plenty of yah-boo politicking, but that is only to be expected both in this place and in that other place down the road. However, when it comes to groups such as carers, we should all be singing from the same hymn sheet and looking to ensure that they are not affected disproportionately by budget cuts.
Will the member give way?
I am sorry—I have finished.
15:17
Bill Kidd finished on an interesting point: I believe that any sensible budget review should have concluded that the SNP Government must decide which services it considers to be important and which are needed in Scotland, and tell us how it is going to pay for them. After all, it is the Government.
In her speech, Maureen Watt quoted Dave Prentis; I want to quote from someone in Scotland—Dave Watson of Unison—who called the independent budget review
“a rather tired rehash of right wing economic orthodoxy”.
The report simply offers suggestions for cutting Scottish public services and universal benefits including concessionary travel, free eye tests and free personal care. It also suggests that tuition fees could be reintroduced and asks the Government to reflect on whether Scottish Water’s status should be changed. I listened to what was said about Scottish Water in yesterday’s debate—although I have to say that I am not entirely clear what it meant—but the budget review report contains some weasel words that suggest that it could be opened to future privatisation. Moreover, it says that the Scottish Futures Trust will become an expert in the disposal of public assets—perhaps we should be happy that it is going to do something—and that road-user charging is to be considered.
On the member’s comment about weasel words, I have to say that I really do not know how much clearer she wants the Scottish Government to be when it says that it will not privatise Scottish Water.
I was actually talking about the report that we are debating, but I still have to say that I was not very clear that what the member has said was the case. I am glad that he has put that on the record.
The report also calls for pay restraints, pay cuts and recruitment freezes, all of which will have a detrimental effect on workers, service provision and the economy; indeed, we should not forget that these cuts will also have a resulting impact on the private sector. It briefly mentions the fact that the Parliament has tax-raising powers, but says that looking at the issue lay outwith the review’s remit. I believe that the SNP, which is now in government, was part of the yes-yes campaign and that the vote of the people gave the Scottish Government a mandate in that respect.
The report also calls for an end to the council tax freeze, which was supposedly introduced by the SNP as a short-term measure, pending the introduction of a fairer local taxation system. Of course, that did not happen. The SNP could at least have amended the tax bands to make the current system fairer instead of starving local councils of funds, which is what has happened.
To help to create jobs, boost the economy and meet a dire social need, it would also have been sensible to have had a massive council and social housing building programme over the past few years. It is a myth that the only response to the recession is strict austerity measures with deep, savage and immediate cuts, as members right across the other side of this chamber have suggested. That is not the only response. The debate is taking place in a chamber in which most of the members on those other benches believe that savage public sector cuts are either inevitable or necessary. I do not believe that they are, and neither do Scotland’s trade unions, for example.
The Tory-Liberal alliance is peddling the proposition that cuts are necessary, but the reality is that they are a good excuse to attack the fabric of the welfare state. The Tory-Liberal Government has quickly shown its true colours with its strategy to viciously slash state provision and its strategy of death by a thousand cuts for the public sector, with a rise in VAT that will hit the poorest hardest, and an ideological attack on the welfare state. Basically, there is a reorganisation of society firmly in favour of the rich and big business interests, and away from the workers. Make no mistake: that is what it is about.
We are not all in it together, and we are not all feeling the squeeze. Very little is being squeezed from the rich. The SNP Government seems to be in the camp that believes that savage cuts are inevitable. Here is some news: they are not; they are ideological. Ironically, the SNP gained support in 2007 on a promise to protect public services and deliver social policies that benefit ordinary people.
Will the member give way?
I am afraid that I do not have enough time.
The reality is that most of the SNP’s progressive policy promises, such as those on free school meals, free prescriptions and smaller class sizes, have not been delivered and others are unravelling. Police numbers are due to decrease, new teachers are without jobs, and there are fewer nurses. The promised alternative to PFI—the now infamous Scottish Futures Trust—has not delivered, which has meant a dearth of new building and no stimulus for jobs and the Scottish economy. It is impossible for a party to convince anyone that it is left of centre while it demands and underfunds a council tax freeze. That is now resulting in losses of jobs, services and provision at local government level. However, that allows that party to say, “It wisnae me.” The SNP should be firmly standing up for Scotland against cuts, not forcing them through. Doing that will threaten recovery and increase unemployment, and will be detrimental to people, the economy and services.
There are alternatives. The people’s charter offers solutions, and the Public and Commercial Services Union has researched solutions such as employing more, rather than fewer, tax inspectors to catch the avoiders and evaders, who cost some £95 billion a year. It is interesting that The Guardian ran a YouGov poll last month to test attitudes towards a one-off tax of 20 per cent on the richest 10 per cent in the country, who own almost half the country’s wealth. Some 75 per cent of people polled approved of such a tax. Where is the debate on that? I do not see it.
Rather than accepting suggestions in the review or collaborating on a savage cuts agenda, it would be better if the SNP served the ordinary people of Scotland by looking for ideas from the Scottish Trades Union Congress’s there is a better way campaign, for example. That campaign will be launched tomorrow, and there will be a rally on 23 October.
Britain is the sixth richest nation in the world, and its economy is continuing to grow. What kind of mad world is it in which the Government, whether in Edinburgh or London, is allowed to slash services to the poorer majority while the rich minority feel no pain at all? The scorched-earth economics of the Con-Dems, who are aided by the SNP, must be stopped before more ordinary working-class people lose their jobs, homes and services and suffer from associated effects on their health and wellbeing.
In conclusion, it was the rich capitalists of the world who caused the global crash, with their greed and private corporate folly, not ordinary people. Despite Government attempts to rewrite history, it was not public spending that created the problem. In this country, the rich continue to rake in their bonuses. They avoid fair taxes and get richer while ordinary people and the poor and vulnerable suffer disproportionately. There is nothing fair about who the cuts will affect. They will not affect the rich minority who own the majority of this country’s wealth.
15:24
I get the impression that we will not see Elaine Smith at any of Tony Blair’s book signings over the coming weeks—should there be any more.
The backdrop to and the context of the debate are critical. We have an enormous national debt that is pushing on 70 per cent of GDP. We had a structural deficit during the boom years of the previous Government, and we have a fiscal deficit this year that means that we must borrow £149 billion, as Jeremy Purvis pointed out.
The solutions that the coalition Government in Westminster has put forward are based around 80 per cent on cutting spending and around 20 per cent on taxation increases. Anybody who wants to suggest a solution has to understand that the only way to do it is to increase revenue or decrease spending. The coalition has outlined its broad direction of travel. The members on various benches who have said that we do not need to cut spending—some said that we do not need to do that at all and some have suggested that it should not be happening at the rate at which cuts will be made—have to tell us how they would increase revenue. Do they want to increase taxation by more than will happen already or do they want to increase borrowing further? Anybody who suggests that cuts are not necessary and not inevitable must tell us which of those alternatives—tax increases or borrowing—they propose.
We heard that the Scottish Government believes that we need to reduce the fiscal deficit “at a slower rate”. I hope that I wrote down accurately what the cabinet secretary said. However, I believe that it is incumbent on the Government to say what it believes that rate ought to be. Mr Purvis put that specific question to the cabinet secretary. Mr Swinney said that it ought to be done at a reduced rate, but he did not say what that should be or how much he thinks we ought to borrow this year over and above the £149 billion.
I apologise for being late. I was detained elsewhere.
It is possible and reasonable to expect the cabinet secretary to say how much he would like, but I do not think that it is reasonable to ask him to make the judgment that the people who lend the money make, because they look at the whole economy and decide what the risk is, in the same way that anybody who lends money does. He cannot say that until he controls all the money.
If someone criticises the Westminster Government for cutting too fast and too deep, it is incumbent on those who make that criticism to say how they think the gaps ought to be plugged. If we choose to increase borrowing—I think that is what the cabinet secretary suggested; he certainly did not propose an increased tax solution—two things will happen. One is guaranteed and the other is a risk. The guarantee is that debt interest will go up; that is a given. It is going to be about £70 billion next year. That is £70 billion that we have to pay in interest before we can spend a penny on public services.
The other side is that there is a risk to our international credit rating for every extra £1 billion that we decide to borrow. We should not overplay the risk, but it is a risk that other countries both inside and outside the European Union have encountered to their detriment. In my view, it is far better to take the cuts ourselves, on our terms and in our time, than to have them imposed on us from the outside world. They would be imposed on us by the international community if we lost our AAA credit rating. If that happened, £70 billion of interest per year would seem like nothing.
My understanding is that financial markets are continuing to fund Government debt. Is the member saying to us that the Government is having problems selling its debt to investors? What is his understanding of the payback period as compared with other countries?
I do not think that we are having problems at the moment with the selling of gilts. The point is that, for every £1 billion that we borrow, we have to pay interest, and that is money that cannot be spent on public services. It will be £70 billion as of next year. We do not want that to increase, because we would then have to make even bigger and deeper cuts.
On the budget review, I feel that we have been presented with something of a false choice in the chamber today by the two largest parties. The Labour Party is demanding that a budget be published immediately all the way down to level 3 and level 4 data, showing every nook and cranny of public spending. I do not think that it is reasonable to ask the Scottish Government to produce that today or in the next couple of days, but by the same token, I do not believe that the Government’s response—that we know nothing at the moment, that anything that it produced would be on the back of a fag packet and that it would be a crystal-ball budget—is particularly acceptable either.
The cabinet secretary said that the scale of the cuts is clear. Although the figure that he quoted of a £1.7 billion real-terms cut next year is not the absolute figure or a figure that we know to be certain, the fact that he quoted it in his speech and the fact that the independent budget review panel was happy to quote it in the report suggests that it is probably in the ball park. If the figure is in the ball park, it is incumbent on the Government—because it is the Government—to tell us where it stands on the issues that the report covers. The cabinet secretary and, in fairness, all the SNP members who have spoken today have told us what they wanted to keep—what should be sacrosanct—but not a single member of the governing party has made a single utterance about what should be cut. The Government is not facing up to any of the measures in the report, but we need it to do so. We need to see the Government’s direction of travel, if not its entire budget, sooner rather than later.
15:30
In the next four years, Scotland’s budget is forecast to be slashed by £3.7 billion—the equivalent of £4,300 a year for every household in the country. I thought that the debate on the independent budget review would provide an opportunity for all parties and MSPs to consider the review’s recommendations and to make suggestions of their own, in advance of the Government’s budget.
Labour complains that it does not have enough information. As a member of the Parliament since 1999, I have gone through several budget processes and I can say that the cabinet secretary has given a damn sight more information than the SNP ever had in opposition.
I have listened carefully to the speeches. From Labour, we have heard nothing—no proposals and no ideas. One of the best speeches today was made outside the chamber by Campbell Christie, who said:
“Jobs in the public sector are directly in the firing line. The difficulty for any Scottish government is that the public spending decisions that affect these jobs are taken in London.
The archaic Barnett formula currently used means the Treasury in London hand Edinburgh a block of money each year. But that is set to shrink by billions. All the Scottish parliament can decide is how to dole out the cuts and the misery.
As matters stand, Scotland’s government have no power to follow an alternative economic strategy by implementing growth oriented economic policies.
Higher growth will create jobs and generate more tax revenues to protect frontline public services, as well as repaying the high level of debt.
To achieve this, Scotland’s government need greater economic powers. But the Calman legislation does not meet this need.
I firmly believe a Scottish government equipped to vary all taxes—including corporation tax and national insurance—would be able to tackle the serious difficulties we face.
I do not want a tax regime to be imposed on Scotland that is utterly unfair and inadequate to meet the challenges we face.
I hope Scotland’s politicians will join me in opposing these unfair proposals.”
The SNP certainly supports Campbell Christie’s call.
We in the chamber today need to ensure that, in the face of the cuts, front-line services are protected as far as is possible and that industry and skills are supported. The cabinet secretary recently announced support for Fife energy park, grants to BiFab in Methil and a regional selective assistance grant to support reopening the paper mill in Leslie in my constituency. In this parliamentary session, he has also set about transforming the public sector landscape by abolishing quangos and encouraging local authorities to share services. I regret that the Parliament did not support going further with the proposed abolition of quangos.
Will the member give way?
If I have time near the end of my speech, I promise that I will let Mr Kerr in. I have things to say and ideas to propose, unlike Mr Kerr in his 14-minute speech.
We need to go further. To deliver front-line services effectively, we need to ensure that those who deliver the services are as effective as possible. Councils banding together to share services is not the solution; it is a sticking-plaster. For many years, I have believed that local government reform is desirable. It should have been done in 1999, when the Parliament was established, but it was not.
Local government reform is no longer just desirable—it is a necessity. Having 32 local authorities, 32 chief executives, 32 social work directors, 32 education directors and 32 layers of bureaucracy is unsustainable. The local government landscape needs to be reformed. Is local government still the best deliverer of education? Is there an argument for combining health boards and local government and doing away with the artificial interagency arguments about who pays for what? Is there a case for bringing the blue-light services together? I do not know all the answers, but I know this: the solution is not to continue as we are with the delivery of public services.
I disagree with the member, as local authorities and health boards are making plenty of moves to rationalise their services and to ensure that they dovetail. With all due respect, it is a bit of an insult to them for us to tell them what they should do. They are at the pointy end and will be the first to get it in the neck. They are trying to do what is suggested—certainly in Lothian.
I fully accept that local authorities and health boards as they are presently constituted are doing their very best within the structures that are available to them. I am asking Margo MacDonald and other members whether those structures are getting in the way of delivering the public services that we need and causing many of the problems.
I seek clarification from the member. She said that Labour members have not offered a package of cuts. For fairness, apart from the Cabinet Secretary for Finance and Sustainable Growth talking about efficiencies, reform and fewer quangos and indicating the red-line areas that the Government wants to protect, what cuts has the SNP proposed today that are news or information to us?
For a start, I would get rid of Trident, which would free up and save us an awful lot of money. I was talking not just about cuts but about the things that the member would like to save, such as free personal care and concessionary travel. The SNP is committed to those; it would have been helpful to hear today whether the Labour Party is as committed to them as we are. As a country and a Parliament, we now need to think about what services must be protected and what agencies are best placed to deliver them.
15:37
If today’s debate has done anything, it has proved how enormously difficult it is to achieve consensus when faced with the difficult challenge of reducing public expenditure. Understandably, no one wants to do that. Those who represent the bodies concerned do not want us to do it, either. Any chief of police will tell us that removing one policeman will dramatically affect crime; health board representatives will tell us that removing one doctor will have a dramatic effect on health. All of us understand that, but they must understand that we are not making the choice on that basis.
Having received the panel’s report, all of us are anxious to have a different debate—about who caused the deficit, about whether there should be an independent Scotland, about whether we should control the monetary supply or about who should set interest rates. All of us do that—I do it, and every party does it. The difficulty, as the debate has again demonstrated, is that that is to skirt around the edges of how we will effect some of the changes to which the report refers.
I know that the cabinet secretary gets upset when we suggest to him that there ought to be a little more detail. I want to take matters further by explaining to him that there is a slight tendency—perhaps because of the way in which the Opposition parties have presented the issue—to give the impression that we expect to have in front of us every last jot and tittle of a budget. We do not, but we wish to know the direction of travel and the policy response. I will illustrate that by looking at the report. If the Parliament’s Finance Committee had prepared the document and brought in independent experts to inform it, the Government would, on its publication, have provided us with a detailed response, in policy terms, in relation to the matters that it raises.
Let us take the issue of public sector pay. Given that pay accounts for 60 per cent of public expenditure, there is no question but that it is the critical element. The cabinet secretary was good enough to say in his opening remarks that he would address that later. I accept the difficulties that are there, but we know that local government organisations are already in discussions with their unions, desperately seeking some kind of formula. The cabinet secretary himself is probably—and understandably—engaged in some discussions on the general shape.
We know from table 4.2 of the report the real difficulty in getting anywhere near some kind of pay agreement by virtue of the nature of the range of organisations with which we have to hold such negotiations and the range of arrangements, agreements and contracts that are in place.
Mr Finnie makes a reasonable argument, as always. He asked about the direction of travel. I think that he was in the chamber for my speech, in which I said that we have more than three years of constrained and tightened pay policy. I expect to tighten pay policy further for the financial year 2011-12 and succeeding years. For me, that is exactly the direction of travel that Mr Finnie is looking for to assist him in trying to form the shape of where we are going on the public finances.
That gets us only part of the way. I really do not want to get into a silly debate about this, but if we are suggesting that there is to be serious pay constraint, there are a range of options about which there ought at least to be a debate. I might say, “I have an agreement with Jeremy Purvis about his pay and I want to renegotiate that agreement”, but there are other options. I could say, “There’s a new agreement in which your existing pay agreement is suspended and we have a new agreement for two years, or whatever.” Those are different options. We need to get some information on that in order that all the Opposition parties can participate genuinely in trying to arrive, if possible, at some kind of consensus on this matter.
I am grateful to Mr Finnie, because I think that he is getting into the scope of what I hoped would emerge from the debate. I am interested in finding out from other parties the areas where some of this material can be uncovered. I am involved in discussions about flexibility in the workforce in all sorts of areas. It would be interesting to know whether that view is broadly shared around the chamber.
That is exactly where I have been trying to get. Perhaps we have been trying to debate two or three things at the same time in the middle of the same debate.
I will move on. The same applies in the national health service. Of course we are all anxious and we in the Liberal Democrats want to and will preserve free personal care. In order that we ensure that there are no unintended consequences of that, we have to have a broader discussion with Government on the Government’s review of how we provide health care in the community. The health budget is not the only budget that supports the elderly.
Likewise, we have the consequences of the Arbuthnott review of the local authorities in the Clyde valley, the ramifications and implications of which could be transferred usefully into other local authorities. As well as debating that, we must debate the Government’s intention in relation to savings—whether we are seeking equity across Scotland or whether we are simply saying that we will make the savings and that we will follow the Government’s existing policy. Those policy choices need to be debated and we need to hear the Government’s direction of travel.
I turn finally and very quickly to Scottish Water, which I feel personally quite strongly about, because I was the minister who set it up. It is not helpful for me to suggest to the cabinet secretary that his words might suggest privatisation, because I do not believe that. I say to him as a Liberal Democrat that I have no intention of putting Scottish Water into the private sector, and it might be a better starting point if we accepted that. I might use words such as “mutualisation”, although some of the models that were created in the 1950s, 60s and 70s were vulnerable to privatisation.
My more important point is this: Scottish Water did not emerge, in the context of this report, because of Scottish Water; it arose in order to give us options in relation to capital expenditure. Although I accept the thrust of what was said yesterday—that the Government might have a longer-term plan for Scottish Water—that does not address the immediate issue of how we will ensure that there is an adequate balance of capital expenditure, even in the recession, to address the issue of stimulus into the economy. Of course, as the cabinet secretary knows, refinancing Scottish Water’s debt has the prospect of releasing some £1.2 billion, in relation to post-devolution debt.
I have given three examples of areas on which we must have a better, more detailed discussion. Such discussion needs to be led by the cabinet secretary, and if that happens there might be a more constructive response to the Beveridge independent budget review.
15:45
No one wants this debate, but it is clear that it is the only debate in town for the foreseeable future. Decisions about the Scottish budget will dominate our decisions in the coming months, if not years. I welcome the work of Crawford Beveridge and the independent budget review panel.
On Tricia Marwick’s point about the renewal of Trident, many members on the Labour benches would be glad to see the scrapping of Trident. However, we must keep the debate relevant. Scrapping Trident would make no difference. Members who join in the debate should stick to the point.
How do we secure the long-term interests of our country and safeguard the quality of life for individuals, create the right safety nets for the people who need them and ensure that there are prospects for the people who might lose out in the coming months? It says in the IBR report:
“Parliament will be tested, and the results of its decisions on the difficult choices it faces will affect all of the people of Scotland.”
The magnitude of the issue creates an imperative for the Scottish Government to begin the debate by publishing its draft budget.
Our response must be framed around an attempt to protect the most vulnerable, ensure fairness and maintain delivery of our public services, so that we can keep our streets safe, ensure the quality of health care, maintain standards in education and provide job prospects for young people. The SNP’s record so far in that regard leaves a lot to be desired.
The backdrop to the report is the global recession. In his introduction, Crawford Beveridge referred to the global financial crisis. The financial crisis is not an issue just for Scotland and the UK; the pain is shared by many countries. Scotland is not alone. It is childish of SNP members, who purport to want a serious debate about the financial crisis, to ignore or try to refute that. Even their leader, Alex Salmond, has said on the record that there is a global financial crisis.
Labour stands by the robust decisions that we made in government to bail out the banks. We still think that the bailout was a critical move and a brave decision, which was taken to protect the economy and ordinary individuals’ mortgages and savings. The decision has long since been vindicated by many leading economists. If it had been left to the Tories there would have been no bank bailout. Such an omission would have had a catastrophic effect on Scottish families and there would have been more job losses across the country. Which side is the SNP on? It has never really said which action it thinks was right to take.
In the aftermath of the bailout, Labour’s strategy was to take longer, cut less and reduce the impact on ordinary people. We took that strategy to the electorate and we still think that the approach offered a stronger basis for economic recovery. I do not agree with Gavin Brown that there is only one way forward. The Conservative-Liberal Democrat coalition’s rejection of our strategy threatens the sustainability of our economy. It is worrying that all the indicators are that the coalition’s approach will hit the poorest people hardest.
It seems that the UK Government’s priority is to push through voting reform and boundary changes. The UK Government plans to have a referendum on the alternative vote system on the same day as the Scottish parliamentary elections. That is perhaps the one issue on which I will agree with SNP members in this debate. I call on the First Minister to register a formal dispute through the joint mechanism and to say that it is not acceptable to have two votes on the same day. Not to acknowledge that the Scottish Parliament rejected such a suggestion shows a lack of respect for this place.
I firmly believe that the UK Government’s approach to the cuts agenda is a deliberate attempt to create a mindset in the whole of the UK, including in Scotland, that all that people can expect is deep cuts, a pay freeze and a reduction to pensions. The aim is to lower expectations, as the Tory approach to the economy is to go for deeper and harder cuts. Therefore, I cannot understand why SNP members see no difference between the Labour approach and the Tory approach.
However, we have not seen anything yet. The proposed VAT increase alone will have a devastating impact on the economy once people realise what effect the VAT increase will have on their lives, given that many essential items still, unfortunately, attract value added tax. The abolition of the future jobs fund, which was aimed at young people, is a disgrace and is a huge error on the part of the Conservative-Liberal coalition. The Secretary of State for Scotland is complicit in creating despair among young people by the abolition of the fund. I hope that my Liberal Democrat colleagues will take the case for that fund to Michael Moore, as it was a good scheme. If people really believe that the Thatcher years resulted in lost generations of young people, we must ensure that we do not repeat the mistakes of the past.
I listened with interest to the debate as SNP members trumped out their defence as to why it is impossible to publish a draft budget. They are in government. Joe FitzPatrick said this morning that they have the right to know about Labour’s plans. Do the public not have a right to know what the Government’s plans are for its budget? There is simply no excuse for such evasion because, as we heard this morning, there is 99 per cent certainty about what the budget will look like. Therefore, it is quite staggering that the Government is hiding behind that argument.
Apparently, however, the SNP’s answer is to take Scotland into independence—
You should be finishing now, Ms McNeill.
In conclusion, despite their repeated mantra that independence is the answer, we have heard not one iota of detail about how SNP members would use the levers in an independent Scotland in a financial crisis that, as I said already, Scotland is not alone in facing.
15:52
Obviously, we have heard quite a lot, both this morning and in the continuation of the debate this afternoon, about how Scotland will deal with the severe cuts from the Westminster Parliament over what is expected to be a long number of years.
I will touch on Pauline McNeill’s point that Trident is not relevant to this debate. If Trident is not relevant, it is certain that VAT and the other Westminster-related issues that she highlighted are not relevant to the debate either.
Some of the accusations and arguments about the Government’s failure to publish a draft budget have been, to be honest, quite staggering. When I spoke to constituents over the summer, the cuts that Westminster will impose on the Scottish Parliament often came up, but the people I spoke to were quite astounded at the proposal that we should publish a draft budget. When I pointed out that we do not know how much money we will have and that we could not really put forward proposals when we did not know whether they would happen, the vast majority of people agreed with me 100 per cent.
In the same vein, how can Mr Swinney go round the country telling people that this is how much is coming out of the budget: 3.3 per cent or £3.7 billion and asking them for their ideas? The two arguments do not stand together.
As Mr Swinney goes round the country, he can talk about the estimates that have been published, but there is nothing factual and nothing concrete. That is the key point about the scenario with the draft budget that Andy Kerr and Jackie Baillie have argued for.
We have heard a great deal of talk from the Opposition but very little about how it will deal with the financial shambles that is the UK public finances. We heard some proposals from the Labour Party, primarily from Lord Foulkes. He certainly let the cat out of the bag when he said that he wanted to see the Scottish Parliament increase tax using the tax-varying powers. In the past, Councillor Gordon Matheson has said that he wants to scrap the council tax freeze. There we have it, certainly from the Labour Party point of view. Labour wants to tax people even more; it wants to punish the most hard-pressed people in our society.
Will the member give way?
I need to make progress. I will try to let in the member in a moment.
I read the Unison briefing note last night. I do not always agree with Unison. Indeed, I do not agree with everything in the briefing note except for where it says that, even when
“it is appropriate to start reducing the deficit, spending cuts will not be the only way to cut debt”
and suggests the introduction of a fairer tax system and
“cutting out wasteful spending including PPP schemes, consultants and Trident.”
The point that Unison makes on PPP is interesting. I am delighted that it agrees that it is a foolish policy to saddle our population with an annual debt mountain of £1 billion, particularly when the current outstanding bill for Labour’s PPP projects is £27 billion. PPP in Scotland was introduced by the previous Scottish Executive.
Will the member give way?
I need to make some progress.
I turn to the CSR in October. One of the first things that John Swinney will have to account for in writing up his budget will be to ensure that the PPP bombshell is covered. The public-private partnership is a funding method that the former Executive and public bodies used. The correct way forward is to look at other methods that would be financially beneficial to the taxpayer. I therefore welcome the IBR and the call that is made in the report for the role of the Scottish Futures Trust to be expanded. On page 129 of the report, the panel suggests that
“the Scottish Government should consider enhancing the role of the Scottish Futures Trust to allow it to lead improvements in capital procurement”
and in paragraph 6.12 on page 122, that the Scottish capital budget
“is projected to fall by £900 million by 2014-15”.
In paragraph 6.19, the report says that it is clear
“that parts of the capital programme are more exposed to reductions in Scottish Government’s capital budget”.
In its annual report, which was published last week, the Scottish Futures Trust said that last year’s activities will accrue savings of £114 million. If Opposition members do not believe what the SFT says in its annual report—which I am sure they probably will not—I hope that they respect the independent London School of Economics, which verified the Scottish Futures Trust figures. The Scottish Futures Trust is delivering for Scotland. As the Confederation of British Industry Scotland says,
“the SFT is performing a useful role in delivering expert advice in areas of financing, procurement, housing and best value.”
That is positive support from an external body. The SFT is a welcome addition to the funding of capital projects. In future, I hope that more schools will be built using SFT financing as compared to PPP/PFI.
Will the member now give way?
No, he cannot. I am about to ask him to bring his remarks to a close.
Apart from Lord Foulkes, we have heard much about nothing from Labour. Until we know exactly how much the Parliament will get—and, looking forward, until we get the full powers of independence and become a normal Parliament just like those in normal countries—we will not be fully able to deal with the problems that we have and those that we inherit from Westminster Governments past and future.
15:59
I apologise for being unable to be present for the start of the debate this morning. I welcome the report for spelling out the scale of the problem that we face and for presenting some of the options that are before us.
I will not spend too long on the background to the report. I hope that members of other parties will note the analysis on page 22, which reminds us of the worldwide recession that began in the US and points out that the deficits that were built up in a range of countries were due to fiscal stimulus, higher social payments and falling tax revenues. It also reminds us that the UK entered the recession with a low level of public debt, and I hope that the Conservatives in particular will take note of that comment.
The report does not express a view on the actions of the UK Government, but it would be right to do so briefly, as they are relevant to the underlying situation. The cuts from the Westminster Government are coming far too fast and they go far too far. The International Monetary Fund has joined many economists in criticising the self-defeating nature of the cuts, which are already leading to lower levels of growth.
I will not concentrate on the cuts that have already taken place under the present Scottish Government during the good times—although I am sure that we will hear a lot about those in the weeks to come. Instead, I will focus on the future, in particular on the alarming table on page 27 of the report, which encapsulates the particular problem that we face, as the cash cuts going into next year are £1.2 billion. That figure is bigger, in cash terms, than the total cash cut over the next four years. We have a particular problem there, and it is regrettable that the Scottish Government has failed to bring forward any proposals to deal with it. It is disappointing that the report does not include costed options to deal with that immediate problem. Where there are costings, in table 5.2 on page 101, for example, there is a lack of clarity and transparency in what is being presented. There are options, for example, for concessionary travel—a matter that I raised at the Finance Committee—but they are not very helpful.
There is a further serious problem with the report, as it does not analyse the budget in terms of fairness and equality—that was another point that I raised with the budget advisers at the Finance Committee on Tuesday.
We know what a serious problem we have at UK level, not just with the level of cuts but with how they are being dealt with, with particular discrimination against the low paid and women. As for the Scottish budget, we have no analysis that would allow us to take those matters into account. There are some further equality dimensions concerning younger people, older people and the other equality groups. We urgently need the Government to do some work on that.
Pay is central to all this. We have to make decisions on pay, taking account of the fairness principle. I hope we all agree that the low paid have to get some preferential treatment. It is quite mistaken, however, to think that pay in itself can deal with our problems. Option 3 on pay, as it is presented in the report, is to me the most drastic and unpalatable option. It basically suggests that everybody should get paid the same next year as this year, and it would result in no cash savings whatever. Even if the draconian pay option was taken, we would still have to find £1.2 billion of cash cuts for next year. The fact is that we have to make unpalatable choices, and I suggest that the ending of the council tax freeze has to be one of them. I do not make that suggestion with any pleasure, but it seems unavoidable, although nobody, at this time of increasing taxes, would want the council tax to go up by an excessive amount.
In this situation, we need to decide what our priorities are and ensure that we have mechanisms for delivering them. I would make school budgets a priority, but the Cabinet Secretary for Education and Lifelong Learning, who is sitting not far from me, has abolished all the mechanisms for ensuring that school budgets are priorities. That is now left entirely to local authorities.
It is possible to protect health. Having always championed health, I will not stop doing so now. It is self-evident that health does not equal the NHS, as Jackie Baillie and other members have reminded us.
There are particularly steep drops next year in capital budgets—in fact, about half of the cash cut is in capital budgets. There, too, we have to choose. I would make housing my number 1 priority, particularly given the imminence of the 2012 homelessness commitment. That is the kind of choice that we have to make—we have to decide what we have to prioritise, and we have to make unpalatable choices. That is what people find particularly difficult.
There is an urgent need for the Government to produce costed options to deal with the £1.2 billion cash cut that we face next year. It would be ideal if it made its own proposals, but even providing a menu of costed options would help the debate because, at the moment, much of it takes place in the dark.
We urgently need to start a real discussion about next year’s budget that transcends political positioning and knee-jerk responses to any proposal that is made. In that context, I was disappointed that Nicola Sturgeon latched on to something that Iain Gray said on “Newsnight Scotland”. He used, I think, exactly the same words as the Cabinet Secretary for Finance and Sustainable Growth, but she immediately tried to make a party-political point about it. We really must try to suspend such activity for a week or two, although I realise that that is unlikely to happen.
16:05
Given the importance of the debates and decisions that the Parliament faces, I hope that the red-line issues that the Scottish Government has outlined will limit the scope for scaremongering as we prepare to adjust our public finances. I was pleased to hear Derek Brownlee say in his opening speech that, although we in the Parliament may disagree, we have a duty to work together to find ways forward for the people of Scotland in these difficult times. However, it is ironic that, for so much of this parliamentary session, the Labour Party has scaremongered about free personal care and concessionary travel, but now refuses to guarantee those important schemes.
Will the member give way?
No, not yet.
One aspect of the independent budget review that will affect many people, especially those on low incomes, is future decisions on council tax. The Scottish Government is to be commended for freezing that regressive tax and for providing the funding for the freeze for the past three years. Tribute must be paid to COSLA’s work in making it happen. In turn, the Opposition parties must not be allowed to forget that they stood in the way of replacing that regressive tax and taking Scotland forward.
The Labour Party—with lain Gray taking his lead from Councillor Gordon Matheson, the leader of Glasgow City Council—has spent many hours in recent weeks talking down the council tax freeze. I remind them that many commentators have said unequivocally that people with incomes just above the qualifying rate for council tax benefit will suffer most. Is the Labour Party honestly planning to go to the polls next year intent on punishing those on low incomes? That is its lookout. It is a long way adrift of its original raison d’être, but I have no doubt that its obstructionism and partisan politicking on the issue—like so many others—will be remembered in May next year.
Imagine for a moment that the Opposition parties had supported replacing the council tax and had acted in Scotland’s interest, not their own. This part of the debate would be redundant. We would have a sustainable, progressive tax system for local government, and my neighbour, who earns far less than half of what I earn, would pay substantially less than she pays now and, more important, substantially less than I would pay. That is how it should be, but it seems that some Opposition MSPs do not agree.
Will Anne McLaughlin explain further the analysis that she has just put forward? The First Minister told us yesterday that we had declining tax revenues as a result of the economic downturn. This morning, Michael McMahon rightly pointed out the impact that declining tax revenues would have if a local income tax regime was in place to fund local services. How would such a regime help the situation?
A tax system is either fair or unfair, and if it is not based on ability to pay it is completely unfair.
Glasgow City Council—the nation’s most effective scandal magnet—is champing at the bit to increase the council tax bill for every household in the city. However, Councillor Matheson also wants to keep the compensation for the council tax freeze. Not only does Glasgow’s Labour council think that it should be alone in not having to find savings, it also thinks that Glasgow’s citizens should be alone in having to pay extra council tax. Talk about ripping off Glasgow.
Another important aspect of public spending that the IBR highlighted is efficiency, something about which many of my constituents have expressed strong views. We must acknowledge—like the IBR—that efficiencies alone will not solve our problems, that many of the most obvious and simple efficiencies have already been dealt with and that, as the Government has rightly highlighted, there are no magic bullets. However, efficiencies are an ideal place to start, and by taking a bottom-up approach to them we allow practitioners to identify savings in their sectors, rather than having them imposed on them, which has happened all too often without consultation in the past.
I will consider efficiencies in local government, because they are important, given the level of public spending for which local government accounts in Scotland. I have some sterling advice about that, and I will pass it on, if I may. Spending hundreds of pounds of council money on flowers is not efficient. Arranging fact-finding trips to coincide with football matches is not efficient. Using £900 of taxpayers’ money for personal phone calls is not efficient. Having street lights blazing all day long when we have this beautiful daylight is not efficient. Awarding contracts to associates for a centre that has to close down shortly after it is opened because of mismanagement is really not efficient. I could go on. Members will be aware of what I am alluding to, and I am sure that they are also aware that I am being very kind to the council in question.
On behalf of my constituents, I say today that if Labour wishes to raise the council tax, it has to start spending wisely what it already has before asking my constituents for more. Perhaps it will happen. Perhaps Labour’s wish will be granted one day and it will be able to raise the council tax, but while Glasgow Labour is champing at the bit, the Scottish Government is doing everything that it can to resist, and to protect council tax payers.
The Government here in Scotland has faced up to the challenges of the financial crisis, and is neither shirking the difficult decisions nor being blinded by ideology. In answer to persistent questions on “Newsnight Scotland” about what he would do, all Iain Gray could say was, “You will find out in our manifesto in May.” That will be too little, too late.
That said, I cannot wait for the summing-up, and I am looking forward to hearing whether the Labour front bench will echo the words of Elaine Smith, who said that cuts are not necessary but are ideological—something I would not necessarily disagree with if we had any control of our finances—or the words of Alistair Darling, who claimed that cuts that are “deeper and tougher” than Thatcher’s will be necessary.
16:11
Earlier, Bill Kidd said that the debate is important. In fact, it is largely pointless. What we have here is a report commissioned by Scottish ministers to make suggestions about what might happen and how we might manage our finances, but Scottish ministers have no opinion whatsoever about the conclusions and recommendations in that report. That makes me ask what the point was of commissioning the report in the first place if ministers will not come back to the Parliament and tell us their opinion of the independent budget review group’s suggestions. That means that we are discussing nothing today, we will come to no conclusion, we are no further forward, and, apparently, we will have to wait until November when the budget is produced. Given that, the cabinet secretary and others should have said that the debate should be put back until then.
However, the reality is that ministers already know the consequences of what is in the report. They have the information to hand, and their own chief economic adviser has already given them an indication of what will be involved. I will come back to that point in a moment or two.
It is important to put the context of this debate into perspective. Yes, there is a worldwide recession caused by irresponsible banks and financial institutions, but we should remember that since the Parliament was created 10 years ago, Scotland has seen unprecedented increases in public expenditure. We have had more money to spend than any other generation of politicians has ever had. Audit Scotland indicated that there has been on average 5 per cent real-terms annual growth since devolution. Indeed, this year alone, an additional £1 billion of expenditure was available to the cabinet secretary and his colleagues. We know, therefore, that the Government has had money to spend, and that does not even take into account the £1.5 billion that was left in reserves for the current Administration when it came to power.
At the same time as that unprecedented growth in public expenditure, the Government has managed to cut services the length and breadth of Scotland. On numerous occasions, Jackie Baillie has articulated the cuts in the number of doctors and nurses that the health service faces. Wendy Alexander, Trish Godman and I have outlined the cuts in Renfrewshire in teacher numbers, delegated school budgets and social work expenditure and services at a time of unprecedented financial growth in the Government’s budgets.
George Foulkes was right to pose a question about blindly and glibly taking at face value what the Conservatives, supported by the members of the millionaire clique of Liberal Democrats who now control the top echelons of their party and who give cover to the Conservatives, are saying. We should not accept at face value that there is no alternative to what they propose.
For the debate to have had any point, the cabinet secretary should have advanced a programme of action so that we could stand shoulder to shoulder and argue that there is an alternative to what is proposed. He should have said that, along with all the social agencies in Scotland, including the trade unions, we will articulate a different approach because we do not want to see severe cuts that put this country into a double-dip recession and result in costly rising unemployment. He should have said that there is something else that can be done but, unfortunately, he and his colleagues have been silent, because not only is there an election coming up next year, he needs to keep his own troops on side with talk of independence, independence, independence at every opportunity, even though we know that Alex Salmond and his cabinet secretaries have no intention of delivering what his back benchers want in that regard.
To return to the position that faces us, the Government’s chief economic adviser has suggested a ballpark figure of around £3.7 billion, which equates to an average cut of 3.3 per cent over each of the next four years. Why have we had no detail on what the cabinet secretary and his colleagues have got to say about capital expenditure? We already know from Audit Scotland that somewhere in the region of £4 billion probably needs to be spent on the public sector estate, never mind any future demands. The maintenance backlog on council property amounts to about £1.4 billion, and we need to spend £1.7 billion on roads, £700 million on the university estate backlog, £500 million on the NHS estate backlog and £2.7 billion on sports facilities. It will take 20 years to catch up on school improvements because of the present Administration’s dereliction of duty on the new school building programme.
That is the scale of what confronts us, but today we have heard nothing about how the SNP intends to address it. We do not know what its view is on pay and pensions, and we have heard little of what it has to say on efficiency savings. The Government has skirted over the issue of universality—
The member should wind up.
When it comes to structures—although I appreciate some of what Tricia Marwick said about police and fire services—again there has been silence. One or two things have been ruled out, but nothing has been said about the key decisions that need to be made. There has been a dereliction of duty by ministers who are charged with looking after the best interests of this country, and it is shameful.
We now move to wind-up speeches.
16:18
I am pleased that George Foulkes is back in his seat. Although I missed part of his speech this morning, I heard the start of it, when he said that I was wrong, but towards the end of it he said that I was right. I hope that he does not mind me saying that I have always looked forward to the end of his speeches.
In my speech this morning, I drew attention to research that Liberal Democrats have carried out on the operation of our enterprise agencies and the public sector overall, and the effect that the use of agency staff has on administrative costs. The debate has been at its best when it has focused on the policy choices that need to be made, regardless of the global sum of the Scottish budget. That is part of the work that is now ahead of us.
I highlighted the fact that after all the economic development reforms—reforms to Scottish Enterprise, VisitScotland and Skills Development Scotland—the overall spend on economic development is £380 million. The cost of administration, premises and staff is £140 million. That raises significant questions about whether we need to take a radical look at the delivery of economic development support in Scotland. Given that development is the absolute top priority of the Scottish Government, I hope that it will take those questions seriously, too.
Similarly, for the first time we now have information about the spend on agency staff across the public sector and Government—£145 million over the last full year, which is a 9 per cent increase on the previous year. Again, that needs to be looked at, because in many areas more expensive private agency staff are carrying out functions. It is not the outsourcing of work; it is the use of agency staff to do public sector duties. They cost a lot more and do not turn up on the head count.
A third area that requires proper scrutiny over the next few months to set the long-term direction is capital expenditure. That issue has been raised today, although not substantially, and it is the issue on which the independent budget review was most critical of the Government. We know that capital expenditure is a key area in looking for reductions, and the Government has said over the past three years that there is both a strategic and a prioritised list of projects. I was surprised, therefore, to read in paragraph 6.37—all members can see this—that
“In the Panel’s view, there is an urgent need to supplement local and organisation-specific prioritisation with a more comprehensive and strategic exercise across the ensemble of capital projects”.
That is a significant reflection from the independent budget review panel.
Policy on capital expenditure has been made in the past few weeks. One of the biggest areas of capital expenditure is within the national health service. On 19 August, an NHS circular was issued to all health boards to implement a new capital allocation policy. Funnily enough, the Government did not need to wait for a long-term considered view or, indeed, the United Kingdom spending review before putting the policy in place. The policy caps the funding that is to be distributed to health boards at £150 million, regardless of the Scottish Government capital budget for the NHS, which I remind colleagues was £550 million for this year. Even if there is a reduction of 20 per cent in NHS capital in one year, that will mean that £300 million is being withheld by central Government and not distributed to health boards.
We have heard much from this Government about promises to keep health care local, but we now have the bizarre situation that the Government wants directly elected health boards to have greatly reduced scope for capital expenditure—and when I say “greatly reduced”, I mean by 75 per cent. For the Borders, there will be a capped limit of £1 million, above which any capital expenditure will have to be bid for to ministers. That should not be the direction of travel. We believe that when resources are tight, there should be more localisation—more local priorities should be set and more decisions should be made by local communities for their local communities—not centralisation.
The Cabinet Secretary for Health and Wellbeing reminded the Parliament that the new Southern general hospital will be paid for purely by public finance. That is part of, if not an ideology, a mantra that we have heard about the evils of private finance and private gain in the public sector—we have also heard about it in this debate—so I was surprised to read in paragraph 33 of that circular that
“The lack of available capital does mean that use of private finance must be an option for Boards to test.”
Therefore, we have a situation in which not only has local boards’ discretion over their budgets been reduced, but the Government is saying that private finance must be an option for them to consider. No consistent policy approach has been presented as a result of the independent review process for us to know how the capital budget will be managed.
Given that the independent budget review panel said that the Scottish Futures Trust must have a central role and that the SFT said in a press release just last week that it is now supporting a portfolio of £7 billion-worth of projects, what is the Scottish Futures Trust doing?
We have heard today and we heard yesterday about Scottish Water, and many SNP members have said that Opposition parties should bring their ideas to the table. I did that last year. We argued that Scottish Water’s resources should be freed up—it should borrow not from the taxpayer but from other sources to free up £150 million—and we published our argument that the Scottish Water Horizons investment model should be followed to establish what I termed Scottish Water energy. By generating energy through Scottish Water, in a public-private partnership, much as the Scottish Futures Trust has proposed, we could offset much of the £40 million to £50 million electricity bill. That is just one example of an Opposition party putting forward a constructive suggestion, and it has taken a year for the Government to move towards it. We are pleased that it has done so, but we cannot afford to lose more time. That is why the Government must bring forward many more of its proposals now.
16:26
This has been a long debate. Whether it has quite matched the public’s expectation of the Parliament eventually coming together to deal with these difficult decisions, we must wait and see. We have heard some reasonably thought-provoking speeches. In my speech this morning, I did not mention the alternative of raising revenue, but George Foulkes, Patrick Harvie and Elaine Smith all made perfectly valid arguments for raising additional income rather than reducing spending. A number of options were floated, but it will not surprise members to learn that I disagreed with all of them. I would not support an increase in the Scottish variable rate of tax, and I certainly would not support tolls on existing roads. Indeed, it is ironic that the only thing that Patrick Harvie seemed to like in the report was the idea of road tolls, given that he seemed to be quite happy for the roads budget not to exist at all.
If I remember rightly, I was open minded but not wholly convinced that a road user charging scheme could be operated in the short term. Does the member have an open mind on the proposal for a financial transaction tax, which, prior to the election, Conservative front-bench members at Westminster were talking about? Where has that proposal got to, and what potential does it have to raise funds to protect public services that are under attack?
Any decisions on such a tax must be taken at Westminster—I am sure that the member knows that it is the subject of international discussion. Pauline McNeill made a valid point when she criticised, quite fairly, someone on the SNP benches for talking about Trident, which is utterly irrelevant to the decisions that we make here. However, she rather spoiled her speech when, as Stuart Macmillan noted, she went on to talk about other reserved issues. The fundamental point is that we must focus on what we can do here.
On revenue raising, there is an issue of principle: should we seek to raise more in charges or taxes rather than squeeze spending? I know that many members have not supported the council tax freeze, but it has brought welcome relief to families throughout the country, which has been a good thing. Anne McLaughlin made the point rather well when she said—I am paraphrasing—that we should not ask for a tax rise until we are sure that we have taken all the opportunities to squeeze out efficiencies in the system.
I see that George Foulkes is about to correct me on something.
No, I just wonder whether Derek Brownlee saw the answer to the recent parliamentary question that I put to the cabinet secretary, which showed that, if someone is poor, they get very little back from the tax freeze, whereas people such as Fred Goodwin, who live in big houses, get substantial amounts back. That cannot be fair, can it?
That comes back to the assumption that people who live in big houses are rich. If that is the case, as I have argued before, council tax must therefore be progressive. However, that is a whole separate issue.
We heard several speeches from the SNP and Labour benches about fiscal powers and the extent to which—whether we are talking about independence or some form of additional fiscal powers—having those would somehow mitigate the spending reductions. I do not often agree with Wendy Alexander, but I agree 100 per cent with her observation that we cannot simply assume that, if the Scottish Parliament had greater financial responsibility, we would be able to avoid spending reductions.
The reasons are threefold. First, proponents of additional fiscal powers, including those in the SNP, have always advocated having lower taxes to grow the economy and, although that would, of course, lead to higher yield over time, in the meantime it would lead to lower tax revenues, which would require lower spending. I can see the compelling economic argument that lower taxes could enable the economy to grow, but it also imposes a spending constraint in the short to medium term. That never seems to feature in the debate now.
I, too, heard Wendy Alexander’s speech, from outside the chamber, and I thought that she raised the pertinent points, as the member has done in reporting on it. Does he also believe in what Alan Greenspan says with regard to fiscal responsibility and capital investment? Alan Greenspan says that every economy and every country will find its own way out. A country cannot do that unless it has the comprehensive range of powers.
The point is that we are where we are. Even with the most optimistic speed of implementation of whatever fiscal powers we will have, we still have to deal with the spending decisions that we face now. Even if we had greater fiscal powers, there would still be the issue of variability in yield, which would require spending cuts from time to time as—unless we borrowed, which is the third aspect—revenues would be lower. Gavin Brown made the point that, if people think the answer to the problem is to borrow more or to borrow for longer, that also has the effect of squeezing out spending through higher debt interest payments, so the situation is not as straightforward as some have suggested.
The debate has been short on specific suggestions about how money can be saved. An honourable exception is Tricia Marwick—I appreciate that she was not articulating the Government view—who raised some perfectly valid points about whether local authorities are best placed to deliver education and about the appropriate structure for the health service and for local government. Those are valid points and there may well be opportunities to squeeze costs out by addressing them.
Other than that, the only significant saving opportunity that was identified by another party was distinction awards, which I think were raised by SNP members. They are a perfectly valid issue and one that Jackie Baillie also raised, but removing them would save something like £30 million when we require savings of billions of pounds. I have a sense that we are as yet nowhere near to facing up collectively to the scale of spending reductions that are required. I freely concede that the Conservatives have not set out sufficient spending reductions to take us to the savings that we need, but no party has and we have collectively to get there.
In a few months—whether people want to argue about the budget being published in November or not—we will not have a choice. For any party that aspires to be in government after May, the choices will come around and we will be judged not only on what we say at the election but on what we do afterwards. That is a test where I think the Scottish people will be looking very seriously at what we do and how well we do it. They expect a bit more than some of what we have had in the debate.
16:33
As we know, the independent budget review team’s report came out during the summer recess. Earlier this week, two of the authors—Crawford Beveridge, who acted as chair, and Sir Neil McIntosh—appeared before the Finance Committee to discuss their work. Mr Beveridge acknowledged that, despite the fact that he and his colleagues had asked for a quick response from the Government, that had not happened—that is not exactly true, because the Cabinet Secretary for Finance and Sustainable Growth, John Swinney, the man who set up the review group, did respond, but only to tell us which of the recommendations he could not accept.
John Swinney has also taken comfort from the fact that the team identified possible cuts amounting to £4.2 billion when the Government apparently needs to find only £3.7 billion over the next three-year period, so clearly choices can and will be made. As a slight aside, I think that it was Mr McCabe who asked Crawford Beveridge whether, if somebody told him that we could also save £4 billion, he would take it; he said yes, he would.
Just like last year, Mr Swinney summoned all the Opposition spokespersons on finance plus Margo MacDonald to take part in cross-party talks to try to get consensus on how to tackle the predicted reduction in Scotland’s budget—less the bits that he and the rest of the SNP do not want to look at. There was nothing new there, as that was his modus operandi last year. It did not work then because Mr Swinney refused to be open about his plans for his capital budget. We all know what happened. He cancelled the Glasgow airport rail link, but the budget went through because, as usual, he was backed by the Tories.
I have no doubt that the Tories will back John Swinney again. After all, we should give credit where it is due. It was Derek Brownlee, the Tories’ finance guru—he must be a finance guru; he is an accountant—who suggested the budget review, copying the Irish model called An Bord Snip. Acceptance of that plan bought the Tories’ support. However, the real pity—given the SNP’s fondness for copying everything Irish—is that there is a key difference between what happened in the Republic of Ireland and the Scottish model: An Bord Snip put a price on its proposals and clearly indicated what it would cut but left the final choice to the politicians. According to the CPPR, the three largest Irish Government departments provided the largest financial savings and the two largest the biggest staff savings. Interestingly, many of the public sector jobs that were subsequently shed came from the ranks of senior and middle managers. However, that was the politicians’ choice and it came after a lot of public debate.
The IBR report does not go into such detail, which is a pity because it means that the group has allowed the SNP Government to avoid its responsibilities. Despite all entreaties, neither Mr Salmond, as we heard yesterday, nor Mr Swinney, as we have heard today, is willing to say what budget decisions they are willing to make before they know exactly to the last penny what they will get from the comprehensive spending review, which is due to be announced by the Chancellor of the Exchequer, George Osborne, on 20 October. So much for the urgent action that the IBR team has called for.
Since the IBR report was published, my colleague Mr Kerr and I have repeatedly asked Mr Swinney to produce an indicative budget now. If he wants the type of all-party co-operation he is seeking, he must, as Mr Finnie pointed out, provide some real suggestions with numbers attached. His excuse that he has to wait until the chancellor makes his announcement might be understandable were it not for the fact that a lot of financial information is already out there. As members have said, the SNP already knows to within around 1 per cent what the total allocation is likely to be and it seems that, while local authorities, quangos and other bodies in receipt of cash from the Government are furiously working out best and worst-case scenarios, only Mr Swinney and the SNP believe that that cannot be done.
Yesterday, the First Minister attacked as “wrong headed” those who had asked for what he described as
“back-of-the-envelope budget”—[Official Report, 8 September 2010; c 28246.]
numbers sooner, a point repeated by his loyal acolyte Joe FitzPatrick this morning. Perhaps Mr Salmond is scarred by history. Those of us with long memories will remember an SNP press conference of some years ago at which Mr Salmond tried to answer a financial question by sketching out numbers on the back of an envelope and managed to get the answer wrong.
As Mr Purvis pointed out at Tuesday’s Finance Committee meeting, the majority of the tables in the IBR report have been sourced from the Scottish Government; indeed, many of them are taken from the report that was compiled by the chief economist, Andrew Goudie, for Mr Swinney himself. The SNP was happy to use that report’s contents for party-political purposes during the general election campaign back in April, but now it is not so sure, despite the fact that Dr Goudie has updated it. If the SNP cannot now rely on Dr Goudie’s report, which provides so much of the IBR team’s source material, what was the point of having the work done in the first place? It is completely misleading to suggest that Dr Goudie, his team and indeed other civil servants in the Scottish Government are just sitting waiting for 20 October before they start work on the Scottish budget.
What we have here is a group of ministers who are hiding from economic reality. How different that is from the situation in Wales that Bruce Crawford mentioned this morning. According to a report in today’s Western Mail, the Labour finance minister, Jane Hutt, asked every minister to spend the summer going through their budgets line by line to see what could be cut. The Welsh do not have an IBR; instead, they got the ministers to do the work.
Here, only yesterday, the Deputy First Minister—or the lady in waiting, as she might now be considered—told the chamber that she was
“aghast, shocked and deeply concerned to hear”
Labour leader Iain Gray say during a “Newsnight Scotland” interview that
“‘Labour would not ring fence the health budget.’”—[Official Report, 8 September 2010; c 28325.]
Where on earth has she been? The IBR report says in its executive summary on page 3:
“We could find no overwhelming rationale for protecting major blocks of expenditure ... and would be concerned about the burden this would place on non-protected areas.”
In fact, Mr Swinney’s position on that has also changed. Originally, he said that he would protect the NHS budget as well; now, he only says that he will guarantee the NHS consequentials. Was Nicola Sturgeon also aghast, shocked and deeply concerned to hear that the doctors’ union, the British Medical Association, said in its submission to the IBR that
“it would be naive to believe that the healthcare budget, one-third of Scottish Government expenditure, could remain immune”
from the expected budget cuts? Health spending does not begin and end at hospital gates, as Jackie Baillie has detailed. The BMA and other health professions recognise that. They want to see decisive action being taken now to start to prioritise the NHS’s core functions and ensure that they are protected so that quality of care and patient safety are maintained.
For the avoidance of doubt, Labour agrees that we would allocate the formula consequentials from Barnett to the health budget in Scotland. That is the same as the SNP’s position. While I am on that subject, we will not privatise Scottish Water. We are happy with the cabinet secretary’s continued efforts to reduce the number of public bodies that exist and the bonuses of the highly paid chief executives of some of them. We remain absolute supporters of free personal care and concessionary travel. I do not need to remind members, after all, that it was a Labour Government that introduced proposals on them to the Parliament in the first place. We will not make any changes to the Scottish variable rate.
Has Nicola Sturgeon instructed her officials to start line-by-line work on the health department’s budget? If she has not, she is guilty of a gross dereliction of duty. The same goes for any other cabinet secretary who has not done so. That has been done in Wales. Why not in Scotland? If that work is not being done, that beggars belief. That is why Labour members have called for an indicative budget from Mr Swinney.
I worry that the member’s speech is revealing some of the danger in the Government’s decision not to indicate, even in broad terms, where it is willing to make changes. If the Government will not do that, the early part of the debate will be characterised by other parties laying down red lines on what cannot be changed, and that will leave far less room for debate and far less prospect of seeing a budget passed. We all need to take account of that if we are going to persuade the Government to bring forward proposals.
I note what the member says, but the point remains that there is an SNP Government. That is the point that we have tried to make throughout the debate. The Government must take the responsibility on its shoulders.
We do not need to see Mr Swinney’s exact numbers, as we agree that some will change, depending on announcements from Westminster. However, this is a Parliament of minorities. If Mr Swinney wants to get his budget bill passed this year of all years, he must be open and honest about his thinking to allow all the parties to participate.
Pay represents the big bill; it consumes 60 per cent of the budget. The IBR report presents four options for consideration. One of the few suggestions that the IBR team made was that a pay freeze and a recruitment freeze should be considered together. What is Mr Swinney’s position on that?
Despite what Mr FitzPatrick may believe, the IBR team says that the council tax freeze should be discontinued and that it does not appear to be sustainable in the long term. Many council leaders—even those who are members of the SNP—agree with that, but Mr Swinney again prevaricates. He wants others to make the decisions for him.
Just after the IBR report was published, Kenny Farquharson of Scotland on Sunday wrote in a column:
“What we expect of a government in these difficult circumstances is for ministers to take charge and face up to their responsibilities. Instead, it looks like we're going to get a government that protects its pet policies, leaves its sacred cows unharmed and instead hands all the agonising decisions to local government. It's rich, coming from a party that stands for Scotland taking complete responsibility for its own affairs. At best, this is abdication of responsibility. At worst, it is cowardice.”
As we would expect, the members whom the SNP has rolled out to take part in today’s debate are still pushing the myth that, if only Scotland were independent, we would not have to make such difficult budget choices. However, the question whether an independent Scotland could have saved the Royal Bank of Scotland, HBOS and Dunfermline Building Society from collapse needs to be asked. I believe that the clear answer to that question is no. As a result of being covered by the UK Government’s fiscal recovery plan, thousands of jobs were saved and the savings, pensions and mortgages of millions of people were kept secure. I would hazard a guess that many of us in the chamber today have bank accounts and other financial arrangements with those two Scottish banks.
There is, unfortunately, a price to be paid for that economic recovery and Scotland has to take its share, but it does not need to be at the speed and with the depth of the cuts that the Tory and Lib Dem Government wants. We heard earlier today of the possible threat to shipyard workers from the defence cuts that are being considered. I agree with Robert Brown when he says that we need to take a bottom-up approach to making savings by asking public sector workers where savings can be made, but there has to be a top-down approach as well from ministers and particularly from the First Minister and his finance minister.
I very much doubt that Mr Swinney ever pays too much attention to what I say, but he does listen to my colleague and former finance minister Tom McCabe, who, in a very thoughtful contribution, made a strong plea for leadership from decision makers and commented that the SNP should not put party needs before the needs of Scotland. I hope that Mr Swinney reflects on that before the next meeting with the other finance spokespeople.
16:46
This has certainly been a long debate, by any stretch of the imagination. In many respects, it has given us an opportunity to consider the issues that are raised by the independent budget review and to examine where its contribution fits into the formulation of a budget for Scotland for 2011-12—because this is not just about the Government’s budget; it is about the budget for Scotland and the public services on which people depend.
I am going to disappoint Mr Whitton, because I am going to concentrate a lot on what he had to say. He made a number of substantial points in his speech. As with any speech that he delivers, there were a fair number of contradictions rippling through the contents. He said that I had somehow not shared with the Parliament information on the scale of the financial challenge that we face, and at the same time that I had in some way disowned the predictions of the Government’s chief economic adviser. I think that Jackie Baillie made that accusation as well.
I want to make it absolutely clear, in case neither Jackie Baillie nor David Whitton were listening to my speech earlier, that the figures that I quoted—an estimated reduction t in 2011-12 of the order of £1.2 billion in cash terms, with a real-terms reduction of £1.7 billion—to show for the nature of the challenge that we face. Those figures are derived from the analysis that was undertaken by the office of the chief economic adviser. Those are the numbers that have been shared publicly, and those are the expectations that are set out in the analysis of the office of the chief economic adviser. Based on that degree of information, the idea that the Government is somehow not providing information that allows Opposition parties to make a contribution to the debate is an unbelievable proposition.
In the cabinet secretary’s speech this morning, he cited further efficiency savings, cutting the number of public bodies and sharing services in the public sector. Can he put a price against any of those three proposals, which he suggested this morning are the bits of the review that he is going to pursue?
Wendy Alexander’s question relates to another of the interesting contradictions in David Whitton’s speech. At the same time as he criticised the independent budget review for its calculations on certain policy choices—I presume that he did not like the look of some of them—he also said that there were no costed options, which was also the centrepiece of Wendy Alexander’s speech. I am not altogether sure which document Wendy Alexander and David Whitton have been looking at, because the independent budget review report contains all sorts of costed options. It discusses how we could change eligibility for services and what the financial impact of that would be. It states that we could take different stances on the pay bill, which is the largest single area—£16 billion is spent on public sector pay, and there are costed options in the report. The idea that, somehow, the budget review did not give us costed options and, most important, that it did not give us options that the Opposition could consider—that criticism was deployed today—is a fallacy. All that the Opposition needs to do is to read the report.
I raised the issue in my speech, too, but the cabinet secretary was not in the chamber when I spoke. Given that the biggest cash cut will take place next year, will he tell us any of the costed options that will help next year’s budget? I said in my speech that even if the Government goes with the draconian option 3 for pay, which involves paying everybody the same next year as they are paid this year, no cash will be saved. Where are the options to save cash for 2011-12?
A range of options is in the independent budget review. One option, which Wendy Alexander just mentioned, is efficiency savings. The review said that we should go for a 2 per cent target as a minimum. Achieving a 2 per cent target would generate in the order of £500 million in efficiency savings. That is a costed option and I produced that while standing here, without thinking terribly much about it. That type of choice exists. It does not need me to do such a sum for the Opposition—the calculation is elementary. Loads of more sophisticated calculations are in the independent budget review document.
That takes me on to whether I should publish a budget now. Mr Finnie’s speech was thoughtful as usual. I always enjoy listening to him, because he always produces a thoughtful contribution to the debate. He said that we needed a direction of travel, not a full budget, although—this will be my only pejorative remark about his speech—he voted on 1 July for an amendment that demanded
“a draft budget by September 2010”—
Or?
Or more detailed financial information.
Correct.
Well, now we know that the Liberal Democrats mean only parts of an amendment for which they vote.
Or a multichoice referendum.
The Liberal Democrats could have lodged an amendment in July, but they left it to the dynamic Mr Whitton. They ended up voting for something that they did not believe in. I wonder when we will hear more about that—that might be a warning to my Conservative colleagues.
We are providing additional information and I made it clear in my opening speech that I would assist in providing more information.
I will dwell on Mr Finnie’s point about the direction of travel. If he and the Parliament examine what I said in my opening speech—doing so might be painful on a Friday morning, but I encourage members to read the Official Report—they will see that I set out several areas in which the Government is clearly taking the debate forward, such as efficiency, pay constraint and work on public bodies. I set out that thinking to Parliament.
I will be as specific as I can be with my question. The cabinet secretary said that scenario planning is for a reduction of £1.2 billion. It is now the second week of September. Is he saying that, in the work that he is doing on the budget, he has identified where that £1.2 billion will come from, or does he have a funding gap in the options that his officials are presenting to him?
We are involved in a process. That takes me to the nub of what the debate is about and why it would be ridiculous for the Government to publish a budget before we have the full financial information at our disposal. In an intervention on my colleague Linda Fabiani, Mr Purvis quoted my correspondence with him last year. As he said, I said in my letter to him that I published a budget last year to ensure that a specific choice was in front of Parliament. I will do that again in November, when the financial information is available to me.
However, Mr Purvis criticised me last year for producing that budget, because he wanted the opportunity for more dialogue, to form a consensus around the budget. That is precisely what we are involved in now. I commissioned the independent budget review to structure some of that discussion and we have had an all-day debate to give Parliament the opportunity to reflect on some of the questions.
Mr Brownlee, Mr Finnie, Tricia Marwick and some of my other colleagues have made suggestions as to how we could constrain expenditure, but the Labour Party has not exactly engaged with the question. I hope that it will engage with the question of how can tackle some of the challenges that we face.
Malcolm Chisholm’s speech was fascinating. In the course of it, he said that his priorities were education, housing and health. On a rough calculation, that accounts for about 60 per cent of the Government’s budget. We face acute pressures across the budget to resolve a number of challenges; we cannot make everything our priority. I encourage the Labour Party to engage constructively with the debate that we are having on this question.
I ask the cabinet secretary to engage just as constructively as he is asking everyone else to do. Malcolm Chisholm made excellent points, which echoed points by Ross Finnie. They asked for priorities to be set out. In my view, the cabinet secretary cannot put a figure on those priorities while there is so much debate in London and the money markets about the exact state of the economy, so I understand his position, but he must understand that Malcolm Chisholm and Ross Finnie also have a valid point of view.
I am prepared to accept all manner of valid points that are made in the parliamentary chamber; the only point that I am making is that we need to be slightly more specific than to say that our priorities are education, health and housing.
I am surprised by the cabinet secretary’s suggestion that no one else is putting forward ideas. He said that he will continue with efficiency measures, that there should be no privatisation of water services, that the number of public bodies should be reduced, that he supports free personal and nursing care, and that he supports concessionary travel—we agree with all those ideas. The suggestion is that he has gone through a plethora of ideas on which everyone else is struggling to get a grip, but he has not. He is a member of the Government; the Parliament merely wants the Government to act in the way in which it should.
That brings me to a point that Hugh Henry made. In one of his inevitable contributions to the debate, Mr Henry accused me of a dereliction of duty. I assure him that I have no intention of being guilty of dereliction of duty. I will fulfil my statutory duty to bring a budget to the Parliament, but I should not be criticised for creating the space to allow us to have a dialogue and a debate about establishing consensus. If I remember correctly, Mr Kerr said that if we published a budget today and the numbers were different in a couple of months’ time, he would be the first person to say that those were draft proposals that might be subject to change. That was touching but a tad unlikely, given the way in such issues are taken forward.
Will the cabinet secretary give way?
I certainly will. Mr Macdonald has made a surprise appearance at the last gasp. If he wants to make a contribution, I will allow him to do so.
That is kind of the cabinet secretary; I acknowledge that most of my enjoyment of the debate has been via the television screen, rather than in person.
I note the point that the cabinet secretary is making. Does he recognise that, in the past three years, local government budgets have been set in precisely the way that he describes, by him?
And by every one of my distinguished predecessors, including Mr Kerr and Mr McCabe.
That is the point.
Council budgets are not set until I have made the financial allocations and the Parliament has approved the local government finance order. [Interruption.] The distinguished former leader of a council is sitting on my right; I think that Keith Brown knows more about the matter than Mr Macdonald does.
Will the cabinet secretary give way?
No, I am drawing my remarks to a close.
It has been suggested that if the budget can be predicted to within £200 million, we are just about there, so there is no real need for much more clarity. I point out to Parliament that, in this Parliament of minorities, to secure parliamentary agreement for my 2008-09 budget I had to vary the draft budget by £19.3 million. In the following year, the figure was significantly higher—£92 million. In the year after that, it was £23 million. That illustrates the fact that there is not by any degree of analysis significant variation in the choices that are available to Parliament when the Government brings the budget to Parliament. What I am trying to do is to create the space for us to bring forward a proposition that is broadly agreed in these difficult times. I encourage the Opposition parties to take part in that process.