Plenary, 09 Oct 2008

Meeting date: Thursday, October 9, 2008

Official Report 618KB pdf

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First Minister's Question Time

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Engagements

To ask the First Minister what engagements he has planned for the rest of the day. (S3F-1086)

Later today, I will have meetings to take forward the Government's programme for Scotland.

I welcome yesterday's decisive action by the Prime Minister and the Chancellor of the Exchequer, when they launched what the First Minister called a "substantial package of stabilisation." Nonetheless, Scots are still worried about what the effects of the current crisis will be. We must consider in this Parliament what we can do in that respect. The First Minister has talked of the importance of using

"Scotland's financial resources fully to help reflate our economy."

What are his plans in that respect?

I also welcomed the package yesterday. There is an increasing awareness that the impact of the financial crisis is now prevailing on the real economy. The forecasts from the International Monetary Fund, which have come out today, indicate how serious that could be. I therefore hope that further action can be taken. On the financial sector, I still think that an underlying guarantee for all deposits would be a great boost to the confidence of consumers. Crucially, for the real economy, I think that further cuts in interest rates would be welcome.

On the Scottish Government's action, our economic committee meets every Tuesday at Cabinet and we bring in other ministers. We have brought forward £100 million of affordable housing investment, we have set new criteria for housing associations to purchase unsold stock and we are accelerating the European structural fund programme in order to try to move those funds into the economy. Those and a range of other measures are fundamental to ensuring that the Scottish economy shows maximum resistance to the international downturn.

I agree that accelerating investment in infrastructure is vital at this time. We welcome the bringing forward of £100 million from the affordable housing investment programme, but only £9 million of that has been allocated and £40 million of it depends on local authorities, whose budgets are under pressure. Is the councils' £40 million agreed yet? How will the Scottish Government quickly move to allocate the remaining £91 million to actual development in order to protect jobs and boost the economy?

Convention of Scottish Local Authorities leaders have agreed to the £40 million and we are in discussions about how to apply it. I am glad that there is agreement on the importance of getting maximum impact from the capital investment budget in Scotland. Housing is certainly one way to do that, and other capital infrastructure projects are another.

We must also acknowledge that the small business community is now under particular pressure. In addition to the small business bonus, which is proving to be so helpful to many of our small businesses throughout Scotland, I am delighted to be able to announce that this Government will aspire to the 10-day target for paying bills to small businesses in Scotland.

I welcome that announcement. The other night, the First Minister made the point that, as far as this issue is concerned, it would be a good idea to suspend normal interparty politics. He also reserved the right to make suggestions constructively. In that spirit, will he now act decisively to bring forward other projects, such as trunk-road maintenance programmes, Scottish Water improvements and the Bishopbriggs prison? Will he act quickly now to boost investment in reskilling and retraining in order to prepare for any job losses that we may face soon?

Last week, the Economy, Energy and Tourism Committee heard powerful evidence that delays in the development of the Scottish Futures Trust are creating a black hole in infrastructure investment. This week, Homes for Scotland told us that 100,000 construction jobs are at risk. In the national interest, will the First Minister set aside the Scottish Futures Trust for the moment to release funding for schools, hospitals and transport?

In the national interest in these troubled times, we should get the maximum value for money for the £14 billion that is being invested in capital infrastructure over the spending review period.

As Iain Gray knows, capital expenditure is constrained to within one year. Given the urgency of the situation, it would be entirely appropriate for Parliament to ask the Treasury for the flexibility to accelerate the capital budget from the three-year programme and to front-load it into the coming year. That would be of enormous help to our construction sector, which is currently working on the M74 completion project at a cost of £500 million. It is also looking forward to completion of the Southern general hospital in Glasgow at a cost of £842 million. That hospital is being built within the public sector and within the national health service.

I am grateful to Iain Gray for his suspension of party politics, even if his question hinted at a little doubt. We will ensure that we meet our housing targets and not do as the previous Administration did. On 21 August 2008, Iain Gray said that that Administration had passed the best homelessness legislation in the world but we did not build the housing to make it work.

The problem with the First Minister's reply is that the construction sector has made it clear that the hold-up in infrastructure investments is because of the lack of detail around the mechanism for funding those investments. The economist Keynes said:

"When the facts change, I change my mind. What do you do, sir?"

The facts have changed and Governments are changing their minds. The chancellor did not expect to be nationalising banks, but he has done what had to be done.

The First Minister, too, must know that the economic facts have changed. The models to which he has looked no longer work: Ireland is in recession, Iceland has been bailed out by Russia and Norway has effected an emergency draw-down of billions of dollars from the United States federal reserve. The price of oil is as volatile as bank shares and now sits at about $85 a barrel. The First Minister should be prepared to change his mind. Will he rethink his economic strategy, restart investment in infrastructure and begin to reskill Scotland to meet the challenges of the difficult days ahead?

Much as I welcome parts of the chancellor's initiative yesterday, I think he will be surprised to find out that he is proposing "nationalising" the banking sector as opposed to offering the recapitalisation and medium-term lending that are in his package.

It is dangerous for Iain Gray not to acknowledge the extent of the recession that is being forecast across the western world, which will affect everybody in the chamber. The International Monetary Fund projects that the UK economy will this year go into recession by almost 1 per cent. That will mean a huge challenge for us in Parliament to produce policies that will give people the confidence to take forward our economy.

There are two problems with the private finance initiative—as Iain Gray should well know. First, the Treasury says that, under international financial accounting practice, PFI will be brought on to the balance sheet as of next year. Secondly, because it is credit-card finance—perhaps it was part of the age of irresponsibility—it will cost the Government and Parliament £600 million in revenue this year. That figure will rise to £1 billion a year in the next few years. Labour says that it built schools. However, it did not pay for them; instead, they are being paid for from the Parliament's budget now at exorbitant rates.

As we accelerate the capital investment programme and seek to keep the Scottish economy from the deepening recession that is forecast, we must obtain maximum value for every pound in the public purse. That is what the Scottish Futures Trust intends to do and that is what all members should support.

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Secretary of State for Scotland (Meetings)

To ask the First Minister when he will next meet the Secretary of State for Scotland. (S3F-1087)

I have had two amicable conversations with the secretary of state. I hope to meet him on Tuesday 21 October in St Andrew's house.

I hope that the fact that the conversations were amicable has not bowled over the new Secretary of State for Scotland. May that conciliatory mood continue.

All political parties support the action that the United Kingdom Government has taken in the past 24 hours to restore confidence to the markets and in our banking system. However, everyone—whether lender, investor or taxpayer—recognises that life will never be the same again, particularly in relation to borrowing. The First Minister has referred to that.

The Scottish Government is contemplating several significant capital projects. One of the most vital is the new Forth bridge, which has a price tag of £4 billion. The Cabinet Secretary for Finance and Sustainable Growth, Mr Swinney, confirmed last month that he expects to make a decision on funding before the end of the year. Given recent events, will the First Minister confirm that the project will go ahead as scheduled and that an announcement on funding will be made to Parliament in the next two months?

I answer yes to both parts of Annabel Goldie's question. She is right to refer to the impact of recent events on the real economy. All of us should accord importance to moving away from the previous strictures on setting interest rates. As every member should be aware from their constituents, the real interest rate has increased sharply for consumers and small businesses as people's facilities have been renegotiated. I hope that, in addition to supporting the measures that were taken yesterday, Annabel Goldie joins me in supporting further interest rate cuts, so that the real economy is not hit by the cosh of the financial crisis.

I must confine my comments to matters that Parliament and I are competent to deal with. Interest rates are for others to determine.

We all agree that when times are hard, charity begins at home. In Scotland, 93 per cent of firms have 10 employees or fewer. The First Minister has shown his support for small businesses by adopting the Scottish Conservative policy of providing additional rates relief to small businesses from next April. I was delighted to hear today his commitment that the Scottish Government will assist those businesses by paying bills timeously, but I noticed his phrasing. I understood him to say that the commitment was restricted to money that the Government owes to those businesses. Will he confirm that that welcome dictate extends to Scottish Government agencies?

Yes—we will certainly advise Government agencies to follow the Government in trying to meet the target that I described, which is particularly important at this time.

I welcome the support of Annabel Goldie's party for the small business bonus scheme. I doubt that any of us foresaw the extent of the financial whirlwind of the past few weeks. Nonetheless, whether or not we forecast the situation, it was exactly the right policy to have. Small businesses the length and breadth of Scotland are benefiting from the small business bonus. As every single bill for energy and everything else goes up, the small business bonus has given vital relief from business rates. It is a key aspect of keeping small businesses going on the high streets of Scotland.

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Cabinet (Meetings)

To ask the First Minister what issues will be discussed at the next meeting of the Cabinet. (S3F-1088)

The next meeting of Cabinet will discuss issues of importance to the people of Scotland.

Yesterday's enormous financial package will be judged on what it does in the real economy: its impact on personal lending, individual deposits, bank credit to business, and jobs around the country. HBOS will now be a taxpayer-supported institution. When the First Minister said three weeks ago that the Lloyds TBS merger with HBOS was

"the only game in town",

he was right, but that is no longer the case, is it?

I have made it clear that my preferred position for HBOS would be for it to remain as an independent bank. We can speculate that, if the measures that were announced yesterday had been in place some weeks ago, perhaps different decisions would have been made. However, the reality is that there is an offer to shareholders, which the Government supports. The offer will therefore be decided on by the shareholders of both banks.

I return to the point about shareholders. Things have moved on, so there is a chance to say, "We want our bank to stay in Scotland. We want to keep the Bank of Scotland's independence, its headquarters and branches on every high street, and jobs that otherwise would be lost." That would protect competition for customers, which is also important for the long-term interests of Scottish business.

Will the First Minister negotiate to get Treasury and Bank of England support to HBOS? Will he take that argument to the Treasury? The rescue package creates taxpayer-supported institutions. Does he agree that the package gives Bank of Scotland shareholders another option? Will he take those fresh steps to keep HBOS in Scotland and to keep it independent?

HBOS has already been designated as one of the financial institutions that has available to it the measures that the Treasury announced. The point is already made. The key issue in terms of the Treasury and UK Government decision is whether the Government will introduce the statutory instrument to waive competition laws, which it shows every sign of doing. If that is done, the offer will be placed before the shareholders of HBOS and, indeed, Lloyds TSB. They will make the decision.

None of us can forecast—indeed, under the circumstances of the past few weeks, it would be extraordinary if we tried to—the exact circumstances that will prevail over the next few weeks. However, right now, the merger is the only offer on the table. Right now, it will be judged by the HBOS shareholders. No doubt they will, when they take that judgment, do so in the light of the events and circumstances that prevail at the time.

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Youth Offending (Links to Alcohol)

To ask the First Minister what steps the Scottish Government will take to address the link between youth offending and alcohol. (S3F-1108)

The Scottish Government is committed to addressing the causes and effects of offending by young people. We are taking action on a number of fronts to address the link between youth offending and alcohol. Through "Preventing Offending by Young People: A Framework for Action", we are committed to developing evidence-based interventions for young people whose offending is linked to alcohol misuse.

In June, we published a robust package of measures, which we believe can positively change for the better all Scots'—including young people—attitude to and relationship with alcohol. We have made record investment in prevention, treatment and support services by almost tripling investment to a total of £120 million over the next three years. In all those ways, the Government is committed to addressing the link between youth offending and alcohol.

I draw the First Minister's attention to research that Glasgow Caledonian University published this week that demonstrates that the number of young offenders who blame alcohol for their crimes has almost doubled in the past 30 years. Does he agree that that evidence further demonstrates the scale of the problem that our nation faces in its relationship with alcohol, and that it illustrates why we need a strategy that tries to change that relationship using bold ideas and effective solutions to ensure that change happens?

I fully agree that a bold and radical approach to tackling alcohol misuse is necessary.

The study that Michael Matheson mentioned suggests that almost 57 per cent of 16 to 21-year-old males blame their offences on alcohol, which is nearly double the figure from only 30 years ago. Members are welcome to disagree with some aspects of the programme of the Cabinet Secretary for Justice and to say that one or other measure does not fit their party's circumstances. However, I appeal to Parliament: for goodness' sake, understand that this country has a real crisis with alcohol, not just among young people, but in the population in general. There is public support for the action that the cabinet secretary proposes. It is high time that it was reflected in Parliament.

It appears that the First Minister does not recognise that members accept, probably unanimously, that there is a link between youth offending and alcohol. However, we have seen no evidence that such offences are committed by people aged 18 to 21. Given that Parliament has decisively rejected the principle of raising the minimum age for off-sales from 18 to 21, why does the First Minister intend to ignore its will?

When we introduce legislation containing a range of powerful proposals to address the problem, Parliament will decide which, if any, of the measures it is prepared to support. I make to Ross Finnie the point that I made generally; I do not mind his disagreeing with one aspect of the proposals, but the difficulty is that neither he nor his party is prepared to identify which measures they support, or to suggest alternatives. The great virtue of our introducing the legislation is that it will enable Ross Finnie to lodge amendments that can be judged on their merits, just as the bold proposals of the Cabinet Secretary for Justice will be.

The First Minister will accept that there is general consensus in the chamber that there is a problem. The question is how we deal with it. Does he agree that the core age group that is causing the difficulty is 16 to 18-year-olds? Does he find it surprising that so few people in that age group have been prosecuted for purchasing or attempting to purchase alcohol while underage? Will he undertake to ensure that there is more rigorous prosecution of the existing law?

As Bill Aitken must know, we are seeking much more rigorous implementation of the legislation governing retail outlets that supply alcohol to underage users. The rising incidence of alcohol misuse in Scotland stretches back at least a generation. Our consumption of alcohol has doubled and has gone out of line even with that of our friends south of the border, whose consumption of alcohol has risen out of line with that of the rest of Europe. The issue is not just the total absence of positive proposals from the other parties that are represented here in the chamber—we also need to reflect on what they were doing in government when the problem was staring everyone in the face but no action was taken to do anything about it.

Does the First Minister not realise that the most effective way of tackling alcohol misuse by young people is strong local policing and proper implementation of existing laws—passed during the previous session—rather than the gimmick of banning off-sales to under-21s? Will he look at the impact of high caffeine content in some alcoholic drinks?

I agree with Richard Baker's first point—so do people on the ground. Lillian Forsyth, who runs one of the Stenhousemuir shops that are taking part in the current pilot, said:

"I think it's been a big success—thanks to the local shops, police and councillors working together."

The pilot has shown a dramatic decrease in offending behaviour and incidents at weekends. In the light of the substantial evidence in support of the measures that have been taken in Stenhousemuir, which do not include additional police resources, when will Richard Baker and everyone else accept that there may be something in co-operation among people such as the shopkeeper whom I mentioned, the police and others, who have made the pilot such a significant part of what is being done to face down Scotland's problem with alcohol?

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Free School Meals

To ask the First Minister how many local authorities have indicated that they can afford to implement the Scottish Government's policy of free school meals for all primary 1 to 3 pupils without a reduction in any other services. (S3F-1107)

All local authorities signed the concordat that was agreed between the Scottish Government and the Convention of Scottish Local Authorities, under which sufficient funding is included in the settlement to enable all local authorities to provide P1 to P3 pupils with free school meals from August 2010.

As the First Minister is well aware, more than half Scotland's councils have publicly said that they cannot afford to provide free school meals within their existing resources.

Which education services will be axed to pay for free school meals? How can Scottish councils have sufficient funds to implement the policy, given that a Scottish Government report said that the costs of implementing the policy are variable and depend on local circumstances? First Minister, what makes you think that you are right—

Please speak through the chair.

Scottish National Party-run councils are telling the First Minister that they are right. Who is right, the councils or the First Minister?

I am delighted to tell Karen Whitefield that all SNP-led councils are committed to and will implement the free school meals policy. However, I want to take a cross-party approach. Not just SNP councils but the cross-party leadership of the Convention of Scottish Local Authorities are enthusiastic about the policy. Independent councils such as Orkney Islands Council and Shetland Islands Council are committed to and substantially support the free school meals programme. Even among the ranks of the Liberal Democrats there are enthusiasts. The deputy leader of Renfrewshire Council, Councillor Eileen McCartin said:

"Free school meals is in the concordat and councils should be working towards delivering it."

Given that cross-party enthusiasm, I would not like the Labour Party to be the only party in Scotland that tries to take the meals from the mouths of Scotland's children in 2010.

I bring more good news to the First Minister on that front. This morning, Labour-led Falkirk Council confirmed that the Scottish Government has made the money available without cutting any other service.

Ask a question, please.

Does the First Minister realise that North Lanarkshire Council failed to count its houses properly and underestimated its council tax revenue by £4 million, which would pay for free school meals in Lanarkshire for four years?

We should all be grateful to Alex Neil, not just for announcing the amity that has broken out in Falkirk Council but for identifying on behalf of North Lanarkshire Council how it will pay for a commitment that leaders of councils throughout Scotland signed up to.

Will the First Minister answer a simple question? If the money for free school meals is included in the local government settlement—I hope it is—why was it necessary to give additional millions of pounds to the local authorities that were involved in the pilots? Should those local authorities have received additional money? What was it used for?

The concordat introduces free school meals from 2010, whereas the pilots took place in the previous academic year. The answer to the question—I hope that this is simple—is three years. First we had the pilots, which the Government funded. Secondly, the policy will be rolled out throughout Scotland. That is in the concordat. Was that reasonably simple?

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Fuel Poverty (Pensioners)

To ask the First Minister what action the Scottish Government is taking to alleviate fuel poverty for pensioners. (S3F-1103)

Last year, we installed a record number of central heating systems in the private sector. So far this year, we have installed over 1,000 more than at this time last year. That will ensure that more fuel-poor pensioners will have heating systems before the winter. We have re-established the Scottish fuel poverty forum to advise on the future of the central heating and warm deal programmes and we look forward to the forum's final report, which is due to be published imminently.

Given that the central heating programme has proved to be an excellent way to ensure that pensioners have efficient and cost-effective heating systems, does the First Minister share my concern that, following the announcement by the Cabinet Secretary for Health and Wellbeing on 22 May, which changed the eligibility criteria but received little publicity, Scottish Gas says that pensioners are now at best uncertain whether they qualify or are, at worst, under the misapprehension that the scheme is no longer available? If he does share that concern, what does he suggest should be done to raise awareness about the new criteria to ensure that, in these difficult times, pensioners take up the offer of heating to which they are entitled?

The facts indicate that there is plenty of demand to take up the offer of heating. In the last year of the Labour-Liberal Administration, 10,238 heating systems were installed. Last year—the first year of the Scottish National Party Administration—with the additional budget that was committed by the Deputy First Minister, 14,371 heating systems were installed. The good news on installations does not stop there, because the figures for the first six months of this year are 1,000 greater than even last year's figures. In the light of the facts—that are chiels that winna ding—I hope that Margaret Mitchell will agree that there is no shortage of demand and that there is plenty more supply of the heating schemes coming through.

Meeting suspended until 14:15.

On resuming—