Good afternoon. We have no visitors up the stairs. The first item of business is a statement by John Swinney on the budget 2015-16. The cabinet secretary will take questions at the end of his statement, so there should be no interruptions or interventions.
The Scottish Government’s draft budget for 2015-16 is rooted in our purpose of delivering opportunities for all of Scotland to flourish through increasing sustainable economic growth. The discipline of that approach, achieving growth while delivering on our obligations of sustainability, cohesion and solidarity, has guided this Government since 2007.
Our record of delivery is rigorously assessed through the national outcomes that are set out in Scotland performs, which has been cited by the Carnegie Trust and others as an international leader in wellbeing measurement, and we will put the outcomes approach into law through the Community Empowerment (Scotland) Bill.
Alongside the draft budget, I have published a number of supporting documents, including an update on Scotland performs, an equalities budget statement and a carbon assessment of our spending plans.
This budget comes at a time when Scotland enters a new phase in our economic and political debate. The economy has grown continuously for almost two years and output is now above pre-recession levels. As a result, 2014 is forecast to be the strongest year of growth since the financial crisis began. The number of people in employment has increased by 87,000 over the past year, to reach a record high of more than 2.6 million, and female employment is at its highest level since records began. Scotland now has the highest employment rate, the lowest unemployment rate and the lowest inactivity rate of all four United Kingdom nations. As we move from recession to recovery, it is essential that the benefits of economic growth are not only maintained but shared by everyone across Scotland.
This budget also follows the most vibrant political campaign Scotland has ever experienced. In the course of the referendum campaign, whether we argued for yes or for no, all of us must have been struck by the unprecedented engagement of the electorate, and the hope—expressed with breathtaking clarity by Scotland’s people—that they want to live in a more prosperous and much fairer country than we do today.
I had hoped to deliver a budget that would lay the foundations for an alternative to austerity through full financial powers. We are not yet in that position. Since 2010-11, our fiscal departmental expenditure limit budget has been cut by around 10 per cent in real terms, and our capital budget has been cut by more than a quarter. Regrettably, once again, Scotland’s budget must strive to meet Scotland’s needs in the face of UK austerity, but I give the commitment, unreservedly, on behalf of the Scottish Government, that we will do all that we can within the powers available to this Parliament to ensure that the people of Scotland are able to live in a more prosperous and much fairer country.
This is my eighth budget to Parliament, but it is the first one in which I have been able to set tax rates—indeed, it is the first time that any finance minister has set national tax rates in Scotland since 1706, when the Scottish Parliament last set the rate of the cess land tax on property. Now, after a hiatus of 308 years, and in a moment of splendid coincidence, we return to the issue of the taxation of property transactions.
From April 2015, land and buildings transaction tax and Scottish landfill tax will replace stamp duty and UK-wide landfill tax in Scotland. In establishing those two taxes and determining the rates that will apply, we have put in place a Scottish approach to taxation that is based on the four maxims set out by Adam Smith in 1776: that the tax system should offer certainty, and convenience; that collection should be efficient; and that taxes should be proportionate to the ability to pay. It is that final maxim—that taxes should be proportionate to the ability to pay—that drives the decisions that I will announce.
As part of my commitment to a robust fiscal framework, I established the Scottish fiscal commission to provide independent scrutiny of the Scottish Government’s forecasts of tax receipts and of the economic determinants that underpin forecasts of non-domestic rates income. The fiscal commission has today published its report, and I am pleased to note that the commission has been
“able to endorse as reasonable the forecasts made by the Scottish Government”.
I have decided that the taxes raised should be revenue neutral, raising no more or less than the taxes that they replace. In setting rates for landfill tax, I am acting to avoid any potential for waste tourism through material differences between the tax rates north and south of the border, and to support our ambitious zero waste goal. As a result, I propose that the standard rate of Scottish landfill tax should be set at £82.60 per tonne and that the lower rate should be set at £2.60 per tonne. I am also setting the credit rate for the Scottish landfill communities fund at 5.6 per cent, which is 10 per cent higher than the UK equivalent. We will increase the funding available to address environmental harm without increasing the burden of taxation.
In accordance with Adam Smith’s maxims, we have designed land and buildings transaction tax to remove the distortions in the residential property market created by the existing UK system, which saw prices set to avoid increased tax bills and placed a barrier in front of first-time buyers. Our progressive approach ensures that the tax that is paid on property transactions is more closely aligned to the ability to pay and that those on lower incomes, particularly first-time buyers, are helped to become home owners in a balanced and sustainable way.
The following rates and bands will apply to residential transactions taxable under LBTT, with effect from 1 April 2015: the threshold for paying the tax will be increased from £125,000 to £135,000; a marginal tax rate of 2 per cent will apply to the proportion of the transaction between £135,000 and £250,000; and a marginal tax rate of 10 per cent will apply between £250,000 and £1 million.
Last week, many people, energised by the referendum debate, will have watched in horror as the Conservative Party cheered the prospect of reducing the incomes of many low-paid workers—not, as the Conservatives claimed, in order to reduce the deficit but to fund a tax break for the better-off. This Government will take a very different approach. As a result of the rates that I have announced today, nobody will pay tax on the first £135,000 of their house purchase; 5,000 more transactions will be taken out of tax, supporting first-time buyers and those buying properties in the affordable market; and tax will be reduced for a further 44,000 house sales up to the value not of £250,000, as had been speculated, but of £325,000. We will do that while ensuring that 90 per cent of taxpayers will be better or no worse off than under the stamp duty land tax.
As a final rate, we will set a top rate of 12 per cent for properties above £1 million, ensuring that the most well-off in our society make a contribution to the public purse. In exercising its first judgments on national taxes, this Government has put fairness, equity and the ability to pay at the heart of what it has done. That is the benefit of putting decisions about Scotland’s future in Scotland’s hands. [Applause.]
As a consequence of our proposals, a first-time buyer purchasing a house at £130,000 will pay no tax; a young couple buying a flat at £140,000 will save £1,300, paying only £100 in tax; and a family buying a home at £260,000 will save £4,500 on their tax bill.
The proposed rates and bands of LBTT for non-residential transactions will ensure that Scotland remains a competitive place to do business. I propose to set the following non-residential rates of LBTT with effect from 1 April 2015: the nil rate threshold will be set at £150,000; a marginal tax rate of 3 per cent will apply to the proportion of a transaction between £150,000 and £350,000; and a marginal tax rate of 4.5 per cent will apply above £350,000. Those rate proposals reduce the tax charge for the majority of transactions below £2 million, ensuring that 95 per cent of non-residential taxpayers are better or no worse off than under SDLT.
The following rates will apply to leases with effect from 1 April 2015: the nil rate threshold will be set at £150,000; and a marginal rate of tax of 1 per cent will apply to the proportion of a transaction above £150,000.
We are also today publishing a fact sheet and a tax calculator to demonstrate the benefits that those rates will have for home buyers in Scotland.
The Scottish Government takes a prudent approach to managing the non-domestic rates pool, but forecasts, by their nature, will never be 100 per cent accurate. Between 2008 and 2014, the difference between the total amount of non-domestic rates income received and the Scottish Government’s estimated budget was three tenths of 1 per cent—£40 million out of a total of £13.1 billion over the period—which was a small but welcome surplus.
The fiscal commission has considered our NDRI forecasts and has expressed the view that the buoyancy assumptions “seem optimistic”. As a result, I have revised down the NDRI forecast in the draft budget for 2015-16. Despite that revision, we will continue to apply the small business bonus scheme and maintain parity with the poundage in England, and I confirm that the public health supplement will conclude, as announced, at the end of this financial year. That will deliver the most competitive tax framework for business in the United Kingdom.
There is one outstanding factor in the devolution of taxation to the Parliament that I wish to raise. Despite repeated engagement with the UK Treasury, a final adjustment to the block grant has not yet been agreed. The budget having been set, any such adjustment must now allow the Scottish Parliament to meet the spending plans that I have set out and to enable an initial payment into the cash reserve.
In addressing the issues that were raised in the referendum, my draft budget is focused on three main themes: to make Scotland a more prosperous country; to tackle inequality; and to protect and reform public services.
The economic policies in the draft budget are focused on job creation, delivering investment and rebalancing the economy. Strengthening Scotland’s labour market performance by improving participation, workforce skills and the quality of employment is essential to achieving sustainable economic growth and ensuring that the benefits of that growth are shared.
Youth unemployment remains a key challenge. We have already allocated £12 million in this financial year to take forward the recommendations of the commission for developing Scotland’s young workforce. In partnership with local government, colleges, Skills Development Scotland and others, we will allocate a further £16.6 million in 2015-16 to expand apprenticeship opportunities, establish new regional employment partnerships and support employers to engage with and employ young people to ensure that they have access to job-relevant learning.
We will maintain our commitment to education that is based on the ability to learn and not the ability to pay by keeping free tuition at the core of higher education, with over £1 billion-worth of investment, and we will maintain our plans to increase funding for further education to £526 million.
Opportunities for all will support 16 to 19-year-olds with training and employment, and we will build on our successful delivery of 25,000 modern apprenticeship opportunities with a target of 30,000 starts each year by 2020.
To ensure that the benefits of economic growth are available to all, we are investing more than £300 million over two years to allow for expanded childcare provision of 600 hours for three and four-year-olds and 27 per cent of two-year-olds. That investment will reduce the cost barriers that face parents with young children when they look to participate in the labour market.
A consistent focus of the Scottish budget has been on expanding investment in infrastructure to secure economic recovery. I will continue to make that argument. In 2015-16, we will secure around £4.5 billion of infrastructure investment, including through the use of the capital borrowing powers that are available to us under the Scotland Act 2012, on top of the capital investment that is being facilitated through the tax increment financing pilot schemes and the national housing trust initiative.
Almost £650 million-worth of projects in the current £2.5 billion non-profit-distributing pipeline began construction in 2013-14 alone. The budget provides an update from the Scottish Futures Trust on the latest timetable for NPD projects and the achieved cost savings, principally through the M8, M73 and M74 improvement works.
I can also confirm the detail of the £1 billion extension to the programme that I announced in April. We will make £140 million available to create new learning campuses at Fife College and Forth Valley College; £330 million for the schools for the future programme; £400 million for health projects, including the Royal Edinburgh hospital; £60 million for up to three new justice centres; and £70 million for low-carbon and digital projects.
Our overall investments in schools, digital infrastructure, energy efficiency, health and transport, including an additional £10 million next year for cycling and walking infrastructure, target projects that will make the economy more productive, with assets that deliver greater energy efficiency and better outcomes.
This investment includes once-in-a-generation projects such as the Queensferry crossing where, on Monday, the Deputy First Minister announced a £50 million reduction in the project’s budget requirement, demonstrating this Government’s continuing determination to secure maximum value for public money.
We will focus on developing the international outlook of our businesses with support for exporting through our enterprise agencies and initiatives such as the Scottish Investment Bank. We will support commercialisation of world-class research in Scotland through our innovation centres programme, backed by up to £124 million of funding over six years. We will help businesses create employment by delivering the most competitive package of business rates relief in the UK, with more than half of all properties benefiting from zero or reduced rates through a relief package worth around £615 million next year. This is a budget that will support business and sustain growth.
We are taking a sustained approach to tackling poverty and inequality, but our efforts are being undermined by the UK Government’s welfare reforms. Child poverty organisations have warned that, by 2020, an additional 100,000 children could be living in relative poverty because of those cuts. Building on our expansion of childcare provision, this budget delivers our commitment of free school meals for all primary 1 to primary 3 children, worth £330 per year for around 170,000 children.
Our social wage commitments, including concessionary travel, free prescriptions, free eye tests, free personal care and freezing the council tax for the eighth year, support household incomes, particularly for those on the lowest income.
Last year we took significant steps to mitigate the impact of UK welfare reform on households in Scotland. It is to my regret that the direction of Westminster policy means that we need to take the same action again. This draft budget maintains our increased support for welfare reform mitigation at £81 million in 2015-16, including funding to fully mitigate the bedroom tax and support the Scottish welfare fund. The fund has helped more than 80,000 households, with around 50 per cent of awards being made to applicants living in the 20 per cent most deprived areas in Scotland. Some 500,000 households have benefited from our council tax reduction scheme, delivered in partnership with local government.
We are committing additional funding to tackling child poverty and will work with the Convention of Scottish Local Authorities to extend financial support to kinship carers. We will increase funding to the early years collaborative, working with community planning partners, to help increase the take-up of healthy start vouchers. We will focus resources on the life chances of some of our most vulnerable young people with a package of support for care leavers, a mentoring scheme for looked-after children and advocacy support for children in the hearings system.
Tackling inequality is not simply about mitigating welfare cuts. Supporting economic growth, improving labour market outcomes and lifting people out of poverty are mutually supportive objectives.
Investment in housing provides economic stimulus, improves the energy efficiency of housing stock, reduces fuel poverty and supports thriving, cohesive communities. Scottish Government programmes are on track to meet our five-year target of delivering 30,000 new affordable homes, including 20,000 for social rent by 2016. An investment of over £390 million will be used in 2015-16 to deliver 6,000 affordable homes, of which 4,000 will be for social rent.
To meet the needs and aspirations of the people of Scotland, this budget recognises that we need to go beyond that commitment. I am delighted to be able to announce that a package of measures spanning social, affordable and market housing will be boosted this coming year by an extra £125 million of financial support for the housing sector in Scotland.
This Government is committed to protecting public services and to driving forward an ambitious programme of public service reform. We are focused on improving outcomes and on ensuring that our services are sustainable in the long term. That is all the more essential in the face of the budget challenges that we face now and those that we will face in the future.
Efficiency and control of costs are vital. We therefore remain committed to the two-year public sector pay policy published last year, which supports those on the lowest incomes, including through the Scottish living wage; guarantees no compulsory redundancies; and allows for affordable increases in pay, within the tight budget settlement imposed upon us. That approach enables us to protect key public service commitments, such as maintaining police numbers and providing a fair settlement for local government, including for shared priorities in school education.
The national health service is a precious asset to us all. Our NHS faces financial challenges arising from the austerity of the UK Government and the latest round of pension changes, in addition to rising levels of demand for care. That is why it is essential for us to continue our programme of reform.
NHS boards and local authorities are working to deliver integration of the adult health and social care system, to achieve better outcomes for individuals and to ensure the long-term sustainability of our services. In this budget the process will be further supported by additional investment in primary care. Taken together, the integration fund and the additional primary care spend will rise to a total of £173.5 million.
The Government gave a commitment in 2011 to pass on resource Barnett consequentials arising from health spending in England to the NHS in Scotland. We have done so, in full, in each and every year since 2011. That means that, in each and every year, the Government has delivered a real-terms increase in health resource funding, just as we promised we would.
Our budget plan for next year would have involved increasing the NHS budget by £202 million in 2015-16. I can confirm to Parliament that we will not now follow that plan. Some Opposition members have suggested that the NHS budget would be cut next year by £450 million. Not for the first time, they are wrong. In addition to allocating more than £400 million in NPD funding for capital projects, I have decided to increase the health budget from this year to the next, not by £202 million but by £288 million in total, with an additional £86 million bringing the health budget to more than £12 billion for the first time ever. Under this Government, Scotland’s NHS is properly funded and will be kept in public hands.
The budget embraces new tax responsibilities for the Scottish Parliament and, within our current powers, deals with the challenges that are created by austerity from the United Kingdom. It harnesses the positive engagement that we saw in the referendum and provides a response that is anchored in the approach that this Government has pursued since 2007.
With a clear and decisive focus on tackling inequality and on making Scotland a more prosperous country, it is a budget for fairness and opportunity, and I commend it to Parliament.
Members who wish to ask a question should press their request-to-speak buttons now. I intend to allow about 40 minutes for questions.
I will begin, as I always like to, by agreeing with the cabinet secretary. He has indeed made a little history today by setting the first Scottish national tax rates for 300 years. He knows that we on the Labour side of the chamber welcome that, and that we welcome the fact that land transaction tax is more closely related to property value than its stamp duty predecessor was.
Will the cabinet secretary agree, therefore, that his historic tax-raising budget and his new borrowing powers exercise simply demonstrate once and for all that we can have a powerful fiscally responsible devolved Parliament here in Scotland, but within the framework of the United Kingdom, exactly as the people of Scotland democratically, decisively and emphatically chose just three short weeks ago today? [Interruption.]
Order.
During the referendum campaign, it emerged that the cabinet secretary’s eight successive budgets have failed to protect the NHS. Health spending in Scotland has not kept up with increases, even in comparison with the Tory-run English NHS. Our NHS has approximately £700 million less than it should have had, had the cabinet secretary kept his promises. The use of the private sector in our health service has spiralled—[Interruption.]
Order. Let us hear Mr Gray, please.
Plans are being made for approximately £450 million-worth of cuts to accommodate the resulting financial pressure. Whatever the cabinet secretary claimed, and no matter how he tried to dress up or spin the figures, page 25 of his budget document shows a real-terms increase in NHS budgets of about 1 per cent, which is a quarter of the increase that is planned in England.
Can the cabinet secretary tell us why he is letting our NHS down yet again?
First, we can all draw conclusions from the exercise of fiscal powers in this Parliament. Iain Gray has just applauded the decisions that I have made. He supported the legislation to enable us to take a different approach on stamp duty land tax in Scotland by the establishment of land and buildings transaction tax. What I deduce from that is that it is much better if we in the Scottish Parliament have the ability to take the decisions that are right for Scottish circumstances.
To flip—may I use that term? The Labour Party knows all about flipping—to another issue, there are in the UK system lots of things happening in respect of welfare that this Parliament disapproves of, and we are currently powerless to deal with all the consequences of those things.
I simply say to Iain Gray that he can draw his own conclusions from the exercise of tax responsibilities that we have undertaken, but the conclusion that I draw is that it is much better to determine such decisions in Scotland.
Before we go much further on the issue of the constitution, I remind Iain Gray of the vow, with its promise of additional and substantive financial responsibilities. We will be holding the Labour Party to the promises that were made in the referendum campaign.
On NHS funding, Iain Gray said that the Scottish Government’s use of the private sector has “spiralled” up. It has gone up from 0.8 per cent to 0.9 per cent. Is that spiralling up? In many of the years in which we have been responsible for the health service, we have spent a smaller proportion of the health budget on private facilities than the Labour Party did when it was in office.
On the health budget, in 2011, the Scottish Government committed itself to passing on every penny of resource from Barnett consequentials to the health service in Scotland. That is precisely what we have done. What was singularly absent from Iain Gray’s comments today was a welcome for the departure from the previous plan, with the result that we are putting even more money into the health service. Why can the Labour Party not welcome good news when it is staring it in the face?
I thank the cabinet secretary for the advance copy of his statement.
Let us begin with health. The cabinet secretary announced additional spending of £288 million. However, his statement was slightly different to the one that the First Minister gave at First Minister’s question time today. Does that money meet the actual manifesto commitment that was made by the Government? I am talking not about the commitment that it has subsequently said it made, but the commitment that it made on page 3 of its manifesto, which says:
“We are pledged to protect the NHS budget in Scotland.”
It says nothing about resource and nothing about revenue.
Read on.
Order. Let us hear Mr Brown, please.
Okay, I will read on.
I read it out this morning.
It goes on to say:
“Scotland’s National Health Service will receive in full the Barnett consequentials from increases in health spending down south.”
That is the end of that section, or pledge, on the NHS in relation to the budget. Does Mr Swinney’s statement meet the commitment on page 3 of the SNP manifesto? No.
I read it out this morning, as Mr Brown is well aware.
Mr Salmond! Stop heckling.
That one seems to have gone down well, Presiding Officer.
Secondly, in relation to the tax announcement that he has just made, how can the cabinet secretary justify an eye-watering 10 per cent tax on houses over the value of £250,000?
There are pockets of this country, such as Edinburgh, where family homes for hard-working families cost considerably in excess of that figure. We all understand that the tax increases as houses go up in value, but I think that that 10 per cent is difficult to justify.
Will the cabinet secretary also confirm that the non-residential rates that he read out—3 per cent on anything over £150,000 and 4.5 per cent on anything over £350,000—will make investing in Scotland less competitive than other parts of the UK?
Finally, Presiding Officer—[Interruption.] I still have the First Minister in stereo in my ear, which is making things difficult. It is so nice to see him actually here in the chamber—
Mr Brown, just get it on with it, please.
Lastly, the cabinet secretary said that this is a budget for business and the economy. He is doing work on internationalisation via the enterprise agencies. However, a year ago he said that those agencies were going to get £400 million, but he now plans to give them £341 million. Will he confirm that he is giving them almost £60 million less than he said he was going to give them a year ago?
First of all, I want to read Mr Brown the quotation from the 2011 Scottish National Party manifesto, which says:
“We recognise that if we want to have a first-class health service in Scotland the resources need to be there. That is why we have guaranteed that the revenue budget of the Scottish NHS will be protected in real terms.”
That is the commitment, and that is what has been followed by the Scottish Government.
Mr Brown’s second point was about the tax rates. I hear what he says about the issues arising from the judgments that I have made, but the fact is that average property prices in Scotland are significantly below the threshold at which individuals would have to pay more under the proposals that I have set out than they do under the current system. The judgments that have been made are therefore fair.
I also point out to Mr Brown that, as I said in my statement, 90 per cent of taxpayers will be either better or no worse off than they would have been under SDLT. Mr Brown voted for the land and buildings transaction legislation, as did all his colleagues. They essentially signed up to the tax being progressive and its relating to a person’s ability to pay, and my announcements today are the consequence of taking a balanced approach to individuals’ ability to pay in the light of the point that I have made about average house prices across Scotland.
On Mr Brown’s question about investment in the non-residential sector, I point out that 95 per cent of non-residential taxpayers will be either better or no worse off than they are under SDLT. Moreover, there is every evidence, given the strength of the Scottish economy, of Scotland’s attractiveness as an investment destination.
Finally, Mr Brown asked me to confirm that I had reduced the amount of money that will be available to the enterprise networks. He is absolutely correct. I see him going for his budget document—perhaps he thought I was going to dispute his point, but he is absolutely correct. I have taken money away to invest it in housing. I make no apology for doing so.
I thank the finance secretary for the advance copy of his statement. I welcome the progressive nature of the taxes that he has set out and the fact that they are based on the ability to pay. That is something that we can agree with.
It was also good to hear Mr Swinney proclaim the economic progress that we have made across the United Kingdom since this coalition Government came to power and, in that spirit, I commit our party again to working with him constructively this year in order to agree this budget. We have made a mark on previous budgets with regard to, for example, free school meals, childcare and colleges, and we will be seeking to do so again this year on childcare, to ensure that Scotland catches up with the level of provision in England. We will do so on colleges in order to ensure that we take funding back to the 2011 levels that it still lags behind. We will do so on mental health, in order to ensure that it gets the priority that it deserves, and on transport for the north-east and the Highlands and Islands. Will he agree to work constructively with us and our party on those priorities in order to make a big mark on this budget?
I welcome Mr Rennie’s remarks. He is absolutely correct that, on various occasions, his party and the Government have been able to come to agreement on budget provisions. I commit myself to working constructively with him on the budget and on the implementation of the vow, to ensure that there is no backsliding by anybody who signed up to the vow, in any way shape or form. [Interruption.] Mr McNeil would know about backsliding, believe you me.
Mr Rennie raised a number of substantive issues—I mean in particular his point about mental health. We will be happy to explore the issues. The First Minister explained at First Minister’s question time just a while ago the importance that we attach to ensuring that mental health services are given the priority that they deserve. If Mr Rennie wishes to raise those issues with me, I will of course consider them with the Cabinet Secretary for Health and Wellbeing and other ministers.
We need to make progress. Many members want to ask questions.
I warmly welcome the positive statement from the cabinet secretary. However, as convener of the Finance Committee, I record my concern that, as the cabinet secretary sets the rates and bands for the new devolved taxes, we still have no clear indication from the Treasury as to what impact that will have on the Scottish block grant because of the UK Government’s failure to address adequately the issue of the block grant adjustment. Does the cabinet secretary agree that UK Treasury politicking not only stands in stark contrast to the constructive approach that the Scottish Government has taken to the taxes, but raises concerns over the delivery of further devolved taxes, as promised by the unionist parties?
As Mr Gibson knows from his convenership of the Finance Committee, the block grant adjustment has been under discussion for a considerable time. One reason why we have not reached agreement is that the United Kingdom Government has advanced a mechanism that would alter the Barnett formula. I do not think that Parliament should be surprised that I cannot agree to that. Of course, that has now been contradicted by the contents of the vow, which assured us of the maintenance and continuity of the Barnett formula. So, in the light of the emergence of the vow during the referendum campaign, I make it absolutely clear that a mechanism that alters the Barnett formula is unacceptable to the Government. I have, of course, proposed alternative mechanisms that would allow us to resolve the issue; I look forward to doing that with the Chief Secretary to the Treasury and other UK ministers, in due course.
Last week, the Institute for Public Policy Research said that the UK needs 87,000 more engineers by 2020. However, as the college term started in Scotland, 818 young people who applied to study engineering at Dundee and Angus College could not get places because of the lack of money from the Government. That is 818 young people. What will the budget do for the engineering skills gap in Scotland and the hundreds of youngsters in the country who just want places at college?
The first thing that I am going to do is to check the figures that Jenny Marra has put forward, because from the experience of a number of my colleagues, it seems that figures are normally pretty dodgy when they come from her. [Interruption.]
Order.
That is the first thing that I am going to do, before I give a definitive answer.
Secondly, I will point out the various measures that the Government is taking to support the development of skills among young people in Scotland. I set out the £526 million financial commitment that has been made to the college sector in Scotland, which is a higher level of funding than in any year when the Labour Party ran the Administration in Scotland. That is a higher level of performance than the Labour Party.
We will implement the provisions of the commission for developing Scotland’s young workforce, with an additional £16.6 million of expenditure to add to the financial provision in 2014-15. [Interruption.]
Ms Marra, resume your seat.
We will work with Skills Development Scotland, colleges and other organisations to ensure that the needs of Scotland’s young people will be met. That will be done through the funding commitments that the Government has made as part of the budget settlement.
I welcome the cabinet secretary’s commitment to increase national health service spending above the Barnett resource consequentials. Can he confirm that, while other parties in the chamber talk about the need to review whether our NHS is sustainable, the Government will continue to ensure that it is sustainable and that it remains in public hands and free at the point of need?
The Government has fulfilled its commitments to invest in the national health service, as we promised we would do, and we have exceeded those commitments today by setting out additional resources. The Cabinet Secretary for Health and Wellbeing will make clear how those resources will be allocated in due course, but I can reassure Aileen McLeod of the Government’s determination to keep the health service in public hands and, most important, to ensure that it is well funded and well supported to carry out the vital work that it does on behalf of all of us in Scotland’s communities.
When I talk to housing associations across the country about how to tackle the housing crisis, one of the issues that keeps coming up is the level of housing association grant, which is currently at £58,000 and is seen as a barrier to future house building. Of the £125 million that has been identified to support housing, how much will be used specifically to support housing associations, and will any of it be used to increase the level of HAG?
I am sure that Mr Kelly is aware that the Government recently increased housing association grant, which I know from the feedback that I have received has helped to assist with development programmes. Only yesterday, I visited an excellent development by Castle Rock Edinvar Housing Association in Craigmillar, in the constituency of the Cabinet Secretary for Justice. It is an excellent programme that is regenerating the wider Craigmillar area in a fantastic way.
The £125 million will be available for a variety of different housing investments. We expect that a significant proportion of that will be available in the affordable housing market, and ministers will set out in due course how those resources will be deployed.
Can the cabinet secretary confirm what support is available in the budget to help to meet the Scottish Government’s climate change targets?
The Government has a range of different measures, including the support that we have put in place for energy efficiency and the new resources for the sustainable and active travel programme, which will assist in the development of walking and cycling infrastructure. There will be investment under the enterprise brief for renewable energy projects to support the Government’s wider economic ambitions, and we will take forward a variety of investments to make the Government’s own estate more energy efficient, and we encourage other public bodies to do so into the bargain.
I thank the cabinet secretary for his statement. He accused Mr McNeil of backsliding, but is he not himself backsliding on his vow that the scheme to mitigate the bedroom tax would be in place for April of this year, as promised by him, although it is not yet in place? He will be aware that people are being pursued for arrears of bedroom tax from 2013-14 and threatened with eviction. Given the agreement between the Scottish Government and Labour to fully mitigate the bedroom tax, will he take action to ensure that people in arrears from 2013-14 have their debts removed?
I know that the Labour Party keeps peddling that point, but I must tell Jackie Baillie that there is a legislative process that has to be gone through. I should add that the Scottish Government has no complaint about how that process has been handled by David Mundell in the Scotland Office and by the UK Government. The process is taking its course and we expect the orders to clear the House of Commons on 14 October. From there, they will go on to the House of Lords and we believe that they will emerge from there on 27 October, and we hope that the order may be made by Her Majesty in council on 6 November. I am not sure whether I have revealed a state secret by disclosing that fact, but that is the timetable that we are working to.
In the meantime, a letter of comfort has been issued by the Department for Work and Pensions, by the Scotland Office ministers and also by the Deputy First Minister on behalf of the Scottish Government, assuring local authorities that they can spend in excess of their current cap to address any issues about payments relating to the bedroom tax during the current financial year, while we wait for the legislation to take its course. That is what I call a belt-and-braces approach to ensuring that we mitigate in full the effects of the bedroom tax in Scotland.
I think that it is exciting that we now have tax as part of the budget for the first time since 1706.
Can the cabinet secretary confirm that the progressive approach that he has taken today with land and buildings transaction tax will be a benchmark for future taxation policy when we get more substantial tax powers in this Parliament?
It is always the accountants who get excited about tax matters.
It is important that, at the outset of exercising tax responsibilities of this nature, we make clear the values that underpin the Government’s decisions. We have set out openly and clearly in the legislation that was put to Parliament that we believe that taxation should be progressive. We embedded that value in the Land and Buildings Transaction Tax (Scotland) Act 2013, and I believe that it is an important value. It was bequeathed to us by Adam Smith in 1776 and it is as relevant in 2014 as it was in 1776.
I was intrigued by the cabinet secretary’s line that he intends to
“maintain our plans to increase funding for further education”.
Last year, the Auditor General for Scotland identified a real-terms cut in college funding between 2012 and 2015. Can the cabinet secretary confirm that today’s flat cash settlement for colleges maintains that real-terms cut to colleges over the three years? If not, can he tell me exactly how many of the 140,000 Scots who would have been denied a place at college will be given that vital opportunity?
The budget for colleges in 2014-15 was £521.7 million. The budget that is proposed in the document today is £525.7 million. The words that I used were absolutely correct: there is an increase in college funding as a consequence of the budget.
The Scottish Government committed to maintaining the number of full-time-equivalent college places at 116,000. We delivered 116,399 in 2012-13, the last year for which records are available, and the Government’s funding settlement is designed to achieve exactly that.
I welcome the cabinet secretary’s confirmation that local government will continue to benefit from a fair funding settlement. Will he set out how this year’s settlement compares with that of previous years?
The best way to make a comparison is to look at the increase in the revenue resources under the Scottish Government’s control between 2013-14 and 2015-16, which was 1 per cent. Over the same period, local government revenue funding has increased by 2.6 per cent. In a very tight financial settlement—I do not for a moment underestimate the financial challenges that are faced by public bodies, local authorities and everybody in the public sector in the delivery of public services—we have demonstrated our commitment to ensuring that local authorities are well funded by the Scottish Government.
I thank the cabinet secretary for the advance copy of his statement, in which he claims that this is the first time in a very long time that a finance minister has been able to set national tax rates in Scotland. However, non-domestic rates are set centrally and—as has been confirmed in the budget statement—this is the eighth year in which council tax is subject to centralised control by the Scottish Government. If we want to ensure that local government budgets in the future are not subject to strain through the setting of national budgets, surely it is about time that council tax—an extremely regressive, unfair tax that has been unreformed since the beginning of devolution—and the financing of local government are made the subject of creative debate and we start to get some solutions to the problem. We cannot afford to fudge the matter any longer.
Mr Harvie makes his point firmly. He will be aware that the Local Government and Regeneration Committee has encouraged discussion about the whole issue of local authority funding, which has also been raised in the report of the commission on strengthening local democracy, which was chaired by the president of COSLA. There is obviously space for that debate to take place.
In 2011, the Scottish Government made a commitment to work with others during this parliamentary session to consider what alternatives it might be possible to take forward to replace the council tax. I have many of the same views and feelings about the council tax as Mr Harvie. The Government will fulfil that manifesto commitment during this session.
My constituents in the Glasgow region will welcome the £81 million pledge to tackle some of the worst aspects of UK welfare reform, including by fully mitigating the bedroom tax and supporting the Scottish welfare fund. Will the cabinet secretary also do all that he can, within the constraints of this Parliament, to defend our working poor, who are under attack from the current, right-wing Tory UK Government?
One of the measures that the Scottish Government has pursued—to some significant criticism, it has to be said—has been the freeze in the council tax, which protects the working poor in Scotland. It is a tax for which many of the working poor will not get support. The Government interrupted the sky-high increases in council tax that were taking place. We gave protection to householders in Scotland and we gave them the assistance that they required.
I quite understand the issue that Mr Doris raises. There is a certain range of interventions that we can make. For example, our provisions on childcare assist the working poor in Scotland. The frustration that I have is that, while we are trying to take those good, substantive measures to support the working poor in Scotland, the Conservative and Liberal UK Government is making the issues much worse.
Apart from full bedroom tax mitigation, which Labour ensured was in last year’s budget, is it not the case that the “Tackling Inequality” section of the budget is full only of warm words signifying very little for those who are the poorest and most disadvantaged in society? Is it not time that we had a comprehensive assessment of the effect of all policies and budget lines on poverty, rather than a bland equality statement that says very little about poverty and ignores specific budget lines and policies?
I do not think that Malcolm Chisholm’s remarks are particularly fair, given the fact that the Equal Opportunities Committee has supported the Government on a number of occasions and has encouraged it regarding the quality and scrutiny of the equalities impact assessment that the Government now publishes on an annual basis as part of the budget.
I do not think that Malcolm Chisholm does his case much good by denigrating the judgments that committees make about the work that the Government takes forward. I encourage Mr Chisholm to read the material in the budget document about inequality. There is plenty of material in there that goes through specific, tangible mechanisms, through which the Government is trying to support individuals who face real difficulty.
Malcolm Chisholm has a bit of a brass neck to come here and complain to me about the difficulties that people are facing when his party, if it is successful in the elections in May 2015, is going to freeze child benefit. How on earth is that going to help people as they struggle to overcome the difficulties that have been created by the Conservative Government?
I welcome the £4.5 billion of investment in infrastructure that is set out in the budget and the additional funding of £125 million for housing. Can the cabinet secretary set out how that money will help to address inequality and poverty in our communities?
I set out the additional resources that are being made available to the housing sector within the context of the discussion on inequality. I saw a very good example of what the housing investment enables us to do on my visit yesterday to the Castle Rock development in Craigmillar. That is not just a construction project of new houses—beautiful though the houses are, with first-class craftsmanship. It has also been a successful project for regenerating the whole community, bringing new economic opportunities into the locality.
As somebody who was born and brought up in Edinburgh, I was thrilled yesterday to see the transformative effect of such a project in Craigmillar, which has been an area of persistent multiple deprivation over many years—indeed, over most of my lifetime. Projects of that nature can have an effect by creating employment and the benefits of regeneration and by attracting new economic opportunities into a locality. That is exactly how we will take forward the investment of that resource.
At the Education and Culture Committee meeting on Tuesday, Mike Russell said:
“As for teacher numbers, I am very keen to maintain and, if possible, expand them.”—[Official Report, Education and Culture Committee, 7 October 2014; c 27.]
That was a bit surprising, given that Mr Russell and the Scottish Government have cut teacher numbers by nearly 4,000 since they came to power. The Educational Institute of Scotland has described those comments as a highly significant development—
Can we get a question, Mr Bibby?
—in the same week that the Scottish Parent Teacher Council raised concerns about a shortage of teachers. I therefore ask Mr Swinney to give us a clear answer: how many more teachers will the budget provide, and will those teachers be in classrooms next August?
Generally, teachers are in classrooms in August. The last time I looked, they were generally in classrooms in August but maybe Mr Bibby thinks that teachers are never—[Interruption.]
Order.
I do not understand the point that Mr Bibby is making, to be honest.
In relation to the question about teacher numbers, local authorities are obviously the employers of teachers. The Government engages in discussion with local authorities about the strength and the size of the teaching profession. That is part of our discussions with local government. We are going to embark on discussions with local government about how we assess the achievement of educational outcomes in the course of the next few months, and of course there will be full discussion and consideration of those issues within Parliament in due course.
There are currently eight council tax bands and six UK property tax bands. I think that the cabinet secretary announced four bands today.
Contrary to how the cabinet secretary might characterise it, there are people living in communities such as East Renfrewshire and elsewhere who are not rolling in it but who find that property values are affected by the reputation of local schools.
Would it not have been possible for the cabinet secretary to introduce a more progressive series of bands between £250,000 and £1 million to ensure that families who find that they live in communities where schooling affects the price of homes, not necessarily their ability to pay, are not being swingeingly taxed on their children’s education?
Obviously, this is a draft budget and Mr Carlaw is free to advance his propositions in relation to it. However, I would like to share with him some of the dilemmas I face in looking at the issue.
One issue is that, if I want the proposals to be revenue neutral, the money has to come from somewhere. Mr Carlaw might take a different view on that point; he might think that we could do without a certain amount of the revenue. However, my view is that, when those taxes are transferred to the Scottish Parliament, they should be revenue neutral on this occasion so that we can sustain the investment in public services. Therefore, the money has to come from somewhere.
If I want to try to respond positively to what I am hearing from the construction and development market about the necessity of encouraging and motivating first-time buyers to get into the market, I have to find some way of balancing the revenue over the whole of the tax-paying population. I have made my judgments and I can be scrutinised on them and held to account for them, but that is the rationale behind them.
I understand that there will be areas of the country where there are some implications because house prices will be differently set than in other areas, but I have tried to exercise a judgment where the crossover point between people having to pay more rather than less under the land and buildings transaction tax is set not at £250,000—as Mr Johnstone was alleging in the newspapers on Monday—but at £325,000, which is significantly higher than the level that Mr Johnstone was pursuing on Monday.
This is a draft budget and there will have to be orders and so on, so Mr Carlaw is quite entitled to pursue his point of view. I simply ask him to consider some of the other dilemmas and issues that I have to wrestle with to ensure that the budget is revenue neutral and that it encourages and incentivises the wider property market within Scotland.
I would like to acknowledge the increase in money for housing. The fact that the cabinet secretary was honest enough to say that the money came from the enterprise budgets—Scottish Enterprise and, presumably, Highlands and Islands Enterprise—is welcome because, in the region that I represent, economic development is often seen as starting not with 150 or 400 houses but with four or five houses, which is enough to make a difference.
I ask that that fact is given some consideration in the spread of the money, because building just two houses in small communities in the Highlands and Islands can often make the difference in keeping a small builder and a number of other people in work and in regenerating the economy.
That is a very fair point. As I look at the affordable housing supply programme, the 2015-16 allocations are spread across every local authority. For example, in Highland Council, which is in the mainland area that Jean Urquhart represents, £16.642 million is allocated for affordable housing in the Highlands and Islands. I appreciate that, if even a small proportion of that money is spent in communities such as Ullapool, Kinlochbervie or other areas in the far north-west, that will have a disproportionate effect.
The point is well made. The Government takes every measure that we can to ensure that we encourage the uptake of and participation in such programmes around the country, because the same regenerative opportunities that I talked about in Craigmillar in the heart of our capital city are just as relevant in some of the more fragile communities in the north and north-west.