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Chamber and committees

Meeting of the Parliament

Meeting date: Thursday, December 9, 2021


Budget 2022-23

The Presiding Officer (Alison Johnstone)

I remind members of the Covid-related measures that are in place. Face coverings should be worn when moving around the chamber and across the Holyrood campus.

The next item of business is a statement by Kate Forbes on the Scottish budget 2022-23. The cabinet secretary will take questions at the end of her statement, so there should be no interventions or interruptions.


The Cabinet Secretary for Finance and the Economy (Kate Forbes)

Today’s budget will help to tackle the climate emergency, to support economic recovery and to reduce inequalities. It comes at a crucial moment for Scotland. It is the first budget of the parliamentary session and of the partnership Government, having been developed in co-operation with the Scottish Green Party. It delivers on key commitments that were made in the Bute house agreement, from free bus travel for young people to doubling the Scottish child payment.

As a result of that partnership, the budget redoubles our efforts to meet our emissions reduction targets in a fair and just way that creates economic opportunities and harnesses opportunities for green jobs, prosperity and greater wellbeing. Both PricewaterhouseCoopers and Lloyds Banking Group have concluded that Scotland is the top-ranked part of the United Kingdom for green jobs and green economic prosperity.

The budget supports Scotland at a point of transition, balancing our response to the immediate pressures of Covid and the cost of living crisis with longer-term action. If my last two budgets have been shaped by our immediate experiences of Covid, today’s aims to lift our eyes to the future—while remaining vigilant, of course, to the effects of new variants. It is a transitional budget, as people, businesses and services get back on their feet.

We cannot leave anybody behind in our determination to increase prosperity. The budget therefore directly contributes to our national mission to end child poverty, by doubling the Scottish child payment and investing in employability schemes to get people back into work.

Government alone can never deliver on all those ambitions, so we need to work collaboratively with all areas of Scottish life—public and private, national and local—to build on the renewed approach to partnership that we saw during the pandemic. However, in the absence of Covid-related funding—despite the very real on-going impacts of the pandemic and in combination with the pressures of inflation—the budget is one of choices.

Although the budget lays the groundwork for a green economic recovery from Covid-19, we must be clear that the UK Government’s spending review has hindered rather than helped us on that mission. In practice, Covid funding having been removed, our day-to-day funding next year is significantly less than in the current year, at a time when we undeniably need to invest in the economy and help public services recover.

That means that the budget cannot deliver the resources that all our partners will want, and, to be clear, there are areas in which I would have wished to go further. However, I present a budget that addresses key priorities, targets resources for low-income households, and paves the way for future investment over the life of this parliamentary session.

It is a budget of choices, but I believe that we have made the right choices. It is a transitional budget, maximising funding, where we can, to deliver key priorities now, but also paving the way for future fiscal choices.

Alongside today’s Scottish budget and medium-term financial strategy, I am publishing a framework for the resource spending review that will be published in May 2022 and will set out the Government’s multiyear spending plans. The framework sets out our principles, and I look forward to contributions from members of all parties.

I will now update the Parliament on the economic and fiscal context. First, I take a moment to thank the Scottish Fiscal Commission for the forecasts that inform the budget. Supply chain bottlenecks, labour market shortages, inflationary pressures and rising energy prices are all placing extra pressure on businesses and households that are trying to recover from the impact of the pandemic.

The Fiscal Commission forecasts a level of long-term economic damage to the Scottish economy from Covid-19 of around -2 per cent. That is similar to the Office for Budget Responsibility’s forecast for the UK economy, which means that the long-term impact of Brexit on the economy will be worse than that which has been caused by Covid-19: the OBR attributes a 4 per cent long-term reduction in living standards due to the UK’s exit from the European Union.

The impact of Brexit has not been felt equally across the UK. The latest figures from the ONS show that Northern Ireland is the only part of the UK where the economy has recovered nearly to pre-pandemic levels. That is not surprising, given that Northern Ireland has, in effect, remained in the EU’s single market for goods as a result of the Northern Ireland protocol. Although all other parts of the UK have experienced a negative impact as a result of Brexit, the scale of that impact is three times higher in Scotland than in London.

We said that Brexit would be bad for Scotland and that it would have a differential impact on our economy; it is, and that is having a direct impact on our budget. Members should be under no illusion that the budget that I am presenting today is smaller than it would have been because of the impact of Brexit on our economy—a Brexit that has been imposed on Scotland against the express wish of the people who live here.

Brexit, along with UK Government policy on immigration, continues to affect income tax receipts in Scotland. Based on the latest SFC and OBR forecasts, Scottish income tax receipts are estimated to be £190 million lower than the block grant adjustment next year. A number of factors explain that. The SFC and OBR both state that the continued uncertainty around the pandemic means that the uncertainty around forecasts may be greater than usual. The final position on the performance of income tax revenues next year will be known only once outturn data is published in 2024.

Strong earnings growth in London and the south-east, in particular among the highest earners, means that our budget is being reduced even while earnings grow in Scotland. That issue is accounted for in the fiscal framework for Wales, but not in ours, and we are clear that it must form part of the upcoming fiscal framework review. Rising inequality in England should not lead to Scotland’s budget being reduced.

Ultimately, however, without full control over economic policy and immigration, which the UK Government refuses to give us, we do not have full powers to mitigate the effects of Brexit, secure a green economic recovery from the pandemic and raise the revenues that our public services need.

Despite all that, there are reasons for optimism in the Scottish economy. The Scottish Fiscal Commission now forecasts that our economy will recover to pre-pandemic levels by April to June 2022, almost two years earlier than was forecast at the previous Scottish budget in January. Although the SFC is expecting a peak unemployment rate of 4.9 per cent at the end of this year, that is far below the 7.6 per cent forecast at the time of the previous Scottish budget.

I have taken those forecasts, and the overall state of our economy, into account when setting tax policies for the year ahead. I am proud of the consultative approach that we take to taxation in Scotland. We consulted widely in advance of the budget and met with a broad range of stakeholders. We will maintain our progressive approach, which we will reinforce when we publish Scotland’s first framework for tax.

Of course, I recognise the on-going need for stability and certainty for taxpayers at this time, in addition to targeted support, as a foundation for recovery. For businesses, over the past two years, I have delivered 100 per cent rates relief for the retail, hospitality, leisure and aviation sectors. Unlike England and Wales, we did not cap the level of support that was available at any time during that period. We were also the first Government to offer the certainty of a relief in 2021-22 when businesses needed it most.

On 1 July 2021, when retail, hospitality and leisure businesses in England started paying rates, their equivalents in Scotland continued to receive 100 per cent uncapped relief for a further nine months. Those decisions, along with our unprecedented decision to cut the poundage at the peak of the pandemic, have saved businesses in Scotland around £1.6 billion through the rates system alone since 1 April 2020.

Recognising that we have offered the most generous rates relief anywhere in the UK for the past two years, and the importance of phasing the return of rates liabilities, rates relief for the retail, hospitality and leisure sectors will continue at 50 per cent for the first three months of 2022-23, capped at £27,500 per ratepayer. That will prevent a cliff edge for businesses in those sectors.

I will also continue to offer the lowest non-domestic rates poundage in the UK, at 49.8p, delivering a below-inflation uplift for the fourth year in a row. That is in addition to our having the UK’s most competitive package of annual reliefs, worth £745 million.

I have heard the calls to support small businesses and our high streets in particular. A small business with a rateable value of less than £15,000 on a Scottish high street will continue to pay no rates for the entirety of next year, irrespective of what sector it is in, through the small business bonus scheme. A new-build in one of our towns will pay no rates for the first 12 months of occupation, through the business growth accelerator. Our competitive rates reliefs are directly seeking to revitalise our high streets.

On income tax, the Government’s priority has been to make the tax system fairer and more progressive, and to protect low and middle-income taxpayers. With increases in the cost of living and rising fuel prices likely to impact lower-income families the most, I believe that those principles are more important than ever. I can therefore confirm that income tax rates next year will remain unchanged. The starter and the basic rate bands will increase in line with inflation, and the higher and top rates will remain frozen at their current level.

Our progressive income tax policy means that the majority of Scottish taxpayers will continue to pay less income tax than they would if they lived elsewhere in the UK, while those who earn more will pay more. It maintains spending power in the households that need our support the most, yet also raises crucial revenues for our public services from those who can most afford it.

On land and buildings transaction tax, we will maintain both residential and non-residential rates and bands at their current levels next year. We will shortly launch a call for evidence and views on changing the additional dwelling supplement.

On Scottish landfill tax, we will increase both the standard and lower rates of tax on 1 April, to maintain consistency across the UK and support our ambitions for a more circular economy.

In sum, with our devolved tax policies we are delivering a more progressive approach to tax, while also supporting recovery. We are also generating the revenues that we need to invest in our national health service recovery plan, our new national care service, our real-terms budget protection so that our police can keep us safe, and the doubling of the game-changing Scottish child payment to £20.

The continued threat that Covid poses will remain the primary focus of the Government in the immediate term, not least in the face of the risk of further variants. Today, I can set out our plans to provide increased funding to respond to the pressures that have been created by the pandemic and to ensure that everyone can get the care that they need at a time, in a place and in a way that suits them. We are doing that despite the absence of Covid consequentials from the UK Government, which means that we must absorb those additional Covid costs within our overall budget.

In total, this budget provides record funding of £18 billion for health and social care, not only to address immediate pressures across the NHS, but to deliver the first step in ensuring that front-line funding, which directly supports patient services, increases by at least £2.5 billion by 2026-27. As we set out in our manifesto, we will deliver on our commitment to pass on all health and social care consequentials in full, with additional spend in excess of £1 billion in health and social care.

Members will be aware of the staffing difficulties being experienced in the care sector, with Brexit and the ending of freedom of movement once again being a major factor. The transfer to local government for social care includes an additional £200 million, which will deliver the £10.50 minimum wage for all adult social care staff in commissioned services and support the recruitment and retention of care staff, who are so vital to the health and care system, as we begin the process of creating a new national care service over the course of this parliamentary session.

The overall package provides £1.2 billion for mental health, taking forward our commitment to ensure that direct mental health funding increases by 25 per cent and that 10 per cent of all front-line NHS spend goes to mental health by the end of this session.

We also reaffirm our commitment to keep the promise, which will see the establishment of an initial £50 million whole family wellbeing fund to provide person-centred holistic support for children and their families. That funding will build during this parliamentary session as capacity and capability for transformational change builds in the sector.

The budget also deepens our partnership with local government. It delivers a settlement for local government that recognises the leadership role that councils play in their communities and their part in delivering a national recovery. It provides increased resources for social care and education, ensuring the continued delivery of vital local services across Scotland while working to increase the fiscal autonomy and power of local government, and it puts more say over how local budgets are raised in local hands. It includes record increased investment in teacher recruitment, supporting the recruitment of at least 3,500 teachers and 500 classroom assistants during this session of Parliament.

My investment plans for public services and action across portfolios are directed by three priority themes: tackling inequalities, supporting Scotland’s economy and ending Scotland’s contribution to climate change.

The budget backs our national mission to tackle child poverty and make Scotland truly a land of opportunity for everybody. The most immediate and direct way to tackle poverty is by putting more money into the pockets of the people who need it most, ensuring a decent standard of living for children, in particular. The budget invests in increasing family incomes and driving down the cost of living.

It provides £200 million for the Scottish attainment challenge—the next instalment of our commitment to provide £1 billion over this session of Parliament to tackle the poverty-related attainment gap. It provides more than £4 billion across social security and welfare payments, providing vital support for low-income families, carers and disabled people, including £1.95 billion to start delivery of the adult disability payment next year. It also provides £41 million for the Scottish welfare fund, helping people in times of crisis, £80.2 million in discretionary housing payments and £110 million for the provision of free bus travel for young people from January, putting more money in their pockets and encouraging more use of public transport.

The budget includes more than £72 million for the continued expansion of free school meals, providing lunches for all children in primaries 1 to 5 and special schools and supporting the infrastructure required to roll out lunches to all primary school children. It includes £544 million for the delivery of free funded early learning and childcare for three and four-year-olds and for two-year-olds from lower-income households, while taking forward work to expand that to one-year-olds from low-income households within this session of Parliament.

It also includes £831 million for affordable housing, progressing our commitment to deliver 110,000 affordable, energy-efficient homes across the next decade, leveraging private sector investment and supporting employment in the construction sector.

There is no question but that those measures will make a huge difference, but we can and must do more. I know that there is consensus in the Parliament for taking greater action to tackle child poverty, and it is right that the Government stretches every sinew to do so. That means that we have to make hard choices elsewhere in the budget, where necessary. We do so in order to fund the most ambitious anti-poverty measures anywhere in the UK and to respond to the UK Government’s decision to scrap the £20 uplift to universal credit.

The budget not only delivers on the pledge in the programme for government to double the Scottish child payment to £20 per week; as the First Minister announced last week, we will also bring forward that commitment to April 2022. That is nearly £200 million in next year’s budget going directly to lift children across Scotland out of poverty.

I know that, when our economy is prospering, more public revenue can be reinvested, and we cannot talk about public services without ensuring that we support businesses to recover. The budget therefore invests in Scotland’s ambition to be a wellbeing economy that enables successful and profitable business activity, entrepreneurship and innovation that is environmentally sustainable and that supports all parts of Scotland to thrive.

We know that the biggest challenges that businesses face now are labour shortages, rising costs and inflationary pressures. Our budget seeks to respond to each of those issues, to invest in skills and employability and to make catalytic investments that regenerate areas, boost trade and keep costs low. That process will be long term, and I will shortly publish the Government’s national strategy for economic transformation, to provide vision and leadership for the longer term. However, the process also starts now, with this budget.

Today’s budget provides over £205 million in capitalisation for the Scottish National Investment Bank, helping it to deliver against its missions of supporting Scotland’s transition to net zero, building communities and promoting equality, and harnessing innovation.

Scotland’s geographical diversity is one of our great economic strengths. I can confirm the investment of £51 million in rural services and islands, including activities that are linked to the national islands plan and the introduction of a new islands bond fund.

Few challenges are as acute as labour shortages, so we will invest more than £225 million in Skills Development Scotland to support a range of national training interventions. The budget also allocates nearly £2 billion to Scotland’s universities and colleges to deliver high-quality education and training.

More generally, I am providing more than £370 million to support our enterprise agencies and nearly £50 million to VisitScotland, to strengthen key sectors such as tourism in order to promote innovation and achieve sustained success in new and emerging markets.

Those actions, taken together with the package of non-domestic rates measures, provide a strong platform in the budget to enable Scotland’s economy to thrive and prosper now and long into the future.

I turn now to the climate crisis, which is also an enormous economic opportunity for Scotland. Our hosting of the 26th United Nations climate change conference of the parties—COP26—showcased the work that we are already doing in Scotland and the depth of commitment that exists to go further. I have worked closely with colleagues in the Scottish Green Party to shape that commitment, and I welcome their support and constructive challenge.

Through the budget, we will lay the groundwork to protect and restore our natural environment, decarbonise our homes, industries and transport, and position ourselves as a global leader in renewable energy and green and digital tech. Meeting our ambitious emissions reduction targets will require transformational activity across all sectors of the economy and society, which will not be an easy task, but we are up for the challenge.

The just transition to net zero needs investment now, and today’s budget sets out almost £2 billion of low-carbon capital investment in Scotland’s public infrastructure to support the decarbonisation of our homes and buildings, transport and industry. We will also continue to work with the private sector to mobilise investment behind the low-carbon transition. The budget will lay the groundwork to secure a green recovery, and it will follow through on our commitment to implement the recommendations of the just transition commission across the Parliament.

Today, I can confirm the first £20 million of our 10-year £500 million just transition fund for the north-east and Moray; £336 million for energy efficiency and low-carbon and renewable heat, which will cut emissions, make homes warmer, tackle fuel poverty and create jobs across Scotland, and which will include £60 million for large-scale heat decarbonisation projects; and £53 million across a range of energy transition and industrial decarbonisation projects, including £20 million for energy transition fund projects in the north-east.

I can confirm £23.5 million for our green jobs fund to help businesses to create green employment through investment; a record investment of £150 million in infrastructure to make walking, wheeling and cycling safer; £1.4 billion to maintain, improve and decarbonise Scotland’s rail network; and £43 million to drive forward Scotland’s circular economy.

I can also confirm £53 million to restore Scotland’s precious natural environment, including our internationally important peatlands, addressing the twin crises of climate change and nature loss; £25 million this year to start work on transforming farming and food production in Scotland, enabling us to be world leading in sustainable and regenerative agriculture; and an investment of a further £69.5 million in woodland creation and the sustainable management of Scotland’s woodlands, to enable an increase of our woodland creation target to 15,000 hectares a year.

Climate change requires global action that is driven by local and national commitments to ensure that we deliver the changes that are needed, and today’s budget demonstrates that that commitment exists here. Let no one be in any doubt that this Government, working in partnership with the Scottish Greens, is absolutely committed to meeting our statutory climate change targets and delivering the net zero society that we not only want but need.

Turning to the issue of pay, the principle of fair work is a cornerstone of this Government’s economic approach, and I have placed that principle at the centre of my decisions about public sector pay. I recognise the challenges that are presented by inflation and rising living costs, as well as the huge effort that the public sector has made in responding to the pandemic. Our pay policy for next year therefore focuses on people on low incomes, continuing our progressive approach and guaranteeing an inflationary uplift of at least £775 to those who earn up to £25,000, £700 to those who earn between £25,000 and £40,000, and £500 to those who earn above £40,000.

In October, the Government announced an uplift in pay for social care workers to £10.02 per hour. Today, I announce a minimum wage floor of £10.50 per hour across all bodies that are covered by the pay policy, with specific funding to apply that for adult social care staff. Targeted support for many of our lowest-paid staff across the public sector is hugely important, and this budget delivers that support.

Today’s budget is a budget of choices. We have chosen to tackle child poverty, invest in the transition to net zero and boost economic prosperity. The budget delivers on our manifesto promises of more teachers, more funding for our police and record investment in our health and social care services as we stand united against the impacts of Covid-19. It is a budget for households facing a cost-of-living crisis, targeting resources at low-income families and making bold choices to address the devastating impacts of child poverty. It is a budget for our businesses and workers, with further financial support for enterprises now and a clear plan to achieve longer-term prosperity. It is a budget for a net zero future, which once again shows Scotland leading from the front in the defining mission of our generation.

I commend this budget to the Parliament and to the people of Scotland.

The Presiding Officer

The cabinet secretary will now take questions on the issues that were raised in her statement. I intend to allow around 60 minutes for questions, after which we will move to the next item of business. I would be grateful if members who wish to ask a question would now press their request-to-speak button.

Liz Smith (Mid Scotland and Fife) (Con)

I thank the cabinet secretary for advance sight of her statement, and I thank Labour for advance sight of its questions.

The cabinet secretary is a fair-minded person, but I am astonished that she has not at least acknowledged that, for this budget, she has at her disposal record block grant funding from Rishi Sunak and the UK Government. That funding is up by 10.6 per cent, proving the benefit of Scotland being part of a strong United Kingdom, which is needed now more than ever as we battle our way out of the prolonged pandemic.

The Scottish Conservatives were clear that the focus of the budget should be twofold: supporting our public services coming out of Covid-19 and accelerating our economic recovery. Those two goals are not separate. Each relies on the other and, achieved together, they will secure the wellbeing of Scottish jobs, companies and families into the future. In that respect, we welcome the doubling of the child payment, which we had called for.

That is absolutely shameless!

We had called for it.

You can’t even keep a straight face.

Liz Smith

I can keep a straight face.

We understand that budgets are about choices, and in the lead-up to today’s statement, we made choices that show that it is possible to balance support for public services and the move to net zero with the protection of jobs and stimulating economic growth.

Such is our concern on the back of what businesses were telling us, we wanted the Scottish National Party to extend 75 per cent rates relief to customer-facing businesses in the next financial year. That would be worth £631 million to businesses. We therefore think that businesses will be disappointed by today’s budget statement. Why is there no commitment to a clear programme for long-awaited structural reforms to the Scottish economy, especially the reform of non-domestic rates, as called for by Liz Cameron and Scottish Chambers of Commerce? Why is there no commitment to greater investment in skills and the digital infrastructure, as called for by business organisations and colleges and universities, all of which will play leading roles in securing Scotland’s future economic success?

Secondly, we wanted to ensure that money goes to front-line health services in the care sector, which clearly has significant resource issues. Scotland is set to receive £2.1 billion in healthcare consequentials and, although £1.2 billion in consequentials is coming to local government, there is clearly a real-terms cut to local government in the budget. Perhaps the cabinet secretary can explain what that choice means and whether the local authorities will have the autonomy to spend the money that is going to local government as they choose.

Thirdly, we will reject any attempt by the SNP, whether now or in later budgets, to backtrack on its £2.2 billion commitment to upgrade the road network, including the dualling of the A9 and A96, which are important for connectivity and economic growth and provide a much-needed lifeline for our rural communities, many of which suffered disproportionately during the pandemic. After all the confusion that we have seen in recent weeks, and the absence of clarity in today’s statement, can the cabinet secretary tell us when those two upgrades will be completed?

We will measure all the announcements in the budget against the essential test of whether they will assist efforts to protect jobs and families, and safeguard our economy. The budget process is a chance for the Scottish Government to put aside party-political priorities and act in the national interest. That will be the test of whether this budget delivers for Scotland.

Kate Forbes

Let me start with the block grant funding. We cannot, by any calculation, come to any conclusion but that next year’s budget is a reduction on this year’s. Why? It is because the Tories have wished Covid away. They have stripped out all Covid consequentials. That is funding to tackle the impact of Covid on our health service, our justice system and our transport system. We know, and the people of Scotland know, that Covid continues to have an impact, so to wish away and strip out all Covid consequentials completely disregards the risks that our public services and people are facing right now.

Liz Smith has made some specific asks. On rates relief, we should remember that, under the Conservative Government, retail, hospitality and leisure businesses started paying rates last July. In Scotland, they are still not paying rates. In terms of dealing with the on-going pressures that businesses face, there is a far bigger cushion in Scotland. Many of the concerns that businesses are raising with us—for example, about labour market shortages, the rising cost of materials, and the impact of inflation—have been inflicted by the Tory Government.

The chancellor has announced his big reform to the non-domestic rates system. Interestingly, he took our best ideas and reformed the non-domestic rates system in England according to measures that were already in place in Scotland.

My last point to the Conservatives is that, if they want to deliver the many choices and options that they have set out today, they will need to tell the Parliament how they would do that. What would they cut, or what taxes would they hike? At the end of the day, if we are to deliver the health and social care funding, to protect businesses against the pressures that they face and—most important—to absorb all the Covid costs within our budget because there is no additional Covid funding, the Parliament faces very stark choices. Every party, including the Tory party, needs to be clear about what it would cut or which tax rates it would raise.

Daniel Johnson (Edinburgh Southern) (Lab)

Rather than saying, “Thank you for advance sight of the statement,” perhaps I should begin by saying, “You’re welcome.”

The people of Scotland are not just wondering, “When will we get back to normal?”; the real question that they are asking is, “When will we move beyond the crisis?” Unfortunately, the budget fails to answer that question. Challenging times require bold action but, rather than rising to that challenge, the budget simply offers more managed decline under the SNP.

Of course, there are things in the budget that we welcome. It is right that the NHS gets the bulk of new funding, but we know that there are more people stuck in hospital because we cannot recruit enough care workers to look after them than there are people in hospital with Covid. That is why care workers deserve a fair pay increase to £15 an hour, not a meagre pay rise of barely 50p. That is an insult to those hard-working workers.

High streets and local shops are the heart of our communities, but they face a bleak new year. With “To Let” boards springing up across Scotland, it is not enough to write off retail, manage decline and reset the cliff edge three months into the summer.

Action on child poverty will always be welcome, but the Government’s targets demand not just doubling the child payment, but increasing it to £40 by April 2023.

As we consider the prospect of new restrictions, every parent is wondering whether this winter will bring more disruption to their children’s schooling. Recovery means implementing in our children’s classrooms the same ventilation systems and standards that we demand in our offices, rather than just asking them to open the window and hope for the best.

Over recent weeks—and again today—the cabinet secretary has attempted to dampen expectations, claiming that she has no money, but that is not true. This year, the block grant will increase by £3.9 billion, or 7.7 per cent in real terms. That is the largest increase in the block grant since 2001.

Therefore, the cabinet secretary has choices. She can choose to use those funds to be bold and deliver recovery, or she can use them to continue SNP managed decline. Scottish Labour makes no apologies for pushing her to be bold and make recovery real, rather than just a political posture or a name check.

How will the cabinet secretary entice more people into social care work when she is offering social care workers an increase in their wages of only 48p, which represents a rise of just 0.6 per cent above inflation? How many retail businesses does she think will go to the wall three months after the new financial year begins? How many businesses pay rates at all, if their rateable value is below £15,000? How far short of its own child poverty targets will the Government be at the end of the next financial year?

Kate Forbes

It is unfortunate to hear the Labour Party parroting the Conservatives’ press release in terms of the funding available. The Conservatives will parrot that line, but Labour should get behind the headlines and recognise that we are having to absorb all the Covid costs within our budget.

One advantage of seeing Labour’s asks ahead of time was that it allowed me to do some calculations. We calculate that, overall, those asks would require approximately £3 billion of additional funding. Assuming that the Labour Party does not want us to cut anything that has been published in the budget, does it want every taxpayer in Scotland to pay £1,000 more per year to deliver that?

I come to the specifics of Mr Johnson’s questions. I agree that we should pay our carers more. That is why we have confirmed a wage floor of £10.50 per hour, which is higher than the national minimum wage and higher than the real living wage, and we are fully funding local government to pay it. That uplift takes pay for social care workers significantly higher than the national living wage of £8.91 per hour that applies to many social care workers elsewhere in the UK, including those in Wales who work under the Labour Party. It is also higher than the £10 per hour that the UK Labour Party wants to be paid to carers in England.

On high streets and local shops, we agree that we need to invest in our high streets to ensure that local enterprises can thrive. That is why we have taken 110,000 small businesses out of paying rates altogether. The member knows as well as I do that the investment in our high streets to ensure that our local towns are thriving comes from more than the rates.

Labour members have previously called for the Scottish child payment to be £20 per child per week. Now that we have delivered that, they have increased their figure. I have a question for them. Will they vote for this budget to provide £20 per week for every eligible child in Scotland, or will they vote against the £20 per child per week?

The Scottish Liberal Democrats will always—[Interruption.] Presiding Officer, there seems to be some disruption.

Just carry on.

Deputy First Minister, I thank you for your contribution, but I will chair this meeting of Parliament—[Laughter.]—and we will hear Mr Cole-Hamilton.

Alex Cole-Hamilton

Thank you, Presiding Officer.

The Scottish Liberal Democrats will always engage constructively in negotiations on the Scottish budget, particularly in a year such as this, when it carries such importance. We did so last year; an additional £120 million was afforded to mental ill health, so we backed the Scottish Government’s budget before the election. We will need to do far more, given the hidden pandemic of mental ill health that has been caused by Covid-19.

Our party is dismayed to see that the budget includes real-terms pay cuts for teachers, nurses and many thousands of public sector workers, in the face of a rise in national insurance contributions and a rising cost of living. I agree with Labour that the derisory pay increase that has been offered to social care staff will not be the transformational injection that we need in order to make it a profession of choice and to attract people into it.

The cabinet secretary described this as “a budget of choices”. It is concerning that she has put preparation for another independence referendum on page 103, but that nowhere within the pages of the budget document does she refer to the 100,000 people in Scotland who are currently suffering from long Covid. The pandemic has been characterised as the biggest mass disabling event since the first world war, but those 100,000 Scots are nowhere in the document. I ask the finance secretary whether that is an oversight. If it is, can we meet to discuss how best to extend care for long Covid? If it is not an oversight, what will she do for the tens of thousands of Scots who are suffering at home from that debilitating condition?

Kate Forbes

The pay policy that we have set out today is progressive and fair, and focuses our efforts on the lowest-paid workers. I remind Alex Cole-Hamilton that we did that last year without any consequential funding because the UK Government’s public sector pay policy froze the majority of salaries. Once again this year, we are in the dark about what the UK Government is going to do. Despite that, we have moved ahead to ensure that our public sector pay policy is affordable and fair.

On long Covid, the member will know that we have published our approach paper that sets out 16 commitments to improve care and support for people with long Covid, backed by the £10 million long Covid support fund. On the budget document, I note that we will, with record spending on health and social care, ensure that part of the £18 billion is focused on people who are suffering from long Covid. It is a hugely important issue.

The last point that I make to the Lib Dems is one that I have made to other parties. I have allocated every penny in the budget and I have done so having absorbed all the on-going Covid costs within a reducing budget, compared with last year’s. Therefore, if we are going to increase any budget line, my question is this. How? Where would the increase come from and how would we fund it? At the moment, every penny is accounted for.

Kenneth Gibson (Cunninghame North) (SNP)

I thank the cabinet secretary for bringing her budget forward by a week to allow the Finance and Public Administration Committee to undertake greater scrutiny. I appreciate her difficulties, given that the resources that are available to her will decline further in the two years following the budget.

Given the fiscal constraints, and as this Parliament has no powers over excise and fuel duty, inheritance tax, VAT, national insurance and so on, all of which are available to the UK Government but which the Opposition parties seek to continue to deny us, how much extra would each Scottish taxpayer have to pay to fund the Tory, Lib Dem and Labour spending demands? I appreciate that that question is not easy to answer, given that many of the demands are completely uncosted.

Kate Forbes

It is, of course, for the Opposition parties to explain the detail of their policy proposals and to say precisely what they want to fund and how it would be funded. I have shared my estimation of the cost of the Labour Party’s requests, which I reckon to be of the order of £3 billion. As a general illustration, it would cost every Scottish income tax payer about £1,000 a year, on average, if those things were to be funded through income tax rates alone.

We also know that households and businesses across Scotland are facing the challenges of an increase in the cost of living, rising energy costs, rising inflation and a rising tax burden. At the end of the day, I have allocated every penny in the budget; it is for others to determine how additional asks would be funded.

Murdo Fraser (Mid Scotland and Fife) (Con)

Table 5.01 on page 39 of the budget document shows that local government spending, excluding Covid funding, will increase only marginally, from £11.124 billion to £11.145 billion. That represents a substantial real-terms cut. Does not that make it inevitable that we will see substantial council tax increases for hard-pressed households as a result of the finance secretary’s choices?

Kate Forbes

The local government finance settlement delivers real-terms growth in the settlement. It protects the core budget in cash terms and it ensures that local government will get a fair share of the health and social care consequentials, which local government has long called for. That additional £200 million will directly support investment in health and social care. We know how important it is to invest in the preventative side of health and social care in order to reduce the pressure on acute services.

Michelle Thomson (Falkirk East) (SNP)

I congratulate the cabinet secretary on making such an outstanding budget statement, given the severe challenges that have been created by the, to be frank, incompetent UK Government.

The cabinet secretary has rightly put economic recovery at the heart of her budget. As she is the first female to hold her post, I want to ask her about issues that are of concern to many women in business. What can be done to ensure that there is a more granular understanding across government of the economic impact on women of Covid, Brexit and so on? What can be done to ensure that women are not discriminated against in seeking business funding for start-up companies?

Kate Forbes

That is an excellent question. Among the work that we are doing right now—specifically because attention was drawn to the fact that fewer women had received some of the Covid business support grants—will be the women’s business centre that will be established in the current session of Parliament. We will also work with the enterprise agencies to ensure that funding is shared equally and that women have an equal opportunity to participate not just in the labour market, but in founding and growing businesses. We are working collaboratively with a number of organisations, including Women’s Enterprise Scotland, to achieve a level playing field when it comes to participation and pay.

Jackie Baillie (Dumbarton) (Lab)

There is a huge and growing crisis in social care because of endemic low pay, which has a direct impact on the current crisis in the national health service. In that context, an increase of 48p for the work that social care workers do is derisory. They are the people who are on the front line of the pandemic, the people who are caring for our loved ones, and the people for whom we have clapped every Thursday evening. Why have the SNP—and the Greens, who put this in their manifesto—not listened to the trade unions, the social care employees and the people who receive care, who say that an uplift to £12 per hour is needed from next year? This is the second budget in a row in which we have asked for that. The proposal is costed and would be affordable without raising income tax by a single penny. Is it the truth that the SNP and the Greens simply do not believe that social care workers are worth it?

Kate Forbes

Jackie Baillie will know that the increase has been costed. The Labour Party has been calling for £15 per hour, which would cost £1.8 billion. We have chosen to increase, over the course of this year, social care pay to £10.02 per hour as a priority and now to £10.50 per hour. That is 48p more per hour for social care workers. That is a priority that we have. The amount is higher than the national minimum wage and the real living wage because we believe in the importance of our carers. That is not just because they are part of our ensuring that the health service can continue to deal with the challenges that it faces, but because we want to ensure that we recognise and value the work that our social care workers do.

John Mason (Glasgow Shettleston) (SNP)

The cabinet secretary will know that the Finance and Public Administration Committee has been keen that we move to more preventative spending. On health and social care, can the cabinet secretary say anything about how much of the budget will be considered to be preventative spend and whether there has been any change over recent years?

Kate Forbes

The budget underpins our commitment to shifting the balance of spend towards mental health and primary, social and community care. It delivers more than 50 per cent of front-line spending directly to community health services and progresses our commitment to increase primary care funding by 25 per cent over this parliamentary session. Those are examples of where we have tried to increase preventative spending to reduce pressure on acute areas.

The £1.6 billion investment in social care and integration lays the groundwork for a national care service. I can point to other examples where we have tried to shift the balance of spend.

Ross Greer (West Scotland) (Green)

This budget is historic for a number of reasons, including the fact that it is the first anywhere in the UK to be co-produced by a Green Party. Despite the challenges of the pandemic, inflation and cuts from the Westminster Tory Government, it prioritises tackling child poverty and the climate emergency. For example, there is record investment in making homes and buildings warmer and easier to heat, which will lift families out of fuel poverty and reduce emissions.

The budget will also fund the first full year of free bus travel for everyone aged under 22. Can the cabinet secretary confirm how many young people will benefit from that transformational policy?

More than 930,000 children and young people will be eligible for free bus travel when the young persons free bus scheme is introduced.

Christine Grahame (Midlothian South, Tweeddale and Lauderdale) (SNP)

I, too, refer to the additional funding of £200 million that is going directly to local government to fund the increase to £10.50 per hour—as a minimum—the pay of adult social care staff. That is to be welcomed, but in order to increase recruitment we have to look beyond that to career progression for people in the care sector. Will that form part of the considerations of the national care service?

Kate Forbes

That will certainly form part of the considerations of the national care service, but we are not waiting until the national care service is in place; we are starting that work right now. I talked about the £200 million that is directly for pay, but we are also funding other initiatives. For example, we are investing £25 million in social work capacity, £50 million to progress fair work and £40 million in multidisciplinary teams. We are also investing £5 million to support the right to respite for unpaid carers. There is a much bigger picture of our investment in social care over and above our commitment to increase adult social care staffing.

Rachael Hamilton (Ettrick, Roxburgh and Berwickshire) (Con)

This is not a green budget for farmers and it is not a net zero budget for the future of agricultural transformation. The Scottish National Party-Green coalition of cuts has slashed the agricultural transformation fund from £45 million per annum to £25 million per annum. Those cuts will affect reductions in emissions targets, agricultural productivity and the transformation of food and farming production. Why is the cabinet secretary cutting that vital agri-environmental funding for hard-working farmers, who are part of the solution to reaching net zero?

Kate Forbes

Farmers right now are actually asking what kind of commitment there is to the replacement of EU funding for the agricultural sector here in Scotland. When it comes to investment in farming, and in agriculture more generally, we have set out not only continued support but support to help farmers, crofters and those who work in the agriculture sector to transition to net zero. We know that it will not be simple, straightforward and easy, but quite clearly there is investment in this budget to support farmers to do that.

Neil Gray (Airdrie and Shotts) (SNP)

I commend the finance secretary on prioritising child poverty—our greatest area of preventative spend—in what is a challenging budget. I commend her, too, on the way in which she has engaged on the issue. What is her estimate of the impact that the £200 million doubling of the Scottish child payment will have on child poverty in Scotland? To what extent will that mitigate the disgraceful cut of £20 a week to universal credit that has been made by the Tory UK Government?

Kate Forbes

Once it has been rolled out in full to under-16s, around 400,000 children will be eligible for the Scottish child payment, while an estimated 40,000 will be lifted out of poverty in 2023-24. I know that, as the finance secretary, I frequently use such figures. However, yesterday I had the opportunity to meet some of the families who will directly benefit. Their children were there, hearing about the impact that that money will have on the challenges that they face. It means that the numbers—400,000 children—are far more than just statistics.

Michael Marra (North East Scotland) (Lab)

There is nothing in the budget to keep schools safe and open, and nothing at all on vital ventilation. There is nothing in the budget to help when schools close, no action on those promised laptops and nothing to make good the losses that have already been suffered. The budget is badged as a budget for everyone, but it cuts 12 per cent from the Scottish attainment challenge, meaning cuts to staff working with the poorest pupils. The nine poorest communities will see that funding cut by 60 per cent by the end of this session of Parliament. The budget is not really for everyone, is it?

Kate Forbes

On the contrary, I would make a point that somewhat agrees with the premise of Michael Marra’s question, which is that the on-going impact of Covid, which is very real in our schools and education system, has had to be absorbed within our overall budget, because there are no Covid consequentials for those issues. However, that said, we have prioritised spending on our schools. We are making the biggest increase in funding to support teacher recruitment since 2007. In this budget, we are funding more than £70 million for primary 4, primary 5 and special school lunches. There is £15 million in this budget towards providing a digital device to every school-age child. We are focused on ensuring that our teachers and schools have the resources that they need, within a very challenging budget.

Rona Mackay (Strathkelvin and Bearsden) (SNP)

I welcome the statistics out this week that show that this Government has delivered nearly 106,000 affordable homes since 2007. Can the cabinet secretary outline how the 2022-23 budget will support the new ambitious target to deliver a further 110,000 affordable homes by 2032?

Kate Forbes

We have led the way across the UK in the delivery of affordable housing, with spending per head on affordable housing already three times higher than that of the UK Government. As a result, in the past four years, we have delivered more than nine times more social rented properties per head of population than in England. The budget increases the funding available for affordable housing by a further £174 million next year, so that we will be able to continue the important work that we started in 2007 of ensuring that everyone in Scotland has a warm, safe and affordable place to live.

Douglas Lumsden (North East Scotland) (Con)

We have heard at the Finance and Public Administration Committee about the importance of spend on early intervention and prevention, which the cabinet secretary mentioned. Our councils can make a huge difference in prevention, but the derisory uplift to the local government core budget is a slap in the face to authorities, which have done so much in the past year. When will the Scottish Government put its money where its mouth is and properly fund our councils?

Kate Forbes

As I said in response to Douglas Lumsden’s colleague Murdo Fraser, this is a real-terms growth settlement and it protects the core budget in cash terms. The local government finance settlement includes significant investment in education and social care.

To take a step back, I understand that the Conservative ask for the budget is to pass on health and social care money for health and social care needs. The fact is that there are no Covid consequentials in the budget and the uplift is due largely to health and social care funding, so where does additional funding for local government come from? We have gone as far as we can to protect local government, in light of the important role that it plays, but the position is a stark reflection of the settlement that is available to us to pass on.

Stuart McMillan (Greenock and Inverclyde) (SNP)

The Scottish Government’s continued focus on addressing inequalities in education is welcome. Will the cabinet secretary provide further detail on how the budget will support the Scottish Government’s work to close the poverty-related attainment gap? What measures have been included to tackle the costs of the school day for my constituents in Greenock and Inverclyde?

Kate Forbes

We are absolutely committed to tackling the impact of poverty on educational experiences and attainment. The budget includes £200 million for the Scottish attainment challenge, which is part of a commitment to provide £1 billion over the parliamentary session to tackle the poverty-related attainment gap. That includes continued investment in pupil equity funding, which reaches 97 per cent of schools. To recognise the impact of poverty and the pandemic on pupils across Scotland, the budget includes the distribution of more than £43 million to all 32 local authorities.

Pam Duncan-Glancy (Glasgow) (Lab)

The Scottish Government will be aware of analysis by the Joseph Rowntree Foundation and the Fraser of Allander Institute that makes it clear that doubling the Scottish child payment and other measures that are set out in the budget will not go far enough to tackle child poverty. Without further action on social security, including raising the Scottish child payment to £40 by April 2023, the child poverty targets will be missed—targets that the Parliament unanimously set before the pandemic, before any universal credit uplift was in place, and without caveat.

Does the Scottish Government accept that analysis? Will it admit that it is on course to miss the interim 2023-24 child poverty target?

Kate Forbes

The member is right to say that a multifaceted approach is needed. In isolation, the Scottish child payment will not of itself ensure that we meet the child poverty targets; we need to take a much more rounded look at how to do that. That includes continued investment in employability schemes, for example, to help parents and ensure that they are paid the real living wage. It includes a reduction in the costs of the school day, which means rolling out free school meals and supporting children through uniform grants and in other ways.

There is a much bigger picture of the action that we are taking. In my budget statement and in the budget, I have made it clear that tackling child poverty is one of the Government’s three top priorities. We are absolutely determined to reach the targets—not because doing so is politically advantageous but because having any child in poverty is a blight on the country and requires all of us to step up to the plate to do something about it.

Emma Roddick (Highlands and Islands) (SNP)

I am particularly happy to hear about planned investment in affordable housing, which the cabinet secretary—my Highlands and Islands colleague—knows is vital. How will the budget address depopulation issues across the Highlands and Islands?

Kate Forbes

The issue is close to my heart and I am delighted that Emma Roddick has asked the question.

The budget does a number of things to tackle depopulation in the Highlands and Islands. It supports the delivery of Scotland’s first population strategy, to set out ambitious sets of actions to address demographic challenges. The strategy aligns with our commitments in the national islands plan to address population decline in particular and ensure a balanced population across all Scotland. That work is supported by the islands programme, which is investing £30 million in infrastructure.

Emma Roddick raises an important point, which is that, as part of our overall investment in affordable housing, education and local government, we need to make sure that we are giving our partners the tools and resources that they need to ensure that the Highlands and Islands is an attractive place to live, work and do business.

Tess White (North East Scotland) (Con)

It is a fact that the number of businesses in Scotland has dropped by almost 20,000 in a year, which is a devastating blow. Does the Scottish Government accept that it needs to do much more to help businesses—particularly small and medium-sized enterprises—to improve their digital capabilities and significantly expand support for upskilling and reskilling, which the Federation of Small Businesses has called for?

Kate Forbes

It is nice to agree, and I agree that we need to invest in digital capability. The member might be aware of our commitment to invest in implementing the recommendations of the Logan review, which will help businesses to access digitalisation and improve their tech capabilities. For example, we have set out commitments of £100 million through the digital boost scheme.

To support small businesses, which are the backbone of our economy and certainly the backbone of our villages and towns, we need to give them the resources that they need and understand the pressures that they face. For example, continuing the small business bonus scheme reduces their costs so that they can reinvest in those capabilities.

In relation to upskilling—I missed that part—I agree. The national transition training fund has tried to cater to specific requests and requirements within sectors rather than be a blanket scheme, so that it can be of better use to the tourism industry, for example.

Stephanie Callaghan (Uddingston and Bellshill) (SNP)

Does the cabinet secretary agree that the UK Government must play its role in our transition to net zero and urgently reverse its illogical decision to overlook the Scottish carbon capture, utilisation and storage cluster for track 1 status, which would support more than 15,000 green jobs?

I am not wholly convinced about that question’s relevance to the statement. Cabinet secretary, do you want to reply very briefly, in a sentence?

I believe that, as energy policy is reserved, the UK Government needs to invest in Scotland, and it is important that that is done alongside the investment that we are making through our budget.

Mark Griffin (Central Scotland) (Lab)

Another £137 million in real terms has gone, which includes money for local bin collections, fixing potholes, keeping libraries open and cutting grass. When will our towns and cities get the resources that they need to recover and grow after the pandemic and a decade of SNP cuts to our communities?

Kate Forbes

I have set out already—but I am happy set out again—that, in relation to our investment in local government, the budget provides a real-terms increase in the overall settlement and includes protection for the core budget in cash terms. I could go through the list of areas where we are investing in partnership with local government—particularly health and social care, which is one of the biggest pressures that local government faces, and education. Ultimately, I have tried to push as far as I can to protect local government budgets, and that is what the budget delivers.

Emma Harper (South Scotland) (SNP)

I will pick up the issue of agriculture. In her statement, the cabinet secretary mentioned the £25 million for sustainable and regenerative agriculture. Will she provide further information about how that will be allocated to support farming and food production in Scotland, so that it is world leading in sustainability and takes a regenerative agriculture approach?

Kate Forbes

Over the next three years, the Scottish Government has committed £51 million to a national test programme that will enable our farmers and land managers to be better able to contribute to our climate targets and biodiversity goals. The industry is already leading the way, and countless examples of regenerative practices are already under way. Our commitment in this budget is to start that process; therefore, as the member said, there is £25 million in the budget to transform how farming and food production is supported in Scotland.

Jamie Halcro Johnston (Highlands and Islands) (Con)

The cabinet secretary has spoken about the need to invest to rebuild our economy but, as she will know, infrastructure issues across Scotland, and particularly in the Highlands and Islands, remain a barrier to growth. Given that the cabinet secretary did not answer the question from my colleague Liz Smith, can she confirm that the funding that is outlined in the draft budget will ensure that the dualling programmes for the A9 and the A96 will be back on track by the end of the budget period and that the Scottish Government will deliver both dualling schemes in full as promised?

Kate Forbes

Jamie Halcro Johnston will know that I—perhaps like him—use the A9 at least twice a week every week, so, if anybody knows the importance of delivering on dualling, it is me. I can assure him that there is no dilution of funding for the A9 in the budget. We have a budget earmarked in the 2022-23 capital spending review to fund the A9 and the A96. If Jamie Halcro Johnston is interested, the budget allocation for the A9 will allow us to continue to progress with completion of the statutory processes for, the procurement of and the commencement of the construction of the Tomatin to Moy section—which is in his region but not quite in my constituency—as well as preparations for procurement of the remaining elements of the programme. I hope that that gives Jamie Halcro Johnston and our joint constituents some reassurance.

Bob Doris (Glasgow Maryhill and Springburn) (SNP)

How will the budget support the introduction of new benefits in the next financial year, including the roll-out of the adult disability payment and the new low-income winter heating assistance to hundreds of thousands of Scots?

Kate Forbes

Social Security Scotland is already successfully delivering 11 benefits, seven of which are brand new, and it is getting ready to deliver several more. Low-income winter heating assistance will be launched in the winter of 2022 and it will provide support to around 400,000 low-income households with a £50 payment every year through our investment of around £21 million. Next year, we will launch the adult disability payment, which is our largest and most technically complex benefit to date. It will provide disabled people with a fundamentally different experience in applying for and receiving the support that they are entitled to.

Maggie Chapman (North East Scotland) (Green)

With one in four children in Scotland in poverty and with pressing concerns about pandemic fallout and the cruel actions of the UK Government, eradicating child poverty in Scotland is a moral obligation. That is why the Scottish Greens have been clear that the Scottish child payment should be doubled as soon as possible. I am pleased that we are delivering that from April. It will make a real difference to those who are struggling most, alongside the commitments on making investments in the just transition.

Question, please.

Can the cabinet secretary confirm how many children are eligible for the Scottish child payment uplift, and—this is important—how the Government will ensure that all those who are entitled to it benefit?

Kate Forbes

As Maggie Chapman said, the Scottish child payment is hugely important. We estimate that, once it is rolled out in full to under-16s, around 400,000 children will be eligible for it and 40,000 will be lifted out of poverty in 2023-24. The Scottish child payment is the most ambitious child poverty reduction measure in the UK. Of course, we are also working with other measures in order to reach our targets on child poverty.

Jenni Minto (Argyll and Bute) (SNP)

The cabinet secretary may be aware that I am holding a members’ business debate next week to highlight the importance of access to defibrillators in communities across Scotland. Access to defibrillators could play a significant role in improving outcomes in out-of-hospital cardiac arrests across Scotland, but, for some communities, the cost of purchasing them and on-going materials continues to be a barrier. Although VAT on defibrillators continues to be a matter that is reserved to the United Kingdom Government, does the cabinet secretary agree that that would be one area in which the Scottish budget could go further if we had the full fiscal levers at our disposal to support community access to that life-saving equipment?

Kate Forbes

I commend Jenni Minto for raising the important issue of defibrillators and for the fact that she is holding a debate next week. Perhaps we could raise that issue. I would always be open to writing to my counterparts in the UK Government about the issues that Jenni Minto has identified.

Graham Simpson (Central Scotland) (Con)

I want to press the cabinet secretary on roads again. There is a slight increase in the total budget for motorways and trunk roads, but the road improvement budget has been cut. Will she, once again, have a stab at the question of whether, under this budget, the A96 will be fully dualled? Is there money for that?

Kate Forbes

We have set out a budget for continued investment in our roads, including the A9 and the A96. When it comes to progress on the A96, the allocation of funding will allow us to continue to take forward the review of the A96 in 2022 and to progress the preparation stages for dualling between Inverness and Nairn and the bypassing of Nairn. We are committed to improving the A96 corridor in order to improve connectivity between the surrounding towns and address safety and environmental issues. There is funding in the budget for road improvement, including for the A9 and the A96. I am not sure how to be more blunt on the issue.

Elena Whitham (Carrick, Cumnock and Doon Valley) (SNP)

I refer members to my entry in the register of members’ interests, as I am a serving councillor on East Ayrshire Council.

Local government has been at the forefront of our response to the pandemic. It is therefore welcome that, despite a challenging budget situation that is devoid of any Covid consequentials, the Scottish Government is committing to a total funding package of more than £12 billion for local government, in support of its work as we press forward with recovery. As we are all aware, local circumstances and spending priorities can vary significantly. Will the cabinet secretary say more about the steps that the Scottish Government is taking to maximise the freedom and flexibility that local authorities will have over their spending?

Kate Forbes

Alongside a funding package that provides an additional £853.9 million—a 7.3 per cent increase on this year—the budget delivers one of the key asks of the Convention of Scottish Local Authorities by providing complete flexibility for councils to set a council tax rate that is appropriate to their local authority area. In every year in which I have been involved with the budget and have negotiated and engaged with COSLA, that has been one of its primary asks. I am pleased to be able to write to COSLA today to agree not just to that flexibility, but also to a number of other fiscal flexibilities, including a commitment to collaborative working on a fiscal framework for local government early next year.

Liam Kerr (North East Scotland) (Con)

The budget suggests that £20 million of the just transition fund will be made available. What precisely is that £20 million allocated to, how did the Scottish Government arrive at that figure, and does the money come from the Scottish Government’s budget or is it loan capital from the Scottish National Investment Bank?

Kate Forbes

I did not quite follow what the member said about loan capital. The money comes from the Scottish Government’s budget, and it will be used to invest in initiatives in the north-east. A number of stakeholders, who will know the member as well as me, have been in touch to ask for a role in determining the best use of that funding.

Overall, we have set out £500 million of funding over 10 years, and we estimate that it will need to increase year on year, so it is back-loaded, as it were, to ensure that it is spent on the big catalytic projects that can most use it and help with the just transition. Obviously, it is not the only investment that is being made in the north-east, and it builds on the £62 million for the energy transition fund. Of course, that money would go even further if it were matched by the UK Government.

Brian Whittle (South Scotland) (Con)

The Climate Change Committee’s report “Progress in reducing emissions in Scotland” was published earlier this month. It states:

“we have not been able to establish whether and how ... proposals”

in the climate change plan

“add up to the required emissions reductions ... The annual targets during the 2020s will be very difficult to meet”.

Ambitious targets are all well and good, but they mean little without a route map. Will the Scottish Government deliver any finance and transparent policies that can deliver on the Scottish Government targets, as called for by the Climate Change Committee?

Kate Forbes

The answer is yes. As the member will know, we are already obliged to provide regular climate change plan updates in terms of the route map that he calls for. Although all parties in the Parliament were agreed on the targets, I agree with him that the setting of targets in and of itself does not make it any easier to meet those targets; it requires a plan, which, he will know, we are obliged to update regularly.

The budget delivers a step change in investment in our climate change ambitions, especially with regard to capital investment in, for example, decarbonisation and transport. The Climate Change Committee has identified those areas as key priorities, and the money that is being invested as part of this budget will deliver the step change that is required.

Sarah Boyack (Lothian) (Lab)

The cabinet secretary claims that she has given councils a fair settlement but, in Edinburgh and across the Lothians, we see massive service pressures every day as a result of historical Scottish National Party underfunding and a growing population. In the past year, the integration joint board has had to take £7 million out of reserves in Edinburgh to meet the immediate care crisis that we face, but constituents are getting in touch almost daily to say that, because of the shortage of care workers, they are not getting the urgent care-at-home support that they need now.

Will the cabinet secretary accept that an extra 50p an hour for care workers does not begin to address rising prices, or the huge increase in housing costs that we have seen in Edinburgh?

Kate Forbes

The member identifies an important point. One of the biggest pressures that councils are facing is in social care, which is precisely why we have delivered a significant increase in the investment that is going to local government for social care as part of the health and social care consequentials. That has been one of COSLA’s asks for a number of years.

On the member’s second point, it is clear that pay is a key part of retention and recruitment, and the £10.50 wage floor that I have set out today will help to deliver that. We all aspire to ensure that our care workers are remunerated fairly and we have seen, from this Government, a significant increase over this year to ensure that we not only recognise care workers with rhetoric, but value them in the choices that we have around funding.

Jamie Greene (West Scotland) (Con)

The budget that has been published today states, in black and white, that

“everyone should have the right to access justice.”

I agree entirely, but the reality is that there is a five-year backlog of court cases to tackle.

The Scottish Courts and Tribunals Service has made a very specific—and, I think, modest—ask of £13 million to tackle that backlog. Why, therefore, has it been offered only a third of that in the budget? How on earth will such a massive shortfall help the SCTS to deliver the true access to justice that victims of crime deserve?

Kate Forbes

I suggest to the member, as politely as possibly, that that £13 million—if I heard him correctly—is in the budget. We have significantly increased not only funding for the justice portfolio, but the Crown Office and Procurator Fiscal Service funding that is required in order to deal with the backlog. There is a significant increase in the spending on justice to try to reduce the backlog.

I make the same point that I have made already this afternoon. The additional Covid costs—the costs of both mitigating Covid and tackling its impact—have to be absorbed in our budget. The absence of Covid consequentials means that those costs have to be absorbed. It is important that we recognise the on-going pressures on our budget as a result of both mitigating Covid and dealing with its long-term impacts.

Stephen Kerr (Central Scotland) (Con)

I have a straightforward yes or no question for the cabinet secretary. Scotland’s employers want transparency in how the apprenticeship levy that they pay is being spent in Scotland. They say that that is currently far from transparent. Given the vital importance of apprenticeships to the future economy that we must build to achieve net zero, will the cabinet secretary listen to business and agree now to allow the greater transparency that business wants to see?


Katy Clark (West Scotland) (Lab)

Over the past 10 years, the Scottish Government’s budgets have increased, but local government’s budgets have been repeatedly cut. North Ayrshire Council, for example, has had to make more than £100 million in cuts. Given the £137 million real-terms cut to councils’ revenue grants in this year’s budget, what does the cabinet secretary expect councils to do to continue to provide services and to deliver on her stated aim of reducing inequalities?

Kate Forbes

There are two answers to that. The first is that we have protected the core budget in cash terms.

The second point, however, is that, in terms of the overall shape of the budget, the member will know that most parties in this Parliament have a commitment to pass on health and social care consequentials, which I think that she shares, although she can correct me if that is not true. Having passed them on means that, over the past decade of austerity, there has been a cut to the rest of the Scottish Government budget. We have, as far as we possibly could, protected local government. However, in this budget I have tried to recognise local government as a valued deliverer of social care and to ensure that some of those health and social care consequentials go to local government. The challenge is that it needs to be used for social care once it is there.

Miles Briggs (Lothian) (Con)

NHS Lothian has warned MSPs across the Lothian region, including SNP and Green members in the chamber, that it faces a £100 million shortfall. Have they raised that with the cabinet secretary? If so, why did she deliver the lowest level of funding per head of population to Lothian yet again?

Kate Forbes

That is a strange question, if I might say so, considering that I have just announced record funding of £18 billion for health and social care in Scotland, including £12.4 billion of investment in our front-line health boards, including NHS Lothian. As the member will know, the Cabinet Secretary for Health and Social Care raises with me, on a very regular basis, the challenges and the financial needs from across our health and social care services. That is why we have been able to deliver record funding for health and social care in this budget.

The finance secretary has talked about an economic recovery and a green recovery, yet the green jobs budget is only £23.5 million. How many green jobs will it create?

A lot more than if that funding was not there. [Interruption.]

Order—thank you. I call Jeremy Balfour to be followed by Clare Adamson.

I follow Fiona Hyslop, Presiding Officer.

Apologies. The questions are coming thick and fast. I call Fiona Hyslop.

Fiona Hyslop (Linlithgow) (SNP)

I thank the cabinet secretary for her statement. Clearly, as she has just said, health and social care are key to the wellbeing of our constituents, particularly during what is still a very pressured pandemic. Can she explain what percentage of the overall budget is still dedicated to health? Can she give further explanation of how we can protect vital services, such as for cancer, for audiology in Lothian—on which a very serious report was published today—or in other areas? I remind members that the attempt to achieve growth, a net zero revolution and the tackling of inequality at the same time that so much funding is still needed for our health and social care budget serves as a stark reminder of the realities of living in a pandemic.

Kate Forbes

The member raises a hugely important issue. We must reflect on the needs that we have right across the board, in our health service as well as other public services, and at the same time try to support our households and businesses through what is one of the most challenging times on record, because of not just the pandemic’s impacts but the impact of inflation.

I have mentioned already that £18 billion is earmarked for health and social care, as part of an overall budget that is just over £40 billion. That in itself tells a story. The rest of our budget seeks to absorb the on-going pressures from Covid, as well as to invest in growth and prosperity.

Jeremy Balfour

I am sure that the cabinet secretary will agree that the third sector has played an immense role in the past two years to support many people in our society. Will she now commit to a three-year funding package, instead of making charities apply year in, year out for funding?

Kate Forbes

Yes, is the short answer. I agree with Jeremy Balfour that multiyear spending is hugely important. Today we have set out our framework for the resource spending review, which will allow us to plan spending on a three to four-year basis. I intend to consult a number of stakeholders, including third sector and other public bodies, to ensure that when the final resource spending review is published, it gives them reassurance of their multiyear position.

Clare Adamson (Motherwell and Wishaw) (SNP)

We find ourselves in a situation in which we have an unclear path ahead in relation to ensuring that the voices of the Parliament and the Government will be heard in negotiations on the internal market and the EU-UK trade and co-operation agreement. How will the increase in the international and European relations budget ensure that Scotland’s voice is heard and that we have a say in the future of Europe and of policy making that will affect our devolved responsibilities?

I remind members of the importance of questions having relevance to the statement.

Kate Forbes

In terms of the budget, that is important for our economic prosperity. We continue to keep trading links alive with countries around the world, not just countries within the European Union. We have an ambitious export plan that relies on those strong links. A lot of exporters in Scotland, particularly smaller ones, have struggled as a result of the additional red tape due to Brexit. Keeping those links alive is hugely important and requires both the soft diplomacy of Governments speaking to one another and business-to-business links.

Craig Hoy (South Scotland) (Con)

The budget allocates £350 million to decarbonise the heating of 1 million homes and 50,000 non-domestic buildings by 2030. That is about £330 per building. I am aware of a hotel that recently decarbonised, which cost around £800,000. Does the finance secretary seriously propose that £330 per building—about the cost of the new hoover—is enough to see that process through?

Kate Forbes

The member raises an important point about the costs of decarbonisation. A point that I am very committed to is how we leverage private sector investment as part of our ambitions. I think it is clear to all of us that public sector investment in isolation will not get us to our net zero targets or enable us to decarbonise at the rate that we need to. We need to work collaboratively with the private sector to leverage in some of that funding and make sure that the public sector funding goes as far as possible. My impression is that most businesses want to do the right thing. It is up to us to make that easier for them. Public sector funding will help, but it will not take us all the way.

Paul O’Kane (West Scotland) (Lab)

Yesterday, many of us attended a protest outside the Parliament with our trade unions and listened to the testimony of workers who have been on the front line during the pandemic in Scotland. Many of them were care workers, who will be interested in the debate in terms of the pay rise that they are being given by the Government. What does the cabinet secretary have to say to those workers, after she has offered them a derisory 48p an hour pay rise? She, along with all other ministers and MSPs, was very fond of clapping care workers last year. Now they clap a 48p pay rise. That is unacceptable. What does she have to say to those workers?

Kate Forbes

That is the second pay rise in several months, because we value the important work that our carers do. We are committing to going beyond the national living wage and the real living wage to ensure that carers are paid for their labours. That is why we have set out that public sector wage floor of £10.50 per hour, which we are fully funding. What would I say to them? I would say, “We could not have got through the pandemic without you. We enormously value the work that you do.” We are matching our rhetoric with our commitment in the budget to invest in a wage increase to £10.50 per hour.

Fulton MacGregor (Coatbridge and Chryston) (SNP)

I put on record my thanks to the cabinet secretary for the groundbreaking child poverty measures that she has announced. Nobody in the chamber should vote against that, come budget time. On that basis, I ask about school uniforms. The cabinet secretary will be aware that I have done some work pushing for them to be more affordable. Will she comment on how that was taken into the decisions around the budget and what more local authorities will now be able to do? I have loads of constituents who cannae afford a £300 hoover—they need to get their school uniforms.

Kate Forbes

That question is hugely important. The work that we are doing on school uniforms is part of a much wider piece of work to reduce the cost of the school day. That work includes significant investment in the expansion of free school meals; the provision of milk; an assurance around funding to provide meals during school holidays; and help for families with some of the additional costs of school, whether around school trips or elements of the curriculum such as art and home economics.

We provide funding to local government to reduce the cost of the school day significantly, as part of our mission to tackle child poverty.

That concludes the ministerial statement on the Scottish budget.