Deputy First Minister Responsibilities, Economy and Gaelic
Good afternoon. The first item of business is portfolio questions, and the first portfolio is Deputy First Minister responsibilities, economy and Gaelic.
Question 1 was not lodged.
Gaelic Educational Services (Ayrshire)
To ask the Scottish Government whether it will support more collaboration between the three Ayrshire local authorities in the delivery of Gaelic educational services, in order to meet growing or unmet demand. (S6O-04769)
The Scottish Government will continue to support the three Ayrshire authorities in delivering Gaelic education. All three authorities receive Gaelic grant funding from the Government to assist with the delivery of Gaelic education. The Gaelic grant can also be used to contribute to transport costs in relation to Gaelic-medium education provision.
Alongside financial support, the Scottish Languages Bill, which is at stage 3, will include measures for local authorities to support young people in securing access to Gaelic-medium education in another authority area. The bill also includes new transport provisions relating to GME provision.
I welcome the Government’s proposals in the Scottish Languages Bill that will give more powers to communities to request more Gaelic-language education services. However, we have a clear issue in Ayrshire. Gaelic-speaking families face splitting up their children at school because all the places are full in East Ayrshire, which delivers a really good service and fulfils more than its obligations. There is no consistent similar level of service across Ayrshire and there is clear underprovision, because local authorities are not able to meet the demand.
Will the cabinet secretary assist with the immediate situation and help the authorities and the families with what is a good problem to have—the rising demand for more Gaelic education? Councils are finding it difficult to meet that demand under the current arrangements.
The member is right to reflect on the popularity of Gaelic-medium education. Although that is a matter for local authorities, the Government has been in touch with East Ayrshire Council, and we understand that demand for GME early years places has been high this year. The council has been discussing the matter with parents, and we understand that a positive outcome has now been agreed for the parents who wish for their children to receive GME early years provision. We expect that, going forward, parents in East Ayrshire who wish their children to receive GME will be able to secure early years or primary level provision for them.
Our position is that GME should be available to all parents who want access to it. I have already talked about the provisions that are in place in the Scottish Languages Bill, which is at stage 3, to deliver that.
Scottish Economy (EY Assessment)
To ask the Scottish Government what its response is to the recent EY assessment of the Scottish economy. (S6O-04770)
The economy is resilient and it strengthened in the first quarter of 2025. However, the economic outlook remains challenging, particularly due to the sharp increase in global trade uncertainty, with implications across Scotland’s sectors and regions.
In response to those challenges, we have announced measures to boost our competitiveness, attract investment and showcase our strengths. We continue to engage with the United Kingdom Government’s free trade agreements programme to protect our more sensitive sectors, and our programme for government includes a six-point export plan to help businesses tap into new markets and increase sales.
Given the EY ITEM—independent treasury economic model—club’s downgrade of Scotland’s growth to just 0.6 per cent for 2025-26, and the repeated warnings from both EY and the Fraser of Allander Institute about underinvestment, weak productivity and widening regional inequality, is it not clear that the Scottish National Party’s failure to invest, reform and lead has taken Scotland into a cul-de-sac of long-term economic stagnation, and that it has in fact taken a UK Labour Government to finally deliver for Scottish exporters by cutting red tape on food exports and giving service businesses the certainty that they have long needed?
The member raises a number of points. I hope that he will agree with what I said in my first answer about global uncertainty and some of the challenges, and how we have responded to attract investment and to support our exporters.
Growing the economy is at the heart of our agenda, and we have seen a significant increase in investment, whether that is through the Scottish National Investment Bank or through our enterprise agencies, which deliver a remarkably good set of results every year.
The member will know about some of the specific interventions that we have made. For example, we have Techscaler, which is designed to support entrepreneurial growth, with a view to ensuring that more entrepreneurs in Scotland grow to unicorn level. The membership of Techscaler increased from 610 to 1,411 in 2024. There are signs of success, and we take very seriously the EY results.
According to EY’s assessment, Scotland has bucked the UK-wide trend, reporting a decade-high level of foreign direct investment projects in 2024. How can the Scottish Government build on that progress and ensure that Scotland remains a top destination for investment in financial services?
Colin Beattie is exactly right to point to EY’s data. The reason why I was so positive about EY’s data in my earlier answer is because it shows Scotland’s strength as an area that regularly outperforms other areas in the UK on attracting inward investment—it is second only to London and the south-east in that regard. That speaks to the attractiveness of the propositions in Scotland, the confidence that international investors have in Scotland and the programmes and initiatives that we have in place to ensure that that investment finds a home in Scotland.
EY’s recent report says that Scotland’s economy is “in a fragile state”, with the figure for Scotland’s gross-value-added growth downgraded from 0.9 per cent to 0.6 per cent. GVA figures from 2023 show that some areas, including West Dunbartonshire in my region, are heavily dependent on exports, as they have large whisky sectors, and are thus impacted by tariffs. What support will the Scottish Government provide to Scotland’s whisky industry?
The member is absolutely right to touch on those comments in the EY research. It says that US tariffs have “an asymmetric impact” on Scotland’s rural regions in particular, which reflects the disproportionately high reliance on exports, particularly to the US, of food and drink products—namely, whisky and salmon, which are the UK’s top two food and drink exports.
We are pleased to see progress with, for example, the India free trade agreement, which offers huge opportunities for whisky. In that vein, I am trying hard to strike a note of consensus across the chamber about the opportunities and challenges that we face. That situation is why we have implemented a six-point export plan to target exporters who need a bit of extra help and support and to ensure that we attract inward delegations to see the opportunities in Scotland while supporting trade missions that back our key industries, such as whisky, to build a greater share of the US market.
In the spirit of seeking consensus, there is an opportunity to grow the Scottish economy through the increase in UK defence spending, but I am concerned that, because of Scottish Government policy on defence spending, we might miss out on that investment. Can the Deputy First Minister confirm that the Scottish Government will seek to work in partnership with the UK Government to make the most of that investment? Will the Scottish Government change its current policy?
The Scottish Government absolutely recognises the critical role that Scotland’s defence sector plays in our economy and our national security. Since coming to office, the Government, through its enterprise agencies, has provided around £45 million in funding to defence companies. A key area of focus is skills. We have agreed investment from within my portfolio of £2 million to develop engineering skills in the Glasgow city region. If the level of investment that the member refers to is to come to Scotland, we need to ensure that we have the workforce pipeline to deliver what is set out in the defence review.
Rolls-Royce Naval Welding Centre
To ask the Scottish Government whether it will reconsider its policy to not use public money to support the manufacture of munitions in order that Scottish Enterprise can reconsider the eligibility of the £2.5 million grant funding towards the £11 million investment in a new naval welding centre on the Clyde, led by Rolls-Royce. (S6O-04771)
We are committed to ensuring that Scotland is the home of manufacturing innovation. As I said to Willie Rennie, the scale of the investment that the Government has provided to defence companies through enterprise agencies amounts to £45 million in funding. The member will know that our long-standing policy position is that we do not use public money to support the manufacture of munitions but will support skills and defence companies.
I welcome the intent in the Deputy First Minister’s response, but the Government’s apparent hostility to a naval vessel—it is not a munition—on the Clyde is stifling investment in the west of Scotland’s single biggest industrial employer and jeopardising the creation of new jobs. It is rather ironic that the only thing that is keeping Government-owned Ferguson Marine open is its steel fabrication subcontract work from BAE Systems for type 26 frigates, while the Scottish Government’s own procurement agency has recently awarded CalMac ferry contracts to Turkish and Polish shipbuilders.
I urge the Deputy First Minister to reconsider that particular investment decision, because it is incoherent. Surely it is good to use public money to support critical naval shipbuilding research work that contributes to our country’s security and sustains thousands of high-skilled and well-paid jobs right across Scotland.
I will answer the member specifically, but as I said, we recognise the critical role that Scotland’s defence sector plays in our economy and national security. Our aerospace, defence, security and space sectors contribute an estimated £3.2 billion to the Scottish economy and support more than 33,000 direct jobs. Given the recent announcements, on the workforce side in particular, I assume that that is set to increase.
I am happy to repeat that, since the Government came to office, we have provided £45 million in funding to defence companies. We are also taking a lead in supporting the pipeline of a trained workforce, in particular around the Clyde maritime cluster, which includes some of the employers that the member has just referenced.
Scotland has always prided itself on the strength of its world-beating defence sector, which offers high-quality, well-paid jobs and is at the cutting edge of innovation. The Deputy First Minister claims that the Government is pro-business. Against that backdrop, the refusal to support the new naval welding sector is inexplicable.
Can we hear from the Deputy First Minister whether it is just bigotry and prejudice on the part of the Scottish National Party Government to refuse to support the naval welding sector—not a munitions project—that will produce high-quality jobs? What is the rational explanation for refusing to do so?
The member seems to have taken no account of the figures that I put on the parliamentary record. Since the Government came to office, we have provided around £45 million in funding to defence companies. That support has helped to drive the very innovation that he is talking about, and many of those companies are at the forefront of developing cutting-edge technologies. Alongside our support for skills, ensuring that we have apprenticeships and are able to attract the right workforce to deliver against those priorities is absolutely critical.
The SNP’s long-standing and principled position is that taxpayers’ money should support the diversification of the industry away from core defence activities and should not fund arms. I therefore welcome the expansion of the welding training scheme at North East Scotland College and the efforts to close critical skills gaps. Will the cabinet secretary say more about the Scottish Government’s efforts to engage with industries and work on skills reform across the country?
It strikes me that the Opposition parties will often criticise the Scottish Government for using its funding in reserved areas and, at other times, criticise us for not using funding for reserved areas.
As I have said, the defence sector is not only critical to our national security, it is a strategic driver of Scotland’s future workforce. We are investing up to £2 million to develop engineering skills in the Glasgow city region that are being designed by the Clyde maritime cluster in partnership with Skills Development Scotland.
Despite supposed human rights due diligence checks, companies such as Raytheon, which produces weapons and military components that the Israeli state uses to inflict unimaginable harms on Palestinians in Gaza, have recently received public subsidies from Scottish Enterprise. Following freedom of information requests, Amnesty International found that, as of May this year, not a single company has ever failed those checks. We called that out in February, and the Scottish Government said that it would review Scottish Enterprise’s human rights due diligence process. We have asked time and again for an update, but I will ask once again: will the Deputy First Minister finally provide an urgent update on the review’s progress before the summer recess?
The Labour Party often forgets that it was a Labour Party amendment that called for a review of Scottish Enterprise’s due diligence work. I will keep members updated on that review. I draw attention to the fact that the subject of the debate back in February was Scottish Government funding for defence, because Opposition members seem to have forgotten that.
Disabled People (Economic Contribution)
To ask the Scottish Government what the estimated value is of the contribution that disabled people make to the Scottish economy annually. (S6O-04772)
We recognise the vital contribution that disabled people make to Scotland through work, volunteering, care giving and community life, enriching our society in ways that go beyond numbers.
This year, we are investing an additional £2 million to strengthen the disability equality plan and deliver real change. Unlocking everyone’s potential and removing labour market barriers is key to a stronger economy. Meaningful and well-paid work supports health, independence and connection. That is why we remain committed to halving the disability employment gap by 2038, and we will roll out specialist employability support for disabled people in every local authority this summer.
The Government has dragged its heels on changing places toilets, introduced floating bus stops and restricted car access in large parts of our cities, so many disabled people continue to struggle to take part in society. If the cabinet secretary believes that disabled people provide so much value to the economy, will she explain why her Government continues to ignore their needs and to make it more difficult for them to earn and spend money in this country?
I fundamentally disagree with Jeremy Balfour’s suggestion that we are in any way ignoring the challenges that disabled people face. Over and above the challenges that he has raised, disabled people have been disproportionately affected by the cost of living crisis, years of austerity and the pandemic. In this year’s budget, we are investing £2.5 million through the disability equality plan, and we have committed a record £6.1 billion for benefits expenditure, more than £3.2 billion of which is for adult disability payments. We have also introduced the pension-age disability payment—that marks a significant milestone, as it is Social Security Scotland’s 15th payment—to ensure that disabled people in all age groups in Scotland receive support based on dignity, fairness and respect. I would be more than happy to engage with Jeremy Balfour as we roll out that additional employability support this summer.
According to the Money and Mental Health Policy Institute, Labour’s plans to press on with disability benefit cuts will lead to a false economy and will, ultimately, take people out of work, because many will lose payments that help them to live a more independent life and contribute to the Scottish economy. Many of my Rutherglen constituents are very concerned about how they will be impacted financially by those callous cuts—cuts that they might have expected from a Tory Government, but certainly not from a Labour one. Does the Deputy First Minister agree that Labour must urgently abandon those plans and that anyone who wants to secure and sustain employment should be able and supported to do so, regardless of disability?
I call the Deputy First Minister to respond on matters for which she is responsible.
Yes, I absolutely agree with the member. We are deeply opposed to those cuts, and we urge the UK Government to listen to organisations such as the Mental Health Foundation, which warns that they could worsen the wellbeing of disabled people. We believe that the UK Government should abandon those reforms.
I also agree that anyone who wants to secure and sustain work should be supported. Our 2025-26 budget includes £90 million for devolved employability services that ensure that person-centred, place-based support is in place right across the 32 local authority areas, and we are introducing specialist employment support to enhance existing provision and support more disabled people into meaningful employment.
The Glasgow Centre for Inclusive Living in my region runs an internship programme to get disabled graduates placements in the national health service. The programme supports disabled people to unlock their potential and to contribute, and it has an 88 per cent success rate for getting people into employment. Last year, it had support for 20 graduates; this year, it has had support from the Government for only six graduates. Does the Deputy First Minister agree that scaling the programme back risks stifling that potential, and will she commit to working with me to restore and expand the programme so that more disabled graduates get the opportunity that they deserve?
I am very impressed with those figures and with that success rate, for want of a better term. I am more than happy to look at the matter in more detail. In an earlier answer, I said that we are rolling out a specialist disabled people’s employability service. We have also protected the overall employability funding in this year’s budget, so I am keen to understand what has driven that change, because, from my perspective, the Scottish Government has not just protected employability funding but has increased support specifically to disabled people.
Former Mills and Disused Buildings (Redevelopment)
To ask the Scottish Government what support it will provide to businesses to redevelop and use former mills and other disused buildings, in order to support regeneration and economic development. (S6O-04773)
Local authorities are responsible for delivering local regeneration and economic development activity. However, the Scottish Government plays a key role in supporting local authorities toward regeneration ambitions, including the redevelopment of vacant and derelict buildings such as former mills. Through the regeneration capital grant fund, businesses are encouraged to work closely with local authorities to bring forward proposals for funding and delivery.
The Bristol mill at the entrance to Galashiels on the Edinburgh road closed in 1998. There have been many proposals to redevelop the site for commercial and housing purposes, but its listing is a major obstacle. Does the cabinet secretary consider that Historic Environment Scotland’s process to delist or even permit the demolition of listed mills needs to be reviewed to allow economic development to meet modern requirements?
The member poses an interesting question about the fact that, even where funding is available, there might be other dimensions that local authorities need to work through in relation to listed buildings. I hope that there are opportunities to work with Historic Environment Scotland to look at the future for these sites, because, where there is funding available, we want to do everything in our power to protect the sites and to restore them for the good of the public.
Employer National Insurance Contributions Increase
To ask the Scottish Government what its assessment is of the impact on Scotland’s economic growth of the increase in employer national insurance contributions. (S6O-04774)
At face value, the increase is increasing costs for both public services and businesses. As was highlighted by the Office for Budget Responsibility in October, it will have a negative impact on short-term growth, reduce employment and push up inflation.
Experts, councils, providers and care organisations across Scotland have all reacted with deep concern about the financial viability of care homes given the increase. When Lesley de Jager from the Coalition of Care and Support Providers in Scotland recently gave evidence to the Health, Social Care and Sport Committee, she stated:
“‘Devastating’ and ‘catastrophic’ are the two words that I would use to describe the impact that it has had on our members.”—[Official Report, Health, Social Care and Sport Committee, 20 May 2025; c17.]
Does the Deputy First Minister agree that this is an extremely worrying and uncertain time for the sector and that, yet again, it is the most vulnerable people in our society who will be hit the hardest by this disastrous Labour United Kingdom Government decision?
The member highlights the fact that public sector organisations are not the only ones that deliver vital public services across Scotland. Providers in the private and third sectors routinely deliver essential and often statutory services.
We have consistently been clear that it is for the UK Government to fully fund the additional costs to public services due to its increase in employer national insurance contributions, including for the vital services that are provided by third and private sector organisations. It is obvious to anyone who has been watching that the UK Government has ignored that point and the widespread concerns about the impact of this damaging tax increase. Last month, it confirmed that we would receive £339 million this year for the additional costs, which is less than half the estimated cost to public services of more than £700 million.
I can squeeze in question 8 if I have brief questions and answers to match.
Public Health Costs (Impact on Businesses)
To ask the Scottish Government what assessment it has made of any economic implications of the Scottish Fiscal Commission’s latest forecasts and the potential impact of rising public health costs on businesses across Scotland. (S6O-04775)
The Scottish Fiscal Commission’s latest forecasts recognise the challenging economic and financial environment that Scotland continues to face as a result of global uncertainty and higher inflation, while business conditions and public services have also been impacted by the United Kingdom Government’s decision to increase employer national insurance contributions. Our programme for government recognises the link between the health of the population and the economy, and it sets out measures to renew the national health service and measures to grow the economy by investing in our workforce, supporting people into employment, attracting investment and backing business.
The report by the Scottish Fiscal Commission highlights the wider effects of public health on our fiscal forecasts. It inevitably has profound effects on the wider economy, not least around workforce productivity. As the minister knows, improved productivity is vital to addressing our anaemic economic growth figures. Does he agree that there is an economic imperative as well as a health imperative to take greater action to improve public health? How does he intend to ensure that improving the health of Scotland’s workforce is embedded in Scottish Government policy?
I agree with the important points that the member makes. The latest budget contains £21.7 billion for health and social care. We recognise that we must help people to go back into work and ensure that they get the treatment that allows them to do that, which helps to support the economy, too. There are many wider factors that impact on the health of people who are in work, such as economic uncertainty, the overall state of the economy and what is happening globally. The member raises important issues, and they are being addressed by the Scottish Government.
That concludes portfolio questions on Deputy First Minister responsibilities, the economy and Gaelic.
Finance and Local Government
Right to Roam
To ask the Scottish Government what funding allocations it has made, and plans to make, to enable local authorities to fulfil their statutory duties to uphold the statutory right of access to outdoor spaces, commonly known as the right to roam. (S6O-04776)
Before we continue, I ask for Ms Burgess’s microphone to be checked. I thought that the sound was a bit faint. However, the cabinet secretary will at least be able to respond to the principal question.
The Scottish Government continues to believe that delivery of local authority duties should be delegated at a local level where possible. The majority of funding provided to local government is made available through a block grant, and £8.1 million is included in that block grant in relation to land access measures and is allocated based on proportions of population and path lengths.
However, the funding is not ring fenced. It is the responsibility of individual councils to manage their budgets and allocate the total financial resources available based on local priorities, once they have met their statutory obligations.
The sad truth is that, although Scotland’s legal right to roam is world renowned, the system for upholding such rights has never been in a worse state. A big reason for that is the way that money is allocated to local government. The number of council access officers has halved in the past 20 years, and many local authorities are failing to do even some of the most basic things, such as host a local access forum. The result is that public complaints are going unanswered, and people who want to enjoy the great outdoors are finding that their rights on paper mean little on the ground.
Does the cabinet secretary accept that, in order to reverse that neglect, there needs to be reform of how access funding is allocated to local authorities?
First, I am very happy to continue these discussions with Ariane Burgess and with others. There is a balance to be struck here. Often, in the Parliament, the demand is that local government has flexibility over its funding. That is something that COSLA called for, including in relation to some of the existing ring-fenced funds. In the Verity house agreement, the direction of travel was towards flexibility of funding and a reduction in ring-fenced funds. So, although I am happy to continue these discussions, we must make sure that we strike the right balance. I am not sure that having lots of small ring-fenced funds helps local authorities have flexibility.
Civility in Public Life (Convention of Scottish Local Authorities)
To ask the Scottish Government whether it will provide an update on how it is supporting colleagues in COSLA regarding their call for civility in public life. (S6O-04777)
The Minister for Victims and Community Safety and I attended COSLA’s civility in public life round table on 28 May, along with councillors from each of the political parties and representatives from other organisations. It was good to see so many people from across many of the quarters that this important issue touches.
The Scottish Government remains committed to working with COSLA to do all that we can to ensure that elected members can conduct their duties free from violence, threats and abuse. I am aware that, following that round table, COSLA is developing an action plan.
I welcome the work that colleagues and COSLA are undertaking that is aimed at tackling abuse and intimidation of elected members.
The tragic and barbarous murders of Jo Cox MP and David Amess MP as they went about their daily duties shook all of us to the core. Does the cabinet secretary agree that the growing abuse and intimidation of elected representatives is a direct threat to democracy? Many elected representatives are standing down from their roles because they are not prepared to tolerate such abuse—which also actively deters people, especially those from underrepresented groups, from entering politics in the first place. Does the cabinet secretary also agree that the work initiated by COSLA should be supported by all of us to ensure that elected members can conduct their duties free from violence, threats and abuse?
I absolutely agree with Ms Whitham. The issue should concern all of us across the chamber. It has an impact on democracy and, more crucially, on getting the right people and a broad range of people to enter politics, in order to represent everyone in our communities.
The Verity house agreement helps to set out the way in which we work together—how we approach our shared priorities and how we engage with each other in a positive manner, based on mutual trust and respect. That should be the standard across all areas of democratic life. It is something on which we, as members of the political parties, need to work together. Otherwise, there will be a reduction in the number of people, and women in particular, coming forward to serve in public life, and that will not benefit anyone.
Aberdeenshire Council (Budget Settlement 2025-26)
To ask the Scottish Government whether it has assessed the impact of its budget settlement for Aberdeenshire Council in 2025-26 on the local authority’s ability to deliver local services. (S6O-04778)
The 2025-26 budget provides local government in Scotland with record funding of more than £15.1 billion. As a result of the Scottish budget, Aberdeenshire Council received a record funding settlement worth £627.7 million to support day-to-day services. How that record funding is deployed to deliver local services, statutory duties and nationally agreed priorities is a matter for locally elected members.
I recognise that no part of the public sector is immune from difficult decisions as a result of the many years of austerity from successive United Kingdom Governments.
Since 2014, the Scottish Government’s budget has increased by 45 per cent in real terms. In stark contrast, local government funding has decreased by about 1 per cent over the same period.
Aberdeenshire has one of the largest school pupil populations outside of the central belt and many pupils travel long distances each day to reach their catchment school—yet the council receives the fourth-lowest level of funding per head, which leaves nothing for bus budgets. That affects rural pupils as well as bus contracts for disabled passengers. Can the cabinet secretary explain how future education budgets will consider rurality when setting funding allocations?
In its reports over the past three years, the Accounts Commission has confirmed that there has been a real-terms funding increase for local government—there has not been a reduction in council funding but, rather, a real-terms increase in council funding.
On the issue of how the funding formulas take account of rurality, the first thing to note is that those decisions are made by the Convention of Scottish Local Authorities, and it is difficult to change formulas that the 32 local authorities have agreed among themselves. I have some sympathy with those who question whether issues such as rurality and deprivation are adequately covered by the formulas that COSLA has agreed with the 32 local authorities, but it would be very unwise of me to try to overrule something that has been collectively agreed by the 32 local authorities.
We will continue to discuss with COSLA the best way to ensure that all local authorities in all parts of Scotland get a fair settlement, but that decision is primarily one that is made by the 32 local authorities.
“Government Expenditure and Revenue Scotland” Statistics 2024-25
To ask the Scottish Government what work it is undertaking to prepare for the publication of the “Government Expenditure and Revenue Scotland” statistics for 2024-25. (S6O-04779)
As happens annually, the normal work to produce the publication has been begun by officials, and the publication date will be pre-announced in line with the code of practice for statistics.
The most recent GERS statistics showed that Scotland’s deficit is nearly £23 billion and runs at more than 10 per cent annually. The Cabinet Secretary for Finance and Local Government has said that full fiscal autonomy is the Government’s preferred policy, but, under full fiscal autonomy, Scotland would lose United Kingdom Government funding and Scotland’s taxpayers would have to plug the gaps.
Does the minister think that the next GERS figures will show a multibillion-pound deficit? Given that context, what impact assessments and modelling did the Government do prior to launching a fiscal policy that would immediately cut £40 billion from the Scottish budget?
As I am sure that Liam Kerr is aware, the Scottish Government’s policy is that Scotland should be a normal independent country and that we should take full control of all our economic levers.
Liam Kerr should also be aware that the GERS numbers are a statement of the current situation that Scotland suffers from as a member of the union. The data clearly lays out the costs that Scotland incurs through that relationship. A significant amount of the costs that are in GERS are costs that have been incurred by the UK Government that have been allocated on a pro rata basis to Scotland. Those are costs that we would not incur, were we a normal independent country.
Liam Kerr should note the successes of Scotland’s economy. Recently published data shows that unemployment is lower in Scotland than it is in the rest of the UK. Recent data shows that average revenue per person in Scotland is higher than in the rest of the UK and that Scotland has faster growth in income tax revenue. There is net inward migration from the rest of the UK to Scotland.
Longer-term trends show that Scotland has higher growth in gross domestic product per head and higher productivity growth per head than the rest of the UK. That is not to mention the £450 billion in oil and gas revenues that have gone south to the UK Treasury over the past number of years and, of course—this is an important point to finish on—the £2.3 billion in additional revenue that would have accrued to the Scottish Government if we had not been taken out of the European Union against our will by the policy of Liam Kerr’s party on Brexit.
Barnett Formula (Replacement)
To ask the Scottish Government, in light of recent reports regarding the Barnett formula, and its ministers stating a preference for full fiscal autonomy, what discussions it has had with the United Kingdom Government in relation to replacing the Barnett formula. (S6O-04780)
This Government is clear that Scotland would be best served by having full control over its finances as an independent country. We have seen today how the funding available for the Scottish budget continues to be dominated by decisions that are made at Westminster. Although the Barnett formula ensures that we receive a population-based share of funding for devolved responsibilities, we can still be left short-changed, as we have seen with the totally inadequate level of funding that has been provided for employer national insurance contributions.
I would, of course, welcome discussion with the UK Government on what further economic and fiscal powers this Parliament should have.
Senior UK politicians are threatening to scrap the Barnett formula. Today, the cabinet secretary has reiterated the Scottish Government’s desire for ministers here to have full fiscal autonomy, in recognition of the fact that a fiscal framework that imposes drastic cuts in the Scottish budget at the whim of Westminster is not in our interests.
It is no secret that I believe that Scotland’s economy would be best served if Scotland were an independent country, but, as the Scottish Government does not see achieving independence as an urgent priority, what specific funding mechanism does the Scottish Government want to be implemented now to replace the Barnett formula? What new powers does it envisage would require to be transferred to the Scottish Parliament as a result?
On the first point, I note that we as a Government regularly point out the deficit in our decision-making levers, not least in relation to our ability to respond to the headwinds that we have faced over recent years, which have made the lack of flexibility in the fiscal framework very stark, indeed. Again, we have laid out on a number of occasions what we want to see in the sphere of additional levers and powers short of independence, and we have asked for a more fundamental root-and-branch review of the fiscal framework. We will continue to push for that over the coming months.
The senior UK politician who Ash Regan referred to is, of course, Nigel Farage, who shares the same position as the Scottish National Party in wanting to get rid of the Barnett formula—a formula that has guaranteed, in the past hour alone, an additional £9.1 billion of spending for Scottish public services.
On 20 May, the cabinet secretary was unable to tell the Finance and Public Administration Committee anything at all as to what the cost of her policy of full fiscal autonomy for Scotland’s budget would be. Does the cabinet secretary believe that policies should be costed before they become Government policy?
First, let me moderate Michael Marra’s excitement about today’s spending review. The average real-terms growth rate in day-to-day public spending will be 0.8 per cent a year, which is lower than the average for UK Government departments. Had it matched UK department levels, we would have more than £1.1 billion by 2028-29 in our finances. Therefore, let us not get too carried away by the spending review, because the facts are quite different.
We see the limitations of the fiscal framework, whether in relation to employer national insurance contributions or the winter fuel payment. Those examples show that the fiscal framework is not fit for purpose in relation to how we navigate through the UK Government’s decisions. It was good to reverse the decision on the winter fuel payment, which will have an impact on our block grant.
Only Michael Marra seems to think that the fiscal framework is perfect and that we need no changes, because, fundamentally, he does not want any additional powers or influence for the Scottish Parliament. That is for Michael Marra to defend; this Government will argue for more powers and more resources for Scotland’s Government and for Scotland’s people.
The Scottish Government’s own figures reveal that Scotland spends £22.7 billion more than the country raises in tax, including from our depleted oil revenues. Full fiscal autonomy would mean losing a union dividend that was worth more than £2,400 per person in 2023-24. At present, our deficit is notional; under the minister’s policy, it would become very real, indeed.
To pursue full fiscal autonomy—a reckless policy—by how much would Shona Robison be forced to raise tax, and which services would she slash?
I am glad that Craig Hoy acknowledged that the deficit is notional. It is notional because it is based on the current constitutional arrangements, and it is a failure of those current constitutional arrangements, paraded by both Michael Marra and Craig Hoy as if they are something that we should be grateful for. This Government will stand up for the interests of Scotland. We need levers that will help us to address the headwinds that we have faced over recent years, such as Brexit, Covid and the war in Ukraine. We do not have those levers in the current fiscal framework, and we want to address that.
MV Glen Rosa (Cost Increases)
To ask the Scottish Government what discussions the finance secretary has had with ministerial colleagues regarding the allocation of any additional funding to meet the cost increases for MV Glen Rosa that were recently announced by Ferguson Marine. (S6O-04781)
I meet ministerial colleagues regularly in relation to budgetary matters, including the Deputy First Minister on the recently announced additional funding needs related to MV Glen Rosa. I will continue to work closely with the Deputy First Minister to support the funding of that new ferry.
Ferguson Marine has stated that it needs an additional £35 million to complete the late and massively over-budget MV Glen Rosa, the total cost of which is now estimated to be a staggering £185 million—nearly four times the original contract price. Will the cabinet secretary guarantee that that will be the final payment that taxpayers will have to make to complete the vessel? What discussions have she and her ministerial colleagues had with Ferguson Marine to ensure that Scottish taxpayers are not, again, placed on the hook to deliver the vessel?
As the Deputy First Minister has said, the news of the further delay and increased cost to deliver MV Glen Rosa is “unacceptable” and deeply frustrating. Our island communities rely on a resilient and reliable ferry service, and they deserve better. We have made it clear—the Deputy First Minister has made it very clear directly to Ferguson Marine—that the situation cannot continue and that strong leadership and urgent delivery are now non-negotiable. That could not be clearer.
The project issues with the Glen Rosa are well rehearsed, but does the cabinet secretary recognise that the fundamental problem is the insufficient volume of work that is going through Ferguson Marine? It is carrying an overhead and has not enough demand signal. What is the cabinet secretary doing to reform public procurement to include social value clauses, so that we can get more shipbuilding work through public procurement contracts?
Paul Sweeney has highlighted an important issue, although it is quite a difficult one, as he will be well aware. Under public procurement rules, direct awards are possible only in very strict and limited circumstances. Public procurement rules cannot just be set aside; there are rules and laws and, potentially, legal challenge governing the way in which those rules are applied. We absolutely want a bright future for Ferguson Marine. We want it to win contracts. However, that has to happen in a way that is above legal reproach.
I have a straightforward question: are there any circumstances whatsoever under which the Scottish Government would refuse more money, if asked for it, to complete the Glen Rosa, or is it the case that we have simply passed the point of no return and that the vessel will be finished, whatever the cost?
As I said in response to Sue Webber, the Deputy First Minister could not have been clearer that the situation is unacceptable and that strong leadership and urgent delivery are now non-negotiable. It is very important for our island communities that the vessel is delivered, but Ferguson and its leadership have to deliver the ferry within the timescale and the budget allocation that have now been agreed. The Deputy First Minister has been very clear about that point.
Humza Yousaf joins us remotely.
Public Procurement (Alignment with International Law Obligations)
To ask the Scottish Government how it ensures that public procurement aligns with its obligations under international law. (S6O-04782)
Such matters are, of course, reserved. The United Kingdom has a number of international agreements that feature chapters on public procurement and is a member of the World Trade Organization agreement on government procurement. When it comes to procurement by devolved Scottish authorities, the terms of those agreements are given effect principally by the relevant provisions of the Public Contracts (Scotland) Regulations 2015, the Concession Contracts (Scotland) Regulations 2016 and the Utilities Contracts (Scotland) Regulations 2016.
Israel is committing genocide in Gaza. That is not only my view but the view of hundreds of legal experts in genocide studies. Every state has an obligation to prevent genocide. Although the UK is the state party to the United Nations Convention on the Prevention and Punishment of the Crime of Genocide, we in Scotland must do what we can to ensure that we are in no way complicit in that genocide or in the continued illegal occupation of the West Bank.
In the light of that, will the minister make it clear that no taxpayer-funded contract from the Scottish Government will aid those war crimes? Will he confirm that the Government will undertake an immediate review to consider what action it can take to ensure that any company that operates in illegal settlements or is in any way complicit in the genocide in Gaza is prevented from bidding for future Scottish Government contracts?
The genocide that is taking place in Gaza must be of the utmost concern to us all. The Scottish Government is committed to the international rule of law, and we support any and all investigations into crimes against humanity and genocide.
We also expect the highest standards of our contractors. The awarding of public contracts is bound by international agreement and domestic regulations. Those regulations permit bidders to be excluded from tender exercises where they can be shown to have acted in a manner that constitutes grave professional misconduct. Scottish Government guidance that is issued to public bodies sets out a view that exploitation of assets in illegal settlements is likely to be regarded as grave professional misconduct. In light of the question that the member asked, I will undertake to ask officials to provide advice on how the Scottish Government could take forward such a review.
Multiyear Funding Settlements (Discussions with United Kingdom Government)
To ask the Scottish Government what discussions it has had with the United Kingdom Government regarding multiyear funding settlements. (S6O-04783)
We were optimistic that the spending review would deliver a reset of the relationship with the UK Government that was promised by Labour, but we have had very limited opportunities to engage with the Chief Secretary to the Treasury. That is symptomatic of a wider approach by UK ministers.
We made extensive representations on our priorities for the spending review, and although some aspects of the spending review are to be welcomed, we have seen only limited progress. That comes on top of the UK Government’s failure to fully fund the employer national insurance increase, and the concerning welfare reforms.
Although it is too early to provide a full analysis of the chancellor’s announcement today, and although some it is positive, the spending review has reaffirmed that Labour’s priorities are to slash support for disabled people and to double down on the jobs tax, which is already increasing unemployment. Can the cabinet secretary provide details of any engagements that she plans to have with the chancellor to highlight the ways in which today’s spending review lacks ambition to help many people and households in my Greenock and Inverclyde constituency and Scotland as a whole?
The next opportunity to engage will be at the meeting of the finance interministerial standing committee, which involves all finance ministers and which will take place at the end of this month. Of course, we will highlight a number of issues that we want to see resolved and on which we want more information.
As I said in an earlier answer, the headline from today is a modest average real-terms growth rate in day-to-day spending of 0.8 per cent per year, which is lower than the average for UK departments. One concerning aspect is the continuation of the use of the United Kingdom Internal Market Act 2020 to deliver funding that should be routed through devolved Governments. That is one of the issues that I will raise with the Chief Secretary to the Treasury at the FISC meeting at the end of June.
That concludes portfolio questions on finance and local government. There will be a very short pause before we move to the next item of business to allow front-bench teams to change over.