Draft Budget 2014-15
The next item of business is a statement by John Swinney on the draft budget 2014-15. As the cabinet secretary will take questions at the end of his statement, there should be no interventions or interruptions.
Cabinet secretary, you have 20 minutes.
14:40
The Cabinet Secretary for Finance, Employment and Sustainable Growth (John Swinney)
I am pleased to set out today the Scottish Government’s draft budget for 2014-15 and indicative spending plans for 2015-16.
This budget is focused on delivering investment, protecting household incomes and creating jobs. It values our public services, the people who work for them and what they achieve. It provides opportunities for our young people and security of care for our older people. Most of all, it demonstrates the benefits of decisions being made here by those who care most about the future of the people of Scotland.
Scotland is a wealthy and a productive nation. In each of the past 30 years, we have paid more in tax per head than the rest of the United Kingdom. Excluding oil, our national income is on a par with the UK; including oil, our gross domestic product per head is 18 per cent higher than that for the UK. When compared with the Organisation for Economic Co-operation and Development countries, our GDP per head would be the eighth highest. We have a highly skilled workforce, a long-standing reputation for innovation, a respected and recognisable brand, world-class universities, and sectors and companies competing at the highest level across international markets.
With the full decision-making powers of independence, I would, today, have been able to present a budget that would have put all that economic strength to use in building a more prosperous and more just Scotland. Instead, as a result of Westminster’s decisions, I must today present a budget constrained by significant cuts.
The UK spending round reduced the Scottish Government’s fiscal departmental expenditure limit by 10.9 per cent in real terms over the period from 2010-11 to 2015-16, with further cuts expected for 2016-17 and 2017-18. Within that, our conventional capital budget will be reduced by 26.6 per cent. Westminster’s programme of welfare cuts is taking money out of the Scottish economy, adding to the burden on our public services and hitting household budgets.
Despite that, the decisive and distinctive measures that we have taken in Scotland are delivering results. Since my last budget, Scottish GDP statistics have shown growth in each quarter, with annual growth of 1.2 per cent compared with just 0.3 per cent for the UK as a whole. Employment has risen by 45,000 over the year and our employment rate of 72.4 per cent is higher than the UK rate of 71.6 per cent. Unemployment is down 19,000 and our unemployment rate at 7.4 per cent is lower than the UK rate of 7.7 per cent. Youth unemployment is down 12,000 over the year and our youth employment rate of 57.2 per cent is higher than the UK equivalent at 49.8 per cent. The Bank of Scotland purchasing managers’ index for August indicated that private sector output has expanded for the 11th month and is rising at the fastest rate since the survey began. Scotland’s recovery is not, as the Chancellor of the Exchequer claims, happening because of austerity—it is happening in spite of austerity.
However, we cannot take recovery for granted and must be focused on addressing real challenges in the economy. We will face these challenges from a position of strong financial management and responsibility. Each year since 2007, I have brought a balanced budget to Parliament, meeting our commitments and delivering value for money for the taxpayer. We continue to drive efficiency with the Scottish Futures Trust helping to deliver savings in our capital programme and public bodies expected to deliver annual efficiencies of 3 per cent. In 2015-16, we will use our capital borrowing powers of up to £296 million to support our investment programme. We will apply the land and buildings transaction tax and the landfill tax, which I hope Parliament will agree this session. For 2014-15, I have made provision for the costs of the referendum on independence and the costs of implementing the Scotland Act 2012.
I will now set out for Parliament the actions that we are taking to deliver economic recovery, reform our public services and support Scotland’s people, businesses and communities. Our spending plans are focused on accelerating economic recovery through investment. To tackle Westminster’s cuts to capital spending, we are switching funding from resource to capital, utilising capital receipts and pursuing revenue-funded investment through the non-profit-distributing programme and the regulatory asset base rail enhancements. We do so while committing no more than 5 per cent of our future total DEL budget on the costs of our revenue-funded investment programme.
I have published today an update on the projects and the expected investment from this year through to 2022-23. In the short term, NPD investment is lower than was originally forecast. That is for two reasons. First, some NPD projects are being concluded at lower cost. [Interruption.]
Mr Dornan.
Secondly, some projects are taking longer to be prepared and planned. The benefit of taking time to properly prepare projects is clear from the example of the Queensferry crossing, which will be delivered on time and within a cost estimate that has reduced by £145 million since 2011.
Work continues on time and on budget on the £842 million new south Glasgow hospitals project and on major refurbishment programmes across the health service. The schools for the future programme will deliver 67 new schools across Scotland, 11 of which are already complete and operational. Construction is under way on the City of Glasgow College and Inverness College developments. Almost £2 billion of projects are in procurement and more than £500 million of those projects are expected to begin construction this financial year—they are the Ayrshire College project, the M8, M73 and M74 project bundle and a range of schools and community health projects.
The effects of the recession are still being felt in the housing market, and the Government is determined to do all that it can to help. We will support the construction industry and private house building through a range of schemes, including the MI new home mortgage indemnity scheme and our £120 million help to buy Scotland scheme, which will provide access to affordable mortgages for home buyers.
We are on track to deliver 30,000 affordable homes by 2016, of which at least 20,000 will be for social rent. When Parliament passed the Budget (Scotland) Bill in February, I set out plans to invest £859 million in affordable housing over the period 2012-13 to 2014-15. I will revise those provisions today.
Over the three years to 2014-15, we now plan to invest not £859 million but £970 million. In 2015-16, we will invest a further £390 million. I therefore confirm to Parliament that, over the four years to 2015-16, the Government will drive investment in affordable housing of more than £1.35 billion. Together with the other elements of our programme, we will secure total investment of more than £8 billion in Scotland’s infrastructure over the next two years.
The budget takes action to boost employment, create economic opportunities and enhance business confidence. Our plans are supported by the unique opportunities that will be presented next year, when Scotland will welcome visitors from around the world to the Commonwealth games, the Ryder cup and the second year of homecoming. We will invest £24 million in 2015-16 to establish a national performance centre that will help us to sustain the legacy of the Commonwealth games.
Those events will benefit Scottish businesses. We are taking significant steps to support private sector growth and to ensure that we offer the most business-friendly environment in the UK. All our communities benefit from the small business bonus scheme and the most generous set of business rates reliefs in the UK, which are worth more than £560 million each year. Our enterprise bodies will support business growth, including through the Scottish Investment Bank and the small and medium-sized enterprises growth fund, and we will resource innovative measures to encourage a new age of entrepreneurship across Scotland.
Digital technologies offer huge potential to improve productivity and open up new markets. The budget confirms a range of investment in digital technologies, including more than £280 million in two major contracts with BT to ensure that 95 per cent of premises in Scotland have access to superfast broadband by the end of 2017-18, which exceeds our earlier target.
The transition to a low-carbon economy is a key theme of our economic strategy. We will provide £200 million over the next two years for schemes such as the national renewables infrastructure fund. Given the impact on investment of uncertainty over UK energy policy, I will extend the renewable energy investment fund by a further year to 2015-16.
In launching the second report on proposals and policies in June, the Minister for Environment and Climate Change told Parliament that we would use the budget to boost investment in meeting our world-leading climate change targets. The budget confirms that we will maintain the sustainable action fund for the next two years; invest an additional £15 million in peatland restoration; deliver more than £50 million of investment in the warm homes fund a full year ahead of previous plans, which will enable faster progress to be made in delivering greater energy efficiency; and work with the private sector to secure around £200 million for measures to tackle fuel poverty.
The budget also confirms that we will deliver around £40 million of investment in sustainable transport through the future transport fund over the next two years. We will increase funding to support active travel. That will see an additional £20 million being invested in cycling compared with the last budget. In total, our support for active travel over the next two years compared with the last two years will rise from around £40 million to around £60 million.
A focus on education and training is fundamental to our efforts to support the economy and create the conditions for growth. We will extend funding for the 25,000 modern apprenticeships per year into 2015-16. We will continue to fund opportunities for all, which guarantees support for all of Scotland’s 16 to 19-year-olds who are not currently in education, employment or training. Free higher education will continue for Scottish students as part of annual investment of more than £1 billion in the sector.
In addition, the budget secures the position of our colleges for the remainder of the parliamentary session. In February, I confirmed to Parliament that we would provide resource funding of £522 million for colleges in 2013-14 and maintain that level in 2014-15. The budget delivers on that commitment, but it also goes further. I confirm that the colleges resource budget will increase to £526 million in 2015-16, which will enable it to support full-time courses and to equip Scotland’s students for the world of work.
We will act to remove barriers to the labour market, particularly for women. We will invest more than £190 million in the next two years to fund the Children and Young People (Scotland) Bill. That will provide an additional 125 hours of early learning and childcare for all three and four-year-olds, and looked-after two-year-olds, which will be worth around £700 to a family. Real practical help is being offered to hard-pressed families who are making their way in the world.
Our support for households is an integral part of our support for the economy. It is an approach that is in line with the values of the people of Scotland and which demonstrates the priority that we attach to helping the most vulnerable.
Despite the financial pressures that we face, I can give a clear and unequivocal commitment that national health service prescriptions, eye tests and personal care will remain free; that the concessionary bus travel scheme will be maintained; that the education maintenance allowance—and, from 2014-15, a minimum income for students—will be available; and that access to higher education will remain based firmly on the ability to learn, not the ability to pay.
Our public services are vital to the people of Scotland. We value the NHS, just as we believe that local government should be properly funded to deliver local services. In delivering in full the Barnett consequentials for the NHS revenue budget in 2014-15 and 2015-16, the draft budget secures continuing improvement in the quality of service that the NHS provides.
In England, the Chancellor of the Exchequer’s austerity drive has seen the local government settlement hit with a real-terms cut of 18.6 per cent since 2012-13. That reduction is passed on to Scotland through the Barnett formula. In contrast, local authorities in Scotland will see their resource funding from the Scottish Government maintained in 2014-15 and 2015-16, which will enable them to maintain teacher numbers in line with pupil numbers and to deliver the council tax freeze, just as the Government promised that it would do.
As well as protecting our vital public services, we are intensifying our approach to public service reform. Alongside the draft budget, I am publishing an agreement on joint working, which places clear expectations on the public sector to work together to ensure that resourcing decisions are focused on the local priorities of each community planning partnership and that budgets are shared.
In 2014-15, we will fully fund the three change funds that were announced in the spending review, thereby supporting efforts to reshape care for older people, to drive progress in the early years and to reduce reoffending. We will support the crucial role that the third sector can play in each of those areas.
Next year, we will invest £8.5 million in the fourth year of the early years change fund, and we will extend for a further year the reducing reoffending change fund, which is helping to deliver the lowest reconviction rate in 14 years. We will build on the reshaping care for older people fund by allocating £100 million through NHS boards, which will be accessible to local authorities, the third sector and others, to drive the shift towards prevention in 2015-16.
We will also deploy £20 million to support national initiatives, meaning that we will invest £120 million in 2015-16 to assist the integration of adult health and social care services.
Our public services and reform programme depend on the hard work of public sector workers. Since 2010, they have been subject to pay restraint. I am publishing today a pay policy for 2014-15 and 2015-16 that sets out distinct differences from the approach that has been taken by Westminster, particularly in relation to low-paid workers.
We will implement the Scottish living wage and we will uprate it annually. We will increase the minimum uplift in basic pay for employees who earn less than £21,000 from £250 to £300 each year. As a result, some staff will receive increases of up to 2 per cent. We also flatly reject the chancellor’s threat to end pay progression. The Scottish Government will retain our existing policy, leaving public sector employers with the discretion to reach their own agreement with staff and trade unions and to do so outside the 1 per cent cap that will apply to basic pay increases.
The costs of Westminster’s approach to public finances are increasingly borne by the most vulnerable in our society. From 2010 to 2015, its cuts to welfare benefits will take an estimated £4.5 billion out of the Scottish economy, widening the gap between rich and poor. The Scottish Government has neither the legal powers nor the financial resources to meet every cut or to mitigate all the damage done by Westminster.
Last year, I announced that, working with our partners in local government, we would act to protect over 500,000 people in receipt of council tax benefit who would otherwise have struggled to pay their bills each month as a result of a Westminster decision to cut funding for successor arrangements to council tax benefit by 10 per cent. In 2014-15, the Scottish Government will again contribute £23 million to mitigate the funding gap, and we propose to continue to work with our partners in local government to bring that support up to £40 million. That will ensure that we are able to maintain support for vulnerable groups through our council tax reduction scheme.
In 2013-14, we set up the Scottish welfare fund and provided funding for one year. As people continue to struggle, I can confirm that we will maintain the fund at £33 million in both 2014-15 and 2015-16. We have already provided funding of £7.9 million for advice services to meet the additional demand that Westminster’s cuts have caused, with £2.5 million to help social landlords to provide support to those who are affected by the bedroom tax. We will provide a further £2.5 million to build the capacity of local communities and the voluntary sector to respond to the worst effects of welfare reform.
This Government will use the resources that we have—resources intended for devolved public services—to invest £68 million in each of the next two years to limit the damage of Westminster’s welfare cuts.
Today, the United Nations special rapporteur, who is investigating housing in the United Kingdom, has called for the bedroom tax to be abolished
“in light of its dire impacts”.
We agree, and with independence we will abolish the bedroom tax. In the interim, we will continue to press the UK Government to abolish the tax and to increase the support for those who are hardest hit. We do not have legal or financial powers over welfare benefits, but neither are we a Government that will walk by on the other side.
Last week, Shelter Scotland put forward a proposition that focused on the problems that people are facing as a result of the bedroom tax. The start of next year’s budget would be too late for many of those who are currently struggling to make ends meet. I intend to take immediate steps to deal with the iniquitous effect of the bedroom tax. I have considered Shelter’s proposal and looked at what capacity there is in this year’s budget to meet that need. Using resources from savings in my own enterprise portfolio budget and underspend on home energy efficiency in the fuel poverty budget that was caused by delays with UK energy schemes, I can confirm that the Scottish Government will invest up to £20 million this financial year to help those who are struggling the most with the costs of the bedroom tax. That funding will enable local authorities to add to their own provisions to increase discretionary housing payments to meet some of the implications of the bedroom tax.
Our action on the bedroom tax shows the values and priorities that matter in the Parliament. Where Westminster decisions have cut spending, this budget supports investment and job creation. Where Westminster decisions have reduced incomes, this budget delivers a social wage that supports our people. Where Westminster decisions are driving the privatisation of public services, this budget protects our NHS. When Westminster targets the most vulnerable as part of its austerity drive, we will do all that we can to protect them.
This budget makes clear the benefits of decisions being made in Scotland by those who care most about our future. That is the opportunity that is on offer to the people of Scotland in 2014.
I commend the budget to Parliament.
We now move to questions on issues that were raised in the cabinet secretary’s statement. I intend to allow about 40 minutes for questions and answers, after which we will move on to the next item of business.
I thank the cabinet secretary for the early sight of his statement. Indeed, even earlier than that, the cabinet secretary had sent his spin doctors out to brief that the budget would be a budget for independence: honesty, at last.
We then heard that an extra 10,000 Scots and an extra 32,000 young Scots have just joined the dole queues. Even the cabinet secretary realised that a budget for independence was the wrong priority, so he dropped the slogan, but it is the same budget. It is a budget for independence—a “Don’t rock the referendum boat” budget for a Scotland that is at a standstill and on pause. It is the wrong priority.
Yesterday, a committee of the Parliament heard first hand about the hardship that is faced by tenants who are victims of the bedroom tax. I agree with the cabinet secretary on the iniquity of the bedroom tax, but I think that those tenants’ priority might have been a budget that would banish that tax from Scotland. Instead, Mr Swinney has found less than half the funds that are needed for the bedroom tax this year in order to hide the fact that his budget has no provision at all to help next year. That means that councils will have to prioritise between “deserving” and “undeserving” victims of the bedroom tax. Those are the wrong priorities. There is currently no promise of further help next year.
This is the first draft of Mr Swinney’s budget. Will he take the budget for independence away and bring back a real budget for jobs that will banish the bedroom tax from Scotland this year, next year and the year after that, as well?
I always find myself pointing out the fundamental incoherence of the arguments that Iain Gray puts forward. I do not understand how Scotland can be “on pause” when we have taken action to do what we can within our powers to deal with and tackle the bedroom tax. Iain Gray would serve his party better by unreservedly welcoming what the Government has set out today. The reason why there is no provision in the 2014-15 budget for dealing with the bedroom tax is that I have absolutely no intention of letting the Westminster Government off the hook in 2014-15. It is the Westminster Government that has legislated for the bedroom tax.
On whether the Labour Party is committed to getting rid of the bedroom tax, I watched two television programmes on Thursday night: one Labour spokesman said yes and the other said no. So, before the Labour Party comes here and tries to lecture me about the bedroom tax, I suggest that it gets some coherence into its argument and backs us in the steps that we are taking to tackle the iniquitous effect of the bedroom tax on the people of Scotland.
I, too, thank the cabinet secretary for advance sight of his statement. Today’s budget should have been about the economy—particularly on a day when we find out that 10,000 more people are unemployed in Scotland.
However, as far as the economy is concerned, this is a budget that has both underpromised and underdelivered. There has been some encouraging news on the economy over the past couple of weeks. That, coupled with today’s announcement, means that there should have been a direct focus on the economy in the budget.
So, why does the cabinet secretary penalise business? Tucked away at the back of his budget document, on page 163, is the information that business rates will go up from £2.4 billion this year to over £2.8 billion in 2015-16, which means almost £460 million extra coming out of the pockets of business. Is that an example of the benefits of decision making being done here? How does he explain that on top of the retail levy and the empty property tax that he brought in?
The cabinet secretary talked about colleges. They used to get £560 million; this year, they will get £522 million. That is a pretty big drop. However, because the amount will go up to £526 million the year after that, he says in his document that the “funding floor” has been increased. How on earth does going from £560 million to £526 million amount to an increase?
How does the cabinet secretary justify, in these difficult economic times, giving £115 million to Scottish Water in 2014-15 and £120 million in 2015-16? That £235 million could be far better spent on capital projects across Scotland. Today’s budget is a big disappointment. If it was a film, it would have gone straight to DVD.
If that was meant to be funny, it did not impress anybody. I think Mr Brown will have to keep practising.
I find Mr Brown’s narrative on the economy quite surprising, because I went through with considerable care in my statement some objective data, from the 12 months since I last delivered a budget to Parliament, on the performance of the Scottish economy.
I will just reinforce the point. Scottish GDP is growing at a higher rate than that of the rest of the United Kingdom, employment here is at a higher rate than that in the rest of the United Kingdom, unemployment here is lower than that in the rest of the United Kingdom, and the youth employment rate here is higher than that of the rest of the United Kingdom. Further, a Bank of Scotland purchasing managers’ index that was published on Monday was—I thought—a very encouraging indication of the attitudes of people in the business community to conditions in the Scottish economy. I would therefore have thought that with all that evidence, Mr Brown would have given due credence to the fact that the Government’s economic strategy is having the effect that we set out 12 months ago it would have in the circumstances.
On the question of business rates, I simply ask Mr Brown whether he has forgotten about the concept of inflation. Business rates are uprated every September, in line with inflation. If he needs an explanation about the increased business-rate take that is happening in Scotland and wants a comparator for that, he need look only at the rest of the United Kingdom, where business rates are rising in largely the same kind of fashion, because of the inflation uplift, as is happening in Scotland.
On colleges, Mr Brown frequently comes to Parliament and argues that we should reform the public sector. When we do that, what does Mr Brown do? He complains about it. When we are saving money as a consequence of reforming the college sector, while still providing the same full-time equivalents and the courses that people require to get into the labour market, I do not know what he is complaining about.
Finally, on Scottish Water, I know that sometimes when Mr Brown comes to Parliament he is driven by the ideological arguments of his side of the debate. There is an ideological argument for privatising Scottish Water, but I do not accept it. I am on the other side of the argument, because I look at the benefits that customers the length and breadth of Scotland have experienced through improvements in the quality of service and reductions in cost, which are good for the charge payers here in Scotland. We have the right approach and strategy, and the enormous capital investment that is happening the length and breadth of the country, not least in the city of Glasgow, which the Deputy First Minister represents, is a tribute to the capital investment programme of Scottish Water.
I welcome the cabinet secretary’s statement and the £68 million that the SNP Government will allocate in each of the next two years to mitigate the adverse impact of welfare reform. It is clear that the Government is working hard within its limited powers to protect the most vulnerable Scots from UK Government welfare policy.
Can we have a question, Mr Gibson?
I ask the cabinet secretary whether any party has put to him specific proposals to increase funding in relation to welfare and, if so, whether that party has indicated how such an increase would be funded, bearing it in mind that such a proposal must be accompanied by a reduction within the same portfolio.
As always, Mr Gibson, as the convener of the Finance Committee, gets right to the heart of the matter by asking people the hard question about where the money will come from in order that we can afford the propositions that they bring forward.
Mr Gray is correct; this is a draft budget and it is here for discussion. We are perfectly happy to have that discussion, as I have done with parties every year in the parliamentary budget process. However, it is important that when people want us to spend money on different and additional priorities, they come here and tell us where the money will come from to do that.
Willie Rennie (Mid Scotland and Fife) (LD)
I thank the finance secretary for early sight of his statement. He knows that we will work with him in a constructive way to amend his budget.
Remarkably, in his statement today he made no mention of the rise in unemployment. Instead, he calls it a budget for independence. It has the wrong priorities and contains the wrong choices, and it is an inadequate response.
Let us look at colleges. Since 2009, 80,000 part-time places have been cut, but his budget goes nowhere near repairing that damage. Fewer businesses in Scotland have apprenticeships than anywhere else in the United Kingdom. The UK Government’s £2,000 cut in national insurance should be promoted by the Scottish Government in order to recruit more apprentices.
I have repeatedly been disappointed by the finance secretary’s stubborn refusal to adopt our costed plans for 24,000 families with two-year-old children. The Education and Culture Committee heard yesterday about the benefits that that could deliver for families.
On colleges, apprentices and two-year-olds, will the finance secretary agree to look again at his plans?
Again, I am a bit surprised by Mr Rennie’s observations about unemployment. The explanation that I give on the unemployment situation today is this: if colleagues look at the detail of the statistics, there is a substantial fall in economic inactivity in Scotland and people have gone back into the labour market as a result of being successful in securing employment. A large number have not been successful, but over 12 months, unemployment is down by 19,000. I would have thought that that would be welcomed. Indeed, the Secretary of State for Scotland—who, the last time I looked, was a colleague of Mr Rennie’s—welcomed the unemployment position in Scotland today. Perhaps Mr Moore is slightly more authoritative than Mr Rennie on such questions.
On college places, I make the same point that I made to Mr Brown. We have maintained the full-time equivalent numbers because the courses that we are supporting and providing in the college sector are designed to enable people to get back into employment. That is why we have had a rise in employment in Scotland and that is why we have had a fall in unemployment over the past 12 months.
I just announced the extension into 2015-16 of funding for 25,000 modern apprenticeships. Such things become familiar because the Government keeps delivering them, but when Mr Rennie’s colleagues left office and we came into office there were not 25,000, but 16,000 modern apprenticeships. We have increased the number substantially and have sustained that increase over many years.
On promoting UK schemes, I work collaboratively with the Secretary of State for Scotland on such promotion in the Scottish employability forum. I am unaware of any complaint from him about how the Scottish Government supports joint working on employment. In fact, after last week’s employability forum meeting, the Secretary of State for Scotland issued a tweet about how constructive his meeting with me at the forum had been. I was delighted to see his little tweet, which was more encouraging than Mr Rennie’s question.
On childcare, the Government has just announced a significant expansion in provision, with funding of £190 million. Does not Mr Rennie have the good grace today in Parliament to welcome that investment?
Before I call Jenny Marra, I should say that 16 members want to ask questions of the finance secretary. I want to get through them all, so I give members some guidance: cut out the preamble and ask one question. That way, we will get through everyone. If members do not do that, they will disadvantage their colleagues.
Presiding Officer, let me tell the cabinet secretary—[Interruption.]
Can we just get a question, Ms Marra?
Who thinks that Scotland is on pause? Is it the 32,000 extra young people who have become unemployed this summer? What is the cabinet secretary’s budget doing to address that?
The Government’s budget is providing 25,000 modern apprenticeships. As I just said to Mr Rennie, that is a significantly higher number than we inherited from the Government that Ms Marra would have supported all those years ago, and which was defeated in 2007. We have also put in place the opportunities for all guarantee, which assures every 16 to 19-year-old of a training or education opportunity, if they have been unable to find such an opportunity.
That is what the Government is doing to support young people. We are putting in place steps and measures that ensure that young people can access the labour market and fulfil their potential.
Aileen McLeod (South Scotland) (SNP)
We know now that a majority of Scots want the Scottish Parliament to have control of decisions over the economy and welfare—
Can we have a question, please?
Will the finance secretary say what he would have been able to do differently with the budget if he had had those powers?
Aileen McLeod made an important point about the flexibility and powers that we would have if we were an independent country. For one thing, we would not have legislated to have the bedroom tax; we would never have brought that forward. Secondly, the Scottish Government would have taken a different approach to capital expenditure from that which the UK Government is taking, in order that we could have ensured that we did not have the economic difficulties—extended as they have been—that have resulted from the current UK Government’s failed economic policies. Those are just two examples of what the Government would have done.
Can the cabinet secretary confirm that the cut in rail services that is detailed on page 128 of the draft budget is the result of the delay to the Edinburgh to Glasgow rail improvement project that was identified in the recent Audit Scotland report, “Scotland’s key transport infrastructure projects”?
There is no change to the capital programme in relation to EGIP or what the Government has announced previously. The funding settlement in the budget provides fully and adequately for the Government to support financially the running of rail services in Scotland, and to invest in the programmes to which we have committed.
Will the finance secretary join me in welcoming today’s Office for National Statistics figures, which show that Scotland—
Can we have a question, Mr Brodie?
I am coming to it, Presiding Officer.
The ONS figures show that Scotland has higher youth employment than the UK. Does the cabinet secretary agree that that is further proof that the Scottish Government is doing the best that it can do with the economic powers that it has, and that only a yes vote next September will give Scotland the chance to break away from the Chancellor of the Exchequer’s austerity programme?
I tried in my statement to give Parliament some dispassionate context based on factual information about what has happened since I last came to Parliament with a budget 12 months ago, when I said that my priority was to improve economic conditions in Scotland. Twelve months on, any dispassionate observer of the statistics that I have given to Parliament would see that the Government has made progress. It is not the end of the journey; it is what the Government is able to do.
Of course, if we had the full range of economic and fiscal powers—
Duncan McNeil (Greenock and Inverclyde) (Lab)
Oh!
If we had those powers we would—I say to Mr McNeil—be able to do a great deal more than the Government is able to do with the constraints under which we operate today.
This year, the UK Government cut the budget by £107 million immediately before it was implemented. Has there been any explanation about that and any guarantee that it will not happen again next year?
Mr Mason will be aware that during the financial year 2013-14, we have had an in-year reduction in our budget. That has never happened in any year in which I have been the finance minister; when I think about it, I cannot imagine that it has ever happened under devolution. The UK Government also applied a reduction of £125 million in our resource budget in 2014-15.
I decided that I would not pass on any of the financial impact of that to local government in Scotland, so the local government settlement that I proposed in 2013-14—which I have set out as an indicative plan, for example, for 2014-15—has been fulfilled by the statement that I have made to Parliament today. That is the appropriate way for us to deal with such questions.
As for guarantees about future reductions, I can make no such guarantees. It has happened already and I cannot rule out its happening again. It is clear from the spending round announcement in late June that there will be further reductions in public expenditure in 2016-17 and 2017-18.
Mr Swinney said that he is increasing the budget for colleges in 2015-16. Will he confirm whether that represents a real-terms cut to college funding in 2015-16?
If Mr Bibby will recall, I gave a guarantee to the Parliament that a funding arrangement of £522 million would be put in place for 2013-14 and 2014-15. I have fulfilled the terms of my commitment and I have increased that to £526 million in 2015-16. Mr Bibby would be well served to welcome the increased resources that the Government is putting into the college sector.
Maureen Watt (Aberdeen South and North Kincardine) (SNP)
Can the cabinet secretary confirm that the Scottish Government will continue its commitment to 1,000 extra police officers on the street, helping to deliver record low levels of crime?
That remains a commitment of the Government. The visible and strong police presence around the country has contributed significantly to the reduction in crime levels in Scotland. The Government’s commitment is fulfilled by the financial settlement that we have put in place as part of the budget today.
Will the cabinet secretary explain why, in the sections of his speech on economic recovery and support for business, he omitted to mention that the enterprise, energy and tourism budget will decline from £479 million this year to £444 million next year? Since our next debate is about enterprise bodies, will he tell us how the focus of those bodies will be affected for good or ill by the transfer of £41.8 million from resource to capital?
The budget line that Mr Chisholm refers to contains the expenditure on the enterprise networks and on energy projects. As I explained in my statement, I have extended the national renewables investment fund for an extra 12 months because of the fact that it has been difficult to get renewable energy projects agreed as a result of the uncertainty over UK energy policy.
The factor that accounts for the decline in the budget in 2014-15 that Mr Chisholm highlights essentially arises out of a change to the energy line within that overall line. The enterprise networks are broadly consistent between 2013-14 and 2014-15. There is an increase in energy expenditure in 2015-16 representing the fact that projects are taking longer to be agreed because of the uncertainty over UK energy policy.
In relation to the wider role of the enterprise networks, as I am sure that Mr Ewing will set out in the next debate this afternoon, they are focused in a positive way on providing support to the company sector for the development of companies and to ensure that the Government’s objectives on internationalising business, on securing the opportunities in the low-carbon economy and on the work in the key sectors—about which we saw some good evidence this week in relation to the success of the food and drink sector—can be fulfilled.
The savings that are being delivered by the Queensferry crossing project are welcome. Can the cabinet secretary expand on the continued opportunities for local businesses as part of this vital infrastructure project for the kingdom of Fife, and can he provide some detail on how the savings could be reallocated?
The revised estimates that we published arose out of the fact that the project is progressing well and that the contract was structured around a level of contingency risk that ran alongside a fixed-price contract. As the elements of risk are being addressed and dealt with—as I saw yesterday at the Queensferry crossing—we are able to release those savings, and our latest estimate is that the savings will total £145 million.
We have, of course, allocated some of those resources already, in two tranches totalling £45 million. Other reallocations have been undertaken to support the infrastructure priorities of the Government, which, of course, extend across a range of areas, particularly the very substantive push to the housing sector, which I am sure is welcomed around the country.
Mary Scanlon (Highlands and Islands) (Con)
The college sector pension deficit was £115 million last year—an increase of 93 per cent on the previous year and more than 10 times the deficit in 2007. What assurances can the cabinet secretary give to staff in the college sector who are, rightly, concerned about their pensions?
The issues in relation to the management of college pensions are entirely a matter for the governing bodies of individual colleges, which must exercise prudential judgment and management around the sustainability of the pension funds. That is their responsibility, constitutionally.
Although there is some additional funding for peatland and active travel, what assurances can the cabinet secretary give that all the proposals and policies in the second report on proposals and policies that are relevant to this budget are fully costed, so that we can move forward incrementally, and that he has secured further funding for the carbon assessment tool, so that a more effective carbon assessment of the budget can be conducted to include second-round emissions?
I did not refer to it in my statement, but the carbon assessment of the 2014-15 budget has been published. Patrick Harvie and I have discussed this issue several times over the years. It is an innovative area of policy making and assessment, so the Government is open to suggestions from across the chamber about how we can strengthen the carbon assessment of the budget. The approach is getting stronger and more effective over time. However, as I said, I am happy to engage in discussions about how we can strengthen that.
On the issue of financial commitments and policy commitments, the commitments that I have set out in the budget are the funding commitments of the Scottish Government; they emerge out of the report on proposals and policies. Of course, Paul Wheelhouse told the Parliament that the Government would boost the financial support for RPP measures, and that is exactly what we have done this afternoon.
If the Government intends to raise active travel up its agenda, which would be welcome after the many tragedies that we have seen, what are we to make of the fact that the statement commits £60 million to active travel over the next two years while the budget line on sustainable and active travel commits only £44 million, along with other opaque budget lines such as the future transport fund line? Is it not time for a single, clear and transparent budget line on active travel, so that everybody who is looking at these documents knows what the Government intends to spend public money on?
I have some sympathy with the position that Mr Harvie articulates. I accept that, in the budget documents, elements of expenditure can appear in different policy areas. I have to try to manage a balance between that and ensuring that the Parliament can see the structure of the budget on a comparative basis year by year in a fashion that the Parliament generally believes to be acceptable. The portfolio approach is, by agreement with the Finance Committee, the way in which the budget should be set out.
On other occasions and in light of the point that Mr Harvie has raised with me, I am happy to marshal some of the information in a clearer fashion that identifies the support that is in place on cycling, to provide it to him and to place it in the Scottish Parliament information centre, because elements of budgets that come in from different portfolios contribute to a stronger, better and more effective approach on cycling than in the previous provisions that I brought to the Parliament.
I acknowledged and accepted that we needed to do more to encourage cycling. We have done that in the budget and I will happily share the evidence and analysis with Mr Harvie and the Parliament.
Kevin Stewart (Aberdeen Central) (SNP)
The cabinet secretary pointed out that Westminster is imposing a cut of more than 18 per cent on local government south of the border. I welcome the fact that the Scottish Government recognises the need to protect local services. Will he expand on how local government spending is being protected in the budget, including through additional funding for early years provision?
The Government has set out the funding priority that it attaches to early years education. The measures that we have in place to extend the number of hours of early years education and support that three and four-year-olds, and looked-after two-year-olds, are able to access are an important part of ensuring that the provision is in place.
We will also look at working with our local authority partners on the implementation of the Children and Young People (Scotland) Bill to find the best and most effective way to ensure that that investment can be deployed to create the two outcomes that I suggested: improved early learning opportunities for young people and encouraging greater participation in the labour market by more and more women.
Anne McTaggart (Glasgow) (Lab)
The budget represents another significant real-terms reduction in the resource grant for local government. Will that not inevitably result in more job losses on top of the 37,000 jobs already lost under this Government?
I can appreciate the issues that Anne McTaggart raises. I simply point out to her that local government in Scotland has been treated fairly by the Scottish Government compared to local government south of the border. Until 2012-13, the Government had received an increase in its budget of about 6.4 per cent and local government got an increase of 8.9 per cent. That indicates that local government did better out of the budget than the Scottish Government did.
Of course, Anne McTaggart is free to argue that local government should get more money, so I look forward to the Labour Party making a budget proposal that says how much more money local government will get. However, I gently point out that, every year that the Labour Party has come to the Parliament and complained about the level of funding for local government, it has never, in private to me or as part of the budget negotiations, advanced an argument for giving local government more money. I look forward to that changing this year, but I point out that, in all the years that I have been finance minister, the Labour Party has never asked me to give more money to local government as part of the budget negotiations.
Will the cabinet secretary provide the Parliament with further information on what is included in the 5 per cent cap on his revenue-funded investment programme? For example, would the local authority contribution to an NPD schools project be included in that 5 per cent cap?
Comprehensive information is available in the budget document. I have put two new annexes into the budget document that give a whole host of information. Annex A starts on page 168 and annex B starts on page 171 and there is substantive information that sets out what is in the Government’s 5 per cent framework. I certainly would be very happy to discuss those issues with the Parliament, but the information is in the budget document.
I was glad to hear the cabinet secretary give such a whole-hearted endorsement of the public ownership of water. Could we have a hint in the next draft of the budget as to how he feels about the ownership of the renewables industries that are now being developed? Will they also be in public ownership?
One of the aspects of the legislative changes that we are bringing forward in relation to the water industry is to enable Scottish Water to be a more active player in the development of renewable energy measures. As a consequence of Scottish Water’s ownership by the Government, those investments will clearly be part of the public assets of the Scottish Government. In that respect, I can give Margo MacDonald some comfort.
Clearly, a lot of other investment in the renewable energy sector is undertaken by private companies. The Government has no proposals to change that arrangement, but having a strong and positive policy framework that supports the development of the renewable energy industry in Scotland is a strong advantage for the Government of Scotland.
Does the cabinet secretary agree that the additional £20 million investment in cycling will be widely welcomed by cycling organisations throughout Scotland? That increase is not an accident but has come about as a result of a Government that is willing to listen and act upon the concerns that were expressed by cyclists in Scotland.
I appreciate Mr Eadie’s comments. Mr Eadie has been vociferous—along with Alison Johnstone—when coming to see me about cycling and cycling investment issues and I am glad that we have been able to make some progress on that question in the budget settlement. There are opportunities for us to ensure that that money is used effectively to strengthen cycling infrastructure in Scotland and I assure the Parliament that ministers will be keen to do so as part of the discussions around the budget and the implementation of the commitments that we have made.