Plenary, 13 Mar 2008

Meeting date: Thursday, March 13, 2008

Official Report 777KB pdf

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First Minister's Question Time

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Engagements

To ask the First Minister what engagements he has planned for the rest of the day. (S3F-588)

I also welcome our visitors to the Parliament today and pass on the chamber's congratulations to Frank Hadden and the Scottish rugby team, following their Calcutta cup victory last Saturday. I look forward to seeing them later.

Later today I will have meetings to take forward the Government's programme for Scotland. I will also meet Frank Hadden and will pass on everyone's congratulations.

I think that the chamber will want to join me in congratulating young Nathan Thomson who, at nine years old, intervened to protect his mother from a vicious assault and agree with the Solicitor General's remark that there should be an award for bravery for that exceptional young man.

I associate myself with the remarks that the First Minister has just made.

Two weeks ago, I asked the First Minister to publish his local income tax plans. Finally, the ever obliging Mr Swinney is shoved out to present the First Minister's flagship policy. The nat tax got an even worse reception than Thatcher's poll tax. [Laughter.]

Order.

For the most basic of accountancy purposes, can the First Minister tell the chamber how much 1p on income tax would raise in the first year of the tax?

I can tell Wendy Alexander that 432,000 pensioners across Scotland will welcome the change in taxation.

I notice that Wendy Alexander said that this tax is unpopular. She is a professor at the University of Strathclyde, whose election survey showed that 88 per cent of people supported income tax based on the ability to pay and 12 per cent supported Labour's council tax rises. I think that that is a sign of popularity, and I hope that, at some point, Wendy Alexander will welcome the introduction of a fair tax based on the ability to pay.

Pre-rehearsed, pre-cooked. I asked a fair question—what does 1p on income tax raise in the first year? I will try another question, with the assistance of one of Scotland's top accountancy firms. Yesterday, I asked PricewaterhouseCoopers for its analysis of the Government's plans. It said that it was at a total loss to explain why the most basic numbers were missing from the document. How much council tax cash has to be replaced? Which year do the plans refer to? How much will 3p on income tax raise? What is the size of the resulting black hole and how might it be filled?

It is strange that, although this time last year, in its scramble for votes, the Scottish National Party was willing to answer all of those basic questions, none of those numbers appeared in this week's document.

Does the First Minister agree that he is duty bound to publish the basic numbers and then let the people of Scotland decide?

I saw Margaret Curran shaking her head again. I think that Wendy Alexander is in trouble. [Interruption.]

Order.

I can only imagine that the new consultation with PricewaterhouseCoopers means that Professor Arthur Midwinter is getting the sack. [Interruption.]

Order.

What Wendy Alexander describes as a black hole is a £281 million tax cut for working families throughout Scotland, which, as she has said, represents less than 1 per cent of Scottish Government expenditure. She thinks that that sort of efficiency gain is easily affordable, as she told us in her famous hungry caterpillar speech. Will she at some point join me in acknowledging the fact that single pensioners, pensioner couples, couples with children and one-parent families will welcome a taxation system that is based on the ability to pay as opposed to Labour's regressive council tax? [Interruption.]

Order.

If the First Minister's Government is unwilling to publish the basic numbers or even tell us which year is being talked about, any talk of winners or losers is simply meaningless. It is no accident that the basic numbers appear nowhere in the Government's document. Even worse than that, they are being denied to parliamentary officials. When the Scottish Parliament information centre asked the Government for details on how the money would be raised, it was told:

"the figure was deemed to be internal advice to ministers only."

Scotland deserves answers. In three years' time, the council tax will raise £2.5 billion. That means that there will be a 5p local income tax and a 25 per cent tax hike. Is it the case that, at a rate of 5p, a single person in an average house will start to lose at £23,000 and a couple will start to lose at £34,000?

Wendy Alexander has, unfortunately, forgotten the tax cut of £281 million. She also seems to support the United Kingdom Government's attempt to withhold Scotland's money by withholding its council tax rebate.

Wendy Alexander asked for detailed numbers. I will give her detailed numbers. Under the proposals, single pensioners will be better off by £7.30 a week; pensioner couples will be better off by £13.80 a week; couples without children will be better off by £3.40 a week; couples with children will be better off by £3.10 a week; one-parent families will be better off by £5.40 a week; and single people will be better off by £3.30 a week. That is why the proposals have been widely welcomed by people in society who are concerned that taxation should be based on people's ability to pay.

Attempts to talk about winners and losers are meaningless if the First Minister will not tell us which year the plans refer to, how much council tax cash has to be replaced and the size of the black hole. Of course everybody will pay less if there is a 40 per cent cut in the cash to local services, but that will not make everybody a winner. Three pence on income tax would lead to a huge hole in local finances. The truth is that families cannot afford what has been proposed, businesses do not want it, local government does not like it and—by the way—the rich will not even pay it. Is it not time that the First Minister admitted that he is trying to con the people of Scotland?

I tried to explain that a £281 million cut in taxation will be widely welcomed by the people of Scotland.

Let us take some quotations from the people to whom I listen—as opposed to Wendy Alexander's MSPs, who must accept that they will pay a bit more under an income tax, which is probably why they are so against it. The Child Poverty Action Group says:

"The poorest pay proportionately more tax than the rich. Regressive taxes include council tax … Government must ensure the burden of taxation is proportional to the ability to pay."

This morning, the Age Concern website commented on yesterday's budget announcement:

"Many pensioners will be disappointed that the government hasn't offered any help with their Council Tax bills. Council Tax should be replaced by a fairer system that reflects people's ability to pay."

Those groups, which are concerned about the poorest in society, are part of the 88 per cent of people who support the introduction of a local income tax. Wendy Alexander and her MSPs are part of the 12 per cent who want to hang on to the unfair council tax.

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Prime Minister (Meetings)

To ask the First Minister when he will next meet the Prime Minister. (S3F-589)

I endorse the congratulations to Scotland's rugby players on winning the Calcutta cup. I tell them to be of good heart, as every time Scotland has won the grand slam it has been under a Conservative Government. There is not long to wait, boys.

I have no immediate plans to meet the Prime Minister.

I am pondering which position Annabel Goldie is lining herself up for in the Scottish rugby team.

That is a matter of private interest but not something that I would ever discuss with the First Minister.

The Scottish National Party has, at long last, introduced its plans for a Scottish national income tax. Will the First Minister confirm how much Scottish national income tax someone will pay if their income derives wholly from share dividends and bank interest?

The Chartered Institute of Public Finance and Accountancy, the Burt report and Professor Smith have all argued that an attempt to attack dividend income would cost more than it would yield. Therefore, our proposal is for a fair, progressive taxation system that is infinitely preferable to the council tax, which the Conservative party introduced.

Even allowing for the fact that it is the First Minister, that is a very coy way of saying nothing. I think that we are detecting the early signs of retreat.

What the First Minister cannot confirm is that his charter is to encourage the wealthy to switch income from earned to unearned while clobbering the hard-pressed wage and salary earners of Scotland who have no such room for manoeuvre. The First Minister must face the fact that his Scottish national income tax is unravelling by the day. He must reform the council tax and follow our lead by cutting—not just freezing—council tax for everyone. Under a Scottish national income tax, the dustman will pay but the duke will not; the bus drivers of Scotland will pay but the bus owners might not; the dividends of ministers will be Scot free, but the wages of Scottish workers will be hit hard. How can that be fair?

The people whom Annabel Goldie describes would have to be on dividend income but no earned income, in which case they would pay more, and they would have to have only one house. Most of the super-rich probably have more than one house and would, therefore, be caught by the Government's proposals. The council tax pays no attention to anybody's ability to pay, but local income tax is based on a fair system.

Although I have been pretty hard on the Labour Party by pointing out that, since March 1997, council tax in Scotland has increased by 62 per cent, let us not forget the double-digit increases that occurred in the years before that, after the Tory party introduced that hated tax.

Annabel Goldie, who has been willing to take the credit for so many of the SNP budget's excellent features, should at some point acknowledge that the council tax freeze, which some people in the chamber said could not be introduced, has been successfully introduced by the SNP and widely welcomed across Scotland.

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Cabinet (Meetings)

To ask the First Minister what issues will be discussed at the next meeting of the Cabinet. (S3F-590)

At its next meeting, the Cabinet will discuss issues of importance to the people of Scotland.

I am delighted to see that Nicol Stephen got to the chamber in time.

It is clear that the Chancellor of the Exchequer's budget fails to deliver for Scotland. The new whisky tax, for example, smacks more of smash and grab than sound government and it is bad for Scotland's industry, but this is not the first time the First Minister and I have criticised Labour budgets. In fact, this very week three years ago, the First Minister, who was then in opposition, set five tests for the United Kingdom budget, which he described as

"simple … tests to determine whether the budget is … designed for Scottish success".

Now that the First Minister is in government, which of those tests does he still think is important and which of them is met in his own Scottish budget?

I am sure that Nicol Stephen will join me in welcoming the fact that, yesterday, in the magazine fDi, which is published by the Financial Times, Scotland beat 38 other European competitors to be named the European region of the future. We are not claiming all the credit for that magnificent award, but it might have something to do with acknowledging the central aim of this Administration to increase sustainable economic growth for Scotland. No UK chancellor in recent memory has ever had that as a priority.

At the moment, I want to focus on the First Minister's own tests, particularly the second. The SNP made a very specific promise to give a £2,000 grant to every first-time buyer in Scotland. In 2005, the First Minister said that the matter was urgent; in 2006, his deputy said that it was time to help first-time buyers; in 2007, his manifesto said that it was a promise. It is now 2008. Where is it? The newspapers tell us that it has been cancelled.

Now that the First Minister can deliver in government, his own budget fails his own simple test. Does he still support the £2,000 grant? Does he think that it will ever be put in place? Or does he intend, every year, to break his promise to the 30,000 first-time buyers who enter the market each year?

As Nicol Stephen well knows, the consultation document is out just now. The Government will carefully consider measures to help not only first-time buyers but people right across the housing market. Unfortunately, such measures were not introduced during the member's time in the Labour-Liberal Administration.

I have no doubt that, when we introduce these initiatives, Nicol Stephen will be the first to acknowledge them, in the same way that he has acknowledged that we have frozen the council tax, abolished prescription charges and saved hospitals throughout Scotland. Such initiatives are why this Administration is rather more popular than the previous Administration of which he was Deputy First Minister.

The First Minister will be aware of a serious incident at the weekend at St Mary's secure unit for troubled youngsters in my constituency, during which a member of staff was injured and required hospital treatment.

I thank the Cabinet Secretary for Justice for meeting me this morning to discuss the matter. Can the First Minister assure me that the incident will be fully investigated and lessons learned, and that the Scottish Executive will give full support to the staff of St Mary's, who do a terrific job in difficult circumstances?

Yes, I can give those assurances. I know that the member met Kenny MacAskill this morning.

The incident raises a number of concerns that obviously must be investigated before we come to any conclusions. As I am sure David Whitton heard this morning, we take the matter extremely seriously and any improvements that are necessary will be introduced.

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United Kingdom Budget (Scottish Industry)

To ask the First Minister what impact the UK budget is expected to have on Scottish industry. (S3F-595)

The United Kingdom budget not only failed to mention Scotland once but managed to damage our economic interests at a time when oil revenues are propping up the UK's finances to the tune of an expected £56 billion over the next six years, which is up from £38 billion over the past six years.

Does the First Minister agree that the chancellor missed a vital opportunity to back Scottish business by failing to end the system of fuel duty rises and introduce a fuel price regulator to stabilise prices for Scottish industry?

Yes I do. The deferring of the 2p rise was welcome, but we should remember that it has been deferred until October and I cannot imagine that many economists believe that oil prices will suddenly take a dip before then. That remains a serious problem for Scottish industry. As we argued to the UK Treasury, it would be useful to consider a mechanism such as the fuel price regulator and, indeed, the impact—particularly on peripheral communities—of transport costs, which feed through to every area of the economy. It is entirely legitimate to ask the chancellor—who, after all, sits for a Scottish constituency—to consider the particular impact of steeply rising transport charges in the Scottish economy.

Does the First Minister recognise that the chancellor's smash and grab raid on the whisky industry will be most acutely felt by Scotland's most northerly distilleries—the Highland Park and Scapa distilleries in my constituency—which already face serious challenges because of their locations? Will he consider making representations about the continued failure to consider introducing a lower fuel duty for remote and island areas, which is having a serious detrimental impact on the competitive position of businesses throughout the Highlands and Islands?

I can see Liam McArthur's argument that distilleries in his constituency are suffering a double whammy from the whisky tax increase and the rising cost of fuel and transport. We made such representations, of course, before the budget; unfortunately, they have fallen on deaf ears. I congratulate Wendy Alexander on anticipating last week the huge, swingeing increase of 59p in whisky duty. It is the highest rise in whisky duty for 30 years. [Interruption.]

Order.

Although the increase impacts on Liam McArthur's constituency, we should remember that it also impacts on many other constituencies throughout Scotland, including Paisley, which has a distillery and a bottling plant. I am sure that the Labour leader will be able to explain her support for it to her constituents.

The budget mentioned setting a goal for small and medium-sized enterprises to win 30 per cent of public sector business. Page 22 of the Scottish National Party manifesto talks about a target of 20 per cent. Will the First Minister review Scottish Government policy and give SMEs in Scotland the same opportunity as SMEs south of the border?

We have active work under way on procurement to secure the maximum opportunity for Scottish business. Of course, small businesses in Scotland anticipate keenly the massive opportunity of the small business bonus scheme, which will, for the first time, put them at a competitive advantage over businesses south of the border. No doubt that is why people, businesses and even towns are flocking to join the Scottish community these days.

In his budget statement yesterday, the chancellor announced new money to improve the quality of science education and expand apprenticeship programmes to tackle skills gaps in industry. Indeed, apprenticeship opportunities in England will rise to around 500,000. Will the First Minister commit to matching that with 50,000 apprenticeships in Scotland before Scotland and Scottish industry are left behind?

Not only do we have a target of 50,000 places for apprenticeships and other suitable training in Scotland but, as Iain Gray should remember, many analyses of the quality of training that is on offer in Scotland show that it is substantially superior compared with some of the quantitative analyses south of the border. I want Scotland to have more training places, but I also want us to keep the edge in quality over quantity that we have at present.

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Smoking Cessation

To ask the First Minister how the Scottish Government will support people who are trying to give up smoking. (S3F-605)

Yesterday was national no smoking day. I congratulate everyone who has taken the difficult first step towards stopping smoking. The Scottish Government wants to support people to stop smoking all year round, which is why we are investing in NHS smoking cessation services.

I invite the First Minister to join me in congratulating those who organised the day and took part in the celebrations. I know that the First Minister will be aware that every day there are 35 smoking-related deaths in Scotland, amounting to one in four of all deaths in Scotland. He will also be aware that the Scottish Government has cut the smoking cessation budget by almost 6 per cent in real terms over the next three years. How does the First Minister justify cutting spending on preventing Scotland's number one killer disease?

As Richard Simpson knows, expenditure on public health initiatives in Scotland will rise sharply over the next three years. He also knows that Action on Smoking and Health Scotland has told ministers and officials that it welcomes the development of the forthcoming smoking prevention action plan. I am delighted to congratulate and celebrate those who have worked on no smoking day, which is a splendid initiative that the whole chamber should welcome. Richard Simpson, in particular, will welcome the fact that the Cabinet Secretary for Health and Wellbeing has announced that, for the first time ever, healthy living centres will receive central Government funding—especially as six of those centres closed under the previous Administration.

As the First Minister is aware, my consultation on a licensing bill that would require people to have a licence to sell cigarettes has closed. Mixed views were expressed on positive and negative licensing. The First Minister is aware of my preference, but does he agree that either scheme would not only outlaw rogue traders who are engaged in underage selling but help to eradicate the sale of counterfeit cigarettes that, because of their content, are even more lethal than other cigarettes?

Christine Grahame draws attention to serious issues. Regardless of people's opinions on how we should continue to tackle smoking, the member has identified steps that must be taken. Such measures are under active consideration.

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Local Government Services (Income Tax)

To ask the First Minister whether the Scottish Government will press ahead with a nationally set income tax to fund local government services without the co-operation of HM Revenue and Customs. (S3F-597)

In the consultation paper that we published three days ago, we made it clear that we want HM Revenue and Customs to collect the new tax. At this early stage, we are looking forward to receiving a positive response from HM Revenue and Customs. As I indicated earlier, surveys show that there is massive support for the introduction of a local income tax in Scotland. If it becomes the will of the Parliament that we should pursue such a tax, I am certain that HM Revenue and Customs will not want to defy that will.

Why does the First Minister not save us a lot of time and energy? The proposal is doomed, whether or not he gets the co-operation of HM Revenue and Customs, because the sums do not add up, because the parliamentary arithmetic does not add up, and because, at best, he is dependent on a group of Liberal Democrats who, on yesterday's evidence, do not know their affirms or their annuls from their elbows. Finally, and most important, the plan is doomed because, as Annabel Goldie pointed out, at its heart is the fundamental unfairness that it will tax the earned income of hard-working Scots whereas people who live on investment income will be SNP tax free. Will the First Minister acknowledge that on this national income tax his game is a bogey?

Annabel Goldie's lines were much better. I do not underrate the determination and ability of the Government to get its measures through. People said that we would not get the budget through but, as I remember, some of our opponents ended up abstaining. People said that we could not freeze the council tax, but it has now been frozen across Scotland, by all but one council, which cut the council tax. That authority is Stirling Council, which last night came under SNP control.

I have received personal assurances from Nicol Stephen that Liberal party members will turn up early for every vote to introduce a local income tax. I accept those assurances and look forward to our joint endeavours to defeat the unhappy cabal of Labour and Conservative members who want to deny the people of Scotland fair taxation based on the ability to pay.

Meeting suspended until 14:15.

On resuming—