Meeting of the Parliament

Meeting date: Thursday, December 15, 2022

Official Report 1190KB pdf

---

Budget 2023-24

Good afternoon. Members will be aware of my response to the points of order that were raised at the end of First Minister’s question time regarding information related to this afternoon’s budget statement. I said at that point that I would investigate the matter. I have been unable to conclude my deliberations in the time available, so I suspend the meeting for 30 minutes.

14:31 Meeting suspended.  

15:11 On resuming—  

I cannot express strongly enough my disappointment at information about this afternoon’s statement appearing in the media before being given to the Parliament. I have spoken to the First Minister and the Deputy First Minister to express my concern in the strongest possible terms, and they have given me a categoric assurance that that information was not shared by the Government. In the interests—[Interruption.] Excuse me, members. Thank you.

In the interests of parliamentary scrutiny and so that members are not disadvantaged, I will allow the statement to be made so that full information about the budget is available to members, public services and the public.

On a point of order, Presiding Officer. I am grateful to you for your ruling on the matter, but you may not be aware that, in the past few moments, yet more information has been released by the BBC in relation to the content of the budget statement. The BBC is advising us that the additional dwelling supplement of the land and buildings transaction tax is to be increased from 4 per cent to 6 per cent. It is also advising that there could be £500 million extra for local government.

It is clear that there has been a comprehensive briefing from the Government to the BBC on the contents of the budget. This is now beyond a joke. This is not the first time that the Government has been caught spreading information to the media in advance of bringing it to the Parliament, and disrespecting the Parliament and its procedures.

Presiding Officer, I ask you to consider what further action might be taken against the Government in the light of the further information that has now come to light.

Thank you, Mr Fraser. It is extremely important that we continue with the business in front of us, given the delay that we have already experienced. I will look into the matters that Mr Fraser has raised at a later point.

The next item of business is a statement by John Swinney on the Scottish budget 2023-24. [Interruption.] I am simply not going to speak if members will not give me the courtesy and respect of being quiet while I do so. Each and every member deserves that courtesy and respect.

The cabinet secretary will take questions at the end of his statement, so there should be no interventions or interruptions.

15:14  

Presiding Officer, I will say openly to Parliament what I have said to you privately in the welcome conversation that we have had: at no stage has anybody been authorised on my behalf to brief information—[Interruption.]

Members. It is extremely important that we hear one another.

Presiding Officer, I will reiterate what I have said to you privately: at no stage has anybody been authorised to disclose any information that is contained in the budget statement on my behalf.

Inevitably, a large number of people have to be involved in the preparation of a Government statement, from the many officials who are involved to people from a range of organisations. I give you my categorical assurance, as a member of this Parliament since its foundation in 1999, that no individual was authorised on my behalf to disclose any information. [Interruption.]

Members! Excuse me, Mr Swinney.

I simply will not have members shouting discourteous comments to one another across the chamber. Please remember that we are elected representatives, who are elected by the people of Scotland. I ask all members to bear that in mind and think about that with regard to their conduct in this chamber.

Presiding Officer, in the light of your understandable concern about this matter, I unreservedly apologise to you for the situation in which you find yourself, in protecting the integrity of Parliament and the ability of Government to explain its policy position to Parliament, which it is in the interests of ministers to make sure that we are able to do.

Before I come to the statement, I will point out that, in relation to the detail that Mr Fraser has just put into the public domain, some of that information was contained in the embargoed statements that I make available in advance to other political parties. [Interruption.]

Members. Thank you.

I simply point out that those factors need to be considered in this whole process.

The Scottish Government budget for 2023-24 takes place in the most turbulent economic and financial context that most people can remember. War is taking place in Europe, which is leading to the suffering and displacement of millions of Ukrainians. As a result of the conflict, energy and fuel prices are surging. Inflation is now corroding our economy, having reached a 40-year high. If those challenges, which are faced by countries around the globe, were not enough, the United Kingdom has added to the turmoil with a disastrous approach to Brexit, which has damaged labour supply, through the loss of free movement of people, and undermined frictionless trade with our nearest markets.

All of those difficulties have been compounded by the utterly catastrophic decisions of the United Kingdom Government in the September mini-budget, which have driven increases in interest rates, saddled the country with much higher debt and undermined the public finances for generations to come.

In short, these are spectacularly difficult times in which to manage the public finances. These times require Governments to lead, make choices and decide what matters, and that is what this Government has resolved to do.

As Parliament knows, those hard realities are not just about future years—I am wrestling with those challenges right now. Before I set out our financial plans for the forthcoming year, I must provide Parliament with an update on this financial year, given the extreme pressure that the Scottish Government budget faces at the present moment.

As a result of soaring inflation, we have faced significant and entirely understandable pay demands from public sector workers. In response, we reallocated over £700 million more than was originally budgeted, in order to enhance pay uplifts to better reflect the increased cost of living and, especially, to tackle low pay.

We continue to deal with the unforeseen, but accepted, costs of resettling refugees who are fleeing the illegal war in Ukraine. We have seen thousands of people in Scotland open their homes in response to war, which is an example of our country at its very best. Scotland will always play our part in supporting those fleeing conflict and persecution. We have made, and are continuing to make, financial provision to support Ukrainian resettlement costs.

The public sector is not in any way immune from the rising costs of energy and inflation, which place additional, real pressures on the value of our budget.

As a result of those factors, in the autumn, the Scottish Government had to make unprecedented reductions to our spending plans, totalling £1.2 billion, midway through the current financial year. We had to do that because, once a financial year commences and in the absence of borrowing powers to address in-year volatility or the ability to alter income tax rates midway through a financial year, we operate a largely fixed total budget unless the United Kingdom Government allocates any additional resources to Scotland. Despite repeated requests, no additional resources have been forthcoming for this year.

The emergency budget review allowed us to meet the costs of increased public sector pay and provide further help to those most impacted by the cost of living crisis. Taken together, in 2022-23, the Scottish Government has allocated almost £3 billion to help to mitigate the cost of living crisis in these difficult days. However, there are two key points that I must advise Parliament about in relation to the budget for this current financial year.

First, despite reductions in spending of £1.2 billion, the financial pressures are so great that I am still working to find a path to fully balance this year’s budget. Secondly, as a consequence of that issue, for the first time since this Government took power, I am announcing a budget today for the next financial year assuming that we will not carry forward any fiscal resources from this year into next. For comparison, our budget for this year was underpinned by £450 million of resources that were carried over from the previous year. The absence of that carryover increases the scale of the financial challenges that we face in the next financial year.

Our budget decisions take place against assessments of deterioration in the economy. I am grateful to the Office for Budget Responsibility and the Scottish Fiscal Commission for their engagement in our budget process. I am, of course, incorporating into the budget the projections made by the Scottish Fiscal Commission.

The UK economy has already begun to contract. The OBR estimates that the UK has entered a recession that will last for more than a year and see gross domestic product fall by 2 per cent. The Scottish Fiscal Commission is expecting the Scottish economy to follow the UK into recession in 2022, with GDP falling 1.8 per cent between quarter 1 of 2022 and quarter 3 of 2023. The commission forecast the recession in Scotland to be similar to that in the rest of the UK. According to the latest data, which was published yesterday, inflation now stands at 10.7 per cent. Last month, we saw inflation in the UK at its highest since 1981. Businesses and households are facing additional pressures from rising interest rates, with the Bank of England base rate reaching 3.5 per cent today following the largest increase since 1989.

Real household disposable incomes are estimated to fall back to 2013 levels, which is the largest fall since records began. To compound matters, our labour market has been experiencing shortages—in part driven by Brexit—as the economy has reopened from the pandemic. As the recession takes hold, unemployment is projected to gradually rise to reach a peak of 4.7 per cent at the end of 2024. In its November economic outlook, the Organisation for Economic Co-operation and Development forecast that the UK will see the worst economic performance in the G20 other than Russia’s in both 2023 and 2024.

The calamitous choices made by successive UK Governments have made our economy weaker and put the public finances under tremendous strain. In November, the UK Government set out revised tax and spending plans in its autumn statement, which was an urgent attempt to repair the damage of the mini-budget. Although that brought some improvements to our resource position for 2023-24 compared with the UK Government’s published plans, our budget will still be lower in real terms than it was in 2021. The outlook for future years is looking particularly bleak in 2025-26 and 2026-27, being the latter two years of the Scottish Government’s resource spending review period.

That is the economic and fiscal context in which the Scottish Government must make our choices for the forthcoming financial year. In formulating this budget, I have reached out to all political parties in this Parliament, to our partners in local government, to trade unions and to many stakeholders in the private, third and public sectors to hear their views. I am grateful to our partners in the Scottish Green Party for their constructive and collaborative approach as we have developed these tax and spending plans in line with our shared commitments in the Bute house agreement.

Four important factors are relevant in considering our decisions. First, the enormous pressures on the public finances mean that, in some cases, it will take the Government longer to deliver on our plans. We will work with partners to minimise that effect.

Secondly, the requirements for public sector reform, which were set out in the medium-term financial strategy and the resource spending review, will be ever more required in this context, and the Government will set out further plans for it in due course. We will take forward an agenda that is consistent with the principles of the Christie commission, with a significant emphasis on early intervention and prevention, as we work to create person-centred public services.

Thirdly, the significant increases in input prices and energy costs mean that our capital budget will be unable to deliver as much as would have been judged possible just a few months ago. The Government will keep these factors under constant review as we take forward the capital programme.

Fourthly, given the uncertain inflation outlook and the need to still conclude some pay deals for the current year, I am not publishing a public sector pay policy for 2023-24 at this stage. We will, of course, continue to collaborate with trade unions and public sector employers on fair and sustainable pay, and will look to say more on our approach for 2023-24 in the new year.

The Scottish Government, like Governments all over the world, is faced with a difficult set of choices. Through this budget, we are facing up to our responsibilities while being open with the people of Scotland about the challenges that lie ahead. To govern is to choose, and the Scottish Government has made its choice. We have chosen not to follow the path of austerity that is the hallmark of the United Kingdom Government—but let me be clear: the choices that we face are all the starker because of the United Kingdom Government.

Within the powers available to us, we will choose a different path—one that sees the Scottish Government commit substantial resources to protect the most vulnerable people of Scotland from the impacts of decisions and policies that are made by the UK Government.

We choose to do everything in our power to eliminate child poverty, because in doing so we improve the lives of children and families in Scotland today while also laying the foundations for a more equal and prosperous country in the future.

We choose to prioritise the transition to net zero, because it is precisely through that transition that Scotland will realise its economic potential, not in spite of it. A stronger, fairer, greener economy benefits everyone.

We choose to stand firmly alongside the Scottish people, investing in our public services and doing everything possible to ensure that no one is left behind. All of us need to know that our public services will be there to meet our needs, and we must invest in them to make sure that that promise can be fulfilled. In particular, we must target investment towards our national health service, which is facing unprecedented pressure following the pandemic.

We do that by choosing a different, more progressive path for Scotland. That is why this budget strengthens the social contract between the Scottish Government and every citizen of Scotland, for the wider benefit of society. That social contract means that people in Scotland will continue to enjoy many benefits that are not available throughout the United Kingdom, including free prescriptions, free access to higher education and the Scottish child payment. It also means that in Scotland families are shielded, as far as possible, from the welfare cuts and austerity policies of the UK Government.

Because we know that this progressive model works, we choose the path where people are asked to pay their fair share, in the knowledge that in so doing, they help to create the fairer society in which we all want to live.

The limited powers that we won after the independence referendum in 2014 enable Scotland to make different choices on tax and on some elements of social security. The Scottish Government has made use of those powers in the past. In total, the decisions that we have taken since the devolution of tax powers and the proposals that I am putting forward today will raise around £1 billion more next year than if we had followed UK tax decisions.

We have also used those powers in creating a social security system that is based on the values of dignity, compassion and respect. This year, we introduced the Scottish child payment—the only measure of its kind available in the United Kingdom—to support children who are living in poverty. It was first introduced at a rate of £10 per week per eligible child under the age of six and it was then doubled to £20 per week from April 2022. In November 2022, it was extended to eligible children under the age of 16 and increased to £25 per week, meaning that the payment has increased by 150 per cent in just eight months. The Scottish child payment is now available to around 387,000 children in Scotland, and I confirm that the payment will remain at that increased level of £25 per child per week.

I am also pleased to announce that all other social security benefits under the control of the Scottish Government will be increased by the rate of inflation in September of 10.1 per cent.

In the face of the extraordinary challenges that we face, we have chosen to use our tax powers again, to protect our country from the harm that is being caused by the turmoil of these times and from the damaging decisions of the United Kingdom Government. Our approach to taxation continues to be guided by our values and by the principle that the tax burden should be proportionate to the ability to pay. That commitment to fairness underpins the choices that we have made throughout this budget, and it underpins our whole approach to taxation.

In this budget, we are asking people on higher incomes to contribute more in taxation than those on lower incomes. The majority of people in Scotland will still pay less in taxation than if they lived in the rest of the United Kingdom. By these decisions, everyone in Scotland will be able to enjoy the benefits of strong public services and a comprehensive social contract.

On income tax, I intend to maintain the thresholds for the starter and basic-rate bands at their current levels. I confirm that I will maintain the higher-rate threshold at its current level and that I will lower the top-rate threshold from £150,000 to £125,140. I also intend to make no changes to the starter, basic and intermediate rates, to protect those on lower incomes.

I have decided to increase the higher and top rates of tax by 1p each to 42p and 47p. As a result, we are asking all those earning more than £43,662 to pay an extra penny in the pound on income tax. I want to be clear that that extra penny is being raised for a specific purpose. We have taken the decision to enable us to exceed the health resource Barnett consequentials from the UK Government with substantial additional investment in the national health service—an investment that will benefit us all. It is, in short, an extra penny to enable spending on patient care in our national health service.

On land and buildings transaction tax, there will be no changes to the main residential and non-residential rates and bands next year. Today, legislation will be introduced to increase the rate of the additional dwelling supplement from 4 per cent to 6 per cent, raising much-needed additional revenue while protecting opportunities for first-time buyers. That change will apply with effect from 16 December to address any potential for forestalling, with a transitional provision in place.

I can also announce today that we will increase the standard and lower Scottish landfill tax rates from 1 April, maintaining consistency across the United Kingdom, guarding against waste tourism and supporting our ambitions for a more circular economy.

The Scottish Fiscal Commission forecasts that the income tax policy changes that I have outlined today will raise £129 million in 2023-24. In addition to that, the Scottish Government estimates that freezing the higher-rate threshold has added £390 million when compared with inflation.

The SFC also forecasts that the changes to the additional dwelling supplement will raise an additional £34 million in revenue in 2023-24. We estimate that, taken together, those changes will provide £553 million in 2023-24 for investment in public services in Scotland.

In the current challenging economic context, I recognise the pressures that businesses face and the difficult conditions that they are working in to create employment and growth in our economy. Sixteen business organisations came together to ask me to take one particular step to support businesses through these tough times. Their number 1 ask was that I freeze the non-domestic rates poundage at 2022-23 levels.

On non-domestic rates, I can confirm that we will protect businesses from the full impact of inflation by delivering a freeze to the basic property rate. That will ensure that Scotland has the lowest poundage in the United Kingdom for the fifth year in a row, and the measure is forecast to save business rate payers £308 million compared with the level of an inflationary increase.

We will reform and extend the small business bonus scheme to improve the progressivity of the relief, while ensuring that it remains the most generous small business relief in the United Kingdom and that it delivers our manifesto commitment that 100,000 properties will be taken out of rates altogether.

By introducing transitional reliefs, we will help to ensure that those properties that see their rates liabilities increase significantly following the revaluation do so in a phased manner. We will use our approach to non-domestic rates to assist the transition to net zero as we incentivise investment in renewables through the introduction of new prescribed plant and machinery exemptions for on-site renewable energy generation and storage.

Investment—whether it be in the low-carbon economy or more broadly—is central to building a strong economy and the fairer and more equal country in which we all want to live. I now turn to that investment.

In formulating a budget in this period of huge challenge, it is vital that the Government sets out its clearest priorities. That is necessary to give clarity to our partners in local government, the private and third sectors and public bodies about our direction—about what matters to the Government.

Through our programme for government and the budget, we are focused on eradicating child poverty, transforming the economy to net zero and creating sustainable public services. We do not view those as three competing objectives; we view them as linked priorities that are a means of supporting families, creating new economic opportunities, protecting our environment, and offering protection and support to every citizen in Scotland through our public services.

Much of what the Government wishes to achieve for Scotland aligns with what local authorities wish to achieve for their communities. However, too often, valuable time and energy are taken up in fractious debates about resources and accountability for spending them. The Government will invite our partners in local government to work with us in building on our jointly produced Covid recovery strategy to create a more effective way of working together that will focus on the outcomes that matter to people, with more flexibility, reduced reporting and greater assurance. We want to enable that new partnership by giving our commitment to the financing of local government, so instead of providing the flat-cash position that is set out in the resource spending review, we are now increasing the resources that are available to local government next year by more than £550 million.

Furthermore, I confirm that the Scottish Government will not seek to agree any phase or cap in locally determined increases to council tax, as requested by the Convention of Scottish Local Authorities and council leaders. That means that each council will have full flexibility to set the council tax rate that is appropriate for its local authority area. I encourage councils, when setting future rates, to consider carefully the cost pressures that members of the public face.

Earlier this year, the Government set out its plan to tackle child poverty in “Best Start, Bright Futures”. The title of the plan says it all. We want to ensure that children get the best start in life and that they are able to fulfil their potential. In this budget, that means: sustaining investment in the baby box; providing 1,140 hours of early learning and childcare to all three and four-year-olds and eligible two-year olds; committing £200 million to Scottish attainment challenge funding to deliver excellence and equity in education; and tackling school holiday hunger with investment of £22 million to provide meals during school holidays to children who need them most.

That builds on our on-going expansion of free school meals to all primary 6 and 7 pupils who are in receipt of the Scottish child payment, and is the next step in fulfilling our commitment to universal provision in primary schools from August 2024.

We recognise that some of the children in poverty whose life chances face the greatest challenges are those who have experience of care. The budget will deliver a further £30 million investment to keep the Promise, and £50 million investment in a whole-family wellbeing programme to provide holistic preventative family support to give our children who face the greatest challenges the greatest opportunity to realise their potential.

A crucial element of helping families out of poverty is provision of the opportunities and integrated support that parents need in order to access, sustain and progress in work. We recognise that some people face greater challenges than others in entering the labour market, so we are increasing investment in the no one left behind strategy and the fair start Scotland programme.

Employment opportunities are crucial, particularly in these difficult economic times, so the transition of our economy to net zero must be undertaken in a just and fair way that enables people, communities and businesses in Scotland to thrive and prosper. Those opportunities must exist in every single part of Scotland. The approach will be delivered through initiatives including the £366 million planned investment in the heat in buildings programme to decarbonise heating, the £34 million Scottish industrial energy transformation fund and the £26 million low-carbon manufacturing challenge fund.

Investment in our natural environment will support the journey to net zero with a £26 million programme of peatland restoration, £77 million for woodland planting and £44 million to help Scotland to become a global leader in sustainable and regenerative agriculture.

We will support the transition to net zero by investing a further £244 million in the Scottish National Investment Bank; by investing £50 million to deliver the next phase of the just transition fund for the north-east and Moray, which will more than double this year’s allocation; and by investing in the tech scaler programme throughout Scotland to support our efforts in innovation.

As the Climate Change Committee recently highlighted, decarbonisation of transport remains one of the key challenges that we face in reaching net zero. We will support those efforts by working with the private sector to extend Scotland’s electric vehicle charging infrastructure with investment of £60 million; with expenditure of £1.4 billion to maintain, operate and decarbonise our rail infrastructure; by investing nearly £200 million in active and sustainable travel; and by providing £15 million as part of our fair fares review for a six-month pilot that will remove peak-time rail fares as a way of making rail travel more affordable and attractive to travellers.

Ferry services are vital in sustaining connectivity with our island communities, so the budget includes £440 million to support lifeline services. I am also allocating £15 million in this financial year and £57 million in the next financial year to support the completion of vessels 801 and 802 at Ferguson Marine (Port Glasgow) Ltd, along with the resources that are required to build the two new Islay class vessels that are under construction, and a further two vessels of the same type that are currently in procurement.

We must have a skills, training and research environment that enables our people and businesses to realise their potential. For that reason, we have increased the resources that are available to the college and university sectors by £26 million and £20 million to support that.

Many of our public services are on a journey to recovery following the acute phase of the pandemic—none more than the justice system. We want people to live in safe communities in which we act early to reduce the potential for harm, support victims of crime and act swiftly to bring the perpetrators of crime and violence to justice. As part of the budget, I intend to increase the resources that are available to the Crown Office and Procurator Fiscal Service by £13 million, and to our wider justice system by £165 million. That will provide resources to tackle court backlogs, to strengthen legal aid provision and to increase funding of police services by £80 million.

The most precious of our public services—the one on which all of us depend—is our national health service. We recognise the challenges that the NHS faces, and the pressures that are borne by the outstanding public servants who work in the NHS. That is why we have offered a formidable pay settlement to staff in the NHS.

Supporting our NHS boards remains a top priority and, in the year ahead, we will invest more than £13 billion to allow them to continue to drive forward the five-year recovery plan. The reform of key services will continue. That will be backed by £2 billion to establish and improve primary healthcare services in the community. In parallel, we will provide £1.7 billion for social care and integration to improve services, while paving the way for the introduction of the national care service.

An additional £100 million will be made available to support delivery of the £10.90 real living wage for adult social care, which will build on the increase that was provided in 2022-23. Social care is vital work, and it is important that people on the front line are supported.

We remain committed to addressing the on-going public health emergencies and reducing the avoidable harms that are associated with drugs and alcohol. By investing £160 million, we will ensure that that important work continues. That is part of our commitment to provide £250 million of additional funding over the course of the parliamentary session to address the drug deaths emergency.

If we want to be able to depend on the national health service, we must be prepared to pay for it. When the UK Government set out its autumn statement, that gave rise to consequential funding for the NHS in Scotland of £291 million. I intend to pass on that funding consequential, but I do not believe that it is nearly enough for the crucial task that we ask our staff in the NHS to do. As a result of the choices that I have made on income tax, I am in a position, in one year, to increase the amount that we spend on health and social care in Scotland by more than £1 billion.

In the resource spending review, the Scottish Government committed to making £20 million available to fund the cost of a referendum on Scottish independence. The Government believed that to be a necessary investment to ensure that the people of Scotland would have the opportunity to express their democratic right to self-government. The Scottish Government respects the decision of the Supreme Court, but it still believes that the people of Scotland must have the opportunity to have their say in a democratic referendum, in line with our clear mandate. When that opportunity is available, the Scottish Government will make financial provisions for that to happen. However, at this moment, I must make full use of the resources that are available to me.

One of the reasons for my believing that Scotland will be a successful independent country is the energy wealth that we enjoy. Scotland is a country with an abundance of renewable energy opportunities, but the travesty is that, despite that strength, too many of our people languish in fuel poverty. In order to help our most vulnerable citizens, I intend to utilise the finance that was earmarked for a referendum on independence to make provision to extend our fuel insecurity fund into next year. That will mean that a further £20 million will be available to address yet another failure of the United Kingdom Government and its policies.

This budget takes place at a time of enormous challenge and difficulty for people and business, due to volatility in the economy and the corrosive effect of inflation. Many people in our communities—the people who send us here—are suffering real and enduring hardship, and all that is happening at a time when our country needs to adapt to the challenges of net zero and face the hard reality of severe constraints in the public finances.

In that context, the Government has decided to use our scope to take distinctive decisions to the greatest extent that we believe is possible at this time. We have chosen to reject the path of austerity. We have chosen a progressive path instead: to invest in our people, to invest in our economy and to invest in our public services. Those are the choices that we have made—the choices for our future—and I commend the budget to Parliament.

The cabinet secretary will now take questions on the issues raised in his statement. I intend to allow around 60 minutes for questions, after which we will move on to the next item of business. Members who wish to ask a question should press their request-to-speak buttons.

Rather unusually, Presiding Officer, I begin by thanking you for taking the matter of the leaking of the budget to the press very seriously. There is no doubt that it was a very considerable discourtesy to Parliament, and one that I have never come across before in my time in this place. As a result of that, it has been extremely difficult for Opposition members to view the budget. I am sure that there are members across the chamber who will want you to fully investigate why that was allowed to happen.

I again acknowledge the very tight fiscal circumstances confronting the cabinet secretary as he has embarked upon making the tough decisions that he has outlined, but it is about time that John Swinney stopped blaming the UK Government for every single predicament in which he finds himself. He has had more money at his disposal than he has been prepared to admit and, as the Fraser of Allander Institute reminded us at the weekend, the block grant money from the UK Government more or less covered the inflationary pressures on him.

Mr Swinney also knows that—discounting all the additional Covid spend from the UK Government in the previous two years—he has had record block grant funding from the UK Government for the current financial year and that the Scottish Government will receive an additional £1.6 billion of resource spending in the next two financial years, which will give direct support to our schools and hospitals.

Mr Swinney tells us today that the Scottish Government has been forced into using its own powers to the greatest extent. Those powers have been there throughout the whole time that the SNP has been in government, but it has not been using them to deliver on the clear priorities of the Scottish people: supporting household incomes and jobs; sustained and consistent support for our business and high streets; and the delivery of our public services. Many of those services are delivered by local government, which we know recently wrote a very strong letter to John Swinney outlining the extent of the huge pressures that it is under as a result of the SNP cutting funding over several years.

If Mr Swinney raises taxes, the public will want to know why they see only cuts and a deterioration in the delivery of public services. If he widens the tax gap for middle and higher earners in Scotland in comparison with their UK counterparts, he risks undermining the potential for economic growth that this country so desperately needs.

The Scottish Conservatives very much look forward to the forthcoming stage 1 process, in which we will set out where Mr Swinney can further reprioritise money to front-line services, including local government, policing and net zero. That is a re-prioritisation that means withdrawing the huge spending commitment to the national care service, which very few stakeholders want at all, and removing the commitment to a bogus referendum.

In the meantime, what analysis has Mr Swinney undertaken of the likely impact on tax revenues and on economic growth in Scotland that will result from middle and higher-income earners paying more tax per head than their counterparts in the rest of the UK, given that we know from the Scottish Fiscal Commission that the devolved tax powers used so far by the Scottish Government have not delivered any more tax revenue than would have been the case had taxes been set by Westminster?

Secondly, I note that the total budget for education and skills has been increased for the coming year by just under £100 million. As I understand it, that is not the full extent of the Barnett consequentials delivered to the Scottish Government for education. Will Mr Swinney confirm where the rest of that money is? It may be in local government budgets, but it is important that that is spent on education.

It is obviously very good news indeed that the Scottish Government has finally withdrawn the £20 million that was to be spent on an independence referendum. As well as reprioritising that money, has Mr Swinney also reprioritised the activities of the 25 civil servants who were working on it?

That was a very confused contribution from Liz Smith. Let me work my way through it.

Just a few months ago, Liz Smith wanted me to follow the budget of Kwasi Kwarteng and cut tax immediately. Look at the carnage that that has created in the UK economy. At the weekend, Kwasi Kwarteng told us that they all got carried away. They blew it. Well, that lot over there on the Conservative benches wanted me to follow their stupid and foolish example. Thank goodness I never did it.

When I look at some of the points that Liz Smith put to me, I note that, on business support, she did not welcome the fact that I have frozen business rates, despite the fact that 16 business organisations asked me to do that. That might have merited a welcome. She said that we have not put in place support for business. We have the best small business scheme in the United Kingdom.

When it comes to the tax forecasts, Liz Smith will be able to read the Scottish Fiscal Commission’s report. It has given us projections about growth in income tax on earnings in the years to come as the Scottish economy strengthens. That is another thing that Liz Smith might get round to welcoming.

Then we come to education consequentials. How on earth am I supposed to boost the budget of local government, which provides education in our country, if I do not use the consequentials that are set out for that purpose?

Lastly, on the obsession that Liz Smith has with the £20 million for the independence referendum—[Interruption.] She is absolutely and completely obsessed by the whole thing. [Interruption.]

Thank you, members.

I am beginning to get worried about her obsession with it. I confirmed that, in order to deal with the fuel poverty that exists in our country, the punishing inflation that people are wrestling with and the sky-high energy costs that have been fuelled by the mismanagement of the United Kingdom’s energy and economic policies by Liz Smith’s allies in the United Kingdom, I am allocating that resource to support those who are in fuel poverty. Surely the Tories could welcome that.

Presiding Officer, I, too, thank you for your investigations into this afternoon’s incidents. Given the comments that the Deputy First Minister made at the beginning of his statement, I note that the details that were laid bare by Murdo Fraser were news to me, particularly and most prominently the rate of land and buildings transaction tax. I confirm that they were not in my copy of the statement. They were in the embargoed sections. It was an impossibility for Opposition parties to see them. I consider the Deputy First Minister’s comments to be a smear. I ask him to withdraw them and investigate who leaked the statement from the Government, even if it was without his authorisation.

Budgets are about priorities, and the need to deliver on the priorities of the Scottish people could not be greater at this time, but this Government has a delivery problem. We know that there was an underspend of half a billion pounds from the finance and economy budget last year because the Government could not get Covid support grants out the door. This year, the emergency budget saw a cut to building energy efficiency funding, apparently because there was a lack of demand—a lack of demand in the middle of a cost of living crisis caused by increases in gas and electricity costs. It beggars belief.

The budget must deliver for those who are in most need. Can the Deputy First Minister set out how the budget will tackle the Government’s clear deficiencies in delivery by assisting those who are in urgent need?

Inflation is robbing people of their security, their dignity and their ability to provide for their families, so the budget must pay particular attention to pay in the public sector. Almost 300,000 people in the public sector are on less than £15 an hour. The ONS data is clear that 23,000 people in the public sector earn less than the national living wage. That is a scandal. Will the Deputy First Minister clarify what those figures will look like, as a result of the budget, at the end of this financial year?

In recent years, Scottish Labour has been consistent about social care pay. Last year, the minimum wage for social care rose by just 50p. This year, it has risen by even less: 40p—an increase of 3.8 per cent. That is an insult. There is a direct and real cost to the NHS of delayed discharge. That has got worse because those who carry out social care have left for jobs with better pay. What is the cost to the health service of failing to increase pay to £12 an hour? Has an assessment of that been carried out?

I also ask the Deputy First Minister to concede that the Scottish Fiscal Commission has been clear that Scottish growth in wages and jobs has lagged behind the UK average and behind every other devolved nation. Does the Deputy First Minister acknowledge the Government’s failure to deliver a growth plan that is worthy of the name, and its failure to grow jobs and people? How will this budget help that?

Finally, Scottish Labour will always support progressive taxation, but we are also clear that, if progressive tax measures are to be taken, clear improvements to public services must be demonstrated. Today’s statement, with its manifesto-busting measure, does not do that. People will not accept a rise in tax bills if all they see is a further decline in their services after 15 years of the Scottish National Party’s mismanagement of those. Neither will they tolerate such a tax hike if they see the ranks of spin doctors, quangos and civil servants swelling. Will the Deputy First Minister bring forward a clear plan that sets out how the money will improve the NHS—not just the amount of the funding—and will he pledge to cut Government waste, to justify the rise in tax?

The focus of the budget is on eradicating child poverty, on making practical and possible the transition of the economy to net zero, and on ensuring that we have sustainable public services. That is the approach that I have put into the budget, to ensure that the delivery challenge that Daniel Johnson puts to me can be addressed.

On public sector pay, as Mr Johnson knows—he and I have rehearsed the issue a few times—we ministers have spent much time over the past few months trying to get to a position whereby we secure deals that increase the pay of public sector workers, and we have made significant progress. At First Minister’s question time, the First Minister made the point that, today, there is industrial action in the national health service in every other part of the United Kingdom. That is not happening in Scotland, because of the dialogue that we have taken forward.

I welcome very much the trade union support for the pay deals that we have put forward. Each of those deals—whether for local government or for the health service—has been specifically focused and targeted on improving the position on low pay. Those on lower pay have had higher increases than those who are on higher pay. Those investments and priorities of the Government are designed to strengthen the position of people who are on low pay.

Daniel Johnson talked about delayed discharge. The Government accepts the undesirability of delayed discharge. The Cabinet Secretary for Health and Social Care and I, and other ministers, spend a huge amount of time working with local government and partners to secure reductions in that. However, we keep being told that the key thing is the challenge of being able to recruit staff. The challenge of recruiting staff is about the folly of Brexit and the loss of the freedom of movement of the population. Through our work to improve pay, we are taking the necessary steps to overcome that disadvantage.

Mr Johnson asked me about wage growth in the Scottish economy. He will not have had time to see what is in the Scottish Fiscal Commission report today. It says that the commission predicts

“a period of catch-up in Scottish earnings over the next five years”

relative to the rest of the United Kingdom. I hope that that gives Mr Johnson some reassurance. That will be driven by the implementation and delivery of the national strategy for economic transformation, which was set out earlier this year by the Cabinet Secretary for Finance and the Economy and is now being taken forward in order to deliver that improvement in economic performance.

We come to the question of tax. I have never in my puff heard such an equivocal explanation of the Labour Party’s position on tax. Throughout his question to me, Daniel Johnson was sat well and truly on top of the fence on the issue of taxation. The Labour Party must decide whose side it is on—is it on the side of investing in public services or on the side of trying to have it both ways, which is what Daniel Johnson tried to do today?

This is a bleak day for our country. External factors have certainly played their part, but their effect has been compounded by the Government’s manifest failure on mental health waiting times, educational attainment, ferries and energy generation.

On top of all that, the Government has failed to grow our economy, despite the extensive levers that are available to it. As such, there is a lot of pain in the budget—for mental health services and for a voluntary sector that is on its knees and which will now face another £4 million cut. The local government uplift is barely half of what COSLA asked for simply to keep the lights on.

I presented to the Deputy First Minister options for further savings, so I am disappointed that there still appears to be a £17 million contract for national testing of children who are as young as four and five and that there still appears to be the vast and unnecessary billion-pound bureaucracy that is the ministerial takeover of social care. If the Deputy First Minister cancels those plans, there is still time to turn this round—perhaps that would allow him to offer hope and comfort to the 200,000 sufferers of long Covid, on whom the budget is entirely silent.

The Government had the opportunity to be transformative on the climate emergency and the rising cost of living by instructing—right now, today—an immediate programme of public works to insulate every home in Scotland. The Deputy First Minister even had a photo opportunity. However, it appears from interrogating the figures that he is reannouncing large portions of the energy efficiency budget. How much of this is actually new money?

I will explore some of the points that Mr Cole-Hamilton put to me about the position on mental health, health expenditure and local government, because that is where we get into dilemmas and into the choices that Parliament must make. In the letter that I received from local government directors of finance, who asked for an uplift of £1 billion for local government—Mr Cole-Hamilton reinforced that figure—they asked for all consequentials from the UK Government to be allocated to local government. That would mean that I could not allocate those consequentials to health, but Mr Cole-Hamilton just made a plea to me to support mental health expenditure and health expenditure.

I have chosen to increase taxation to enable me to invest an extra £1 billion in the national health service, which will ensure that the very priorities that Mr Cole-Hamilton raised with me can be taken forward. I assure him—this comes out of my dialogue with my colleagues in the Scottish Green Party—of the sustained investment that the Government is making in renewable energy, energy efficiency and home insulation. Those programmes are for the long term and must be supported by Government funding. We have made our choices and supported such programmes, which we expect to have an impact on the lives of people in Scotland as a consequence.

I would be grateful if we had short and succinct questions and responses because—unsurprisingly—there is a great deal of interest in the item.

I welcome the Deputy First Minister’s statement, which has been delivered in the most challenging circumstances. Last year, Scottish Enterprise approved £120 million in grant funding and equity investment for innovation activities, which is expected to generate a further £502 million from the private sector and £86 million from public sector partners.

We need to innovate, grow our economy and boost productivity to generate further tax revenues that will support our public services and reduce poverty. Will the Deputy First Minister expand on how the measures that he has announced, such as the tech scaler programme, will help to achieve those goals?

The measures that Mr Gibson sets out are encapsulated in the national strategy for economic transformation. The tech scaler programme, which a very successful organisation called CodeBase is taking forward, is part of that, and it will enable a network of tech scalers to assist in the development of new business concepts and ideas in a thriving innovation environment. Those opportunities will be available in all parts of the country, because one of the key points of the national strategy for economic transformation is the necessity for regional economic policy to thrive as a consequence of it.

I also point out that we have given the enterprise agencies stronger settlements than they might have expected in the resource spending review to support that process of economic development.

The Deputy First Minister claims that the budget prioritises the transition to net zero, and he talked about using the non-domestic rates system to increase investment in renewable energy, which is a worthwhile objective. However, right now—as the acting finance secretary, he should know this—small-scale hydro schemes across Scotland are facing an increase in their business rates of up to nearly 600 per cent. One scheme has seen its rateable value increase from £81,500 in 2017 to a draft valuation of £439,500 in 2023. The executive director of Alba Energy has described that as “madness without a method”. How on earth can the Deputy First Minister reconcile what is happening on the ground with the rhetoric that we have just heard in his statement?

There are a number of points there. First, the Government has expanded the reliefs that are available to renewable energy projects as part of the non-domestic rates regime.

Secondly, as Mr Fraser knows, valuations for non-domestic rates are undertaken by assessors, who are acting independently of Government and come to their judgments on the basis of the structure of non-domestic rates. Individual organisations who do not agree with the assessors’ decisions have the opportunity to appeal against those valuations, and a due statutory process is in place for those appeals to be undertaken.

I thank the Deputy First Minister for his statement, which prioritises Scotland’s national health service. How will the increases in the Scottish Government’s front-line health budget compare to any increase in the UK Government’s front-line health spend?

The decisions that I have taken today have been about ensuring that our health service has available to it resources to recover from the pandemic and ensure that patient care can be properly addressed. That billion-pound, single-year increase is the largest contribution that the Government can make to help the national health service. It exceeds the Barnett consequentials that are available to us, so it demonstrates our commitment to recovery in the national health service.

Will the Deputy First Minister pause the National Care Service (Scotland) Bill to release money to spend on ending non-residential care charges, which are in effect a care tax on the vulnerable during a cost of living crisis?

The Deputy First Minister will be aware that increasing wages to £10.90 an hour means that people who work in Lidl earn more than social care staff do. That increase will not be enough to tackle the increasing level of vacancies in social care and will not take the pressure off the NHS with regard to delayed discharge.

The Deputy First Minister is creating a two-tier workforce in care by paying children social care staff less. Will he pay all social care staff £15 an hour, which is what they so richly deserve?

Parliament is currently considering the legislation on the national care service. A scrutiny process will be undertaken and it is for Parliament to consider all those issues through the proper process.

On the care sector, I recognise the financial challenges that individuals face, which is why the Government has put so much effort and energy—and resource, I might add—into strengthening the pay deals that are available to individuals in employment in the care service. We will continue to do as much as we possibly can, but the scale of the change that Jackie Baillie talks about would rather force her front bench to get off the fence a little bit about where the money would come from to enable that change to take place.

I am happy to participate in discussion and dialogue with Opposition parties about the budget’s priorities. I have already engaged with Mr Johnson on this question—indeed, I have engaged with all political parties—but we have to establish the ground rule that when people come forward with suggestions that will increase costs in the budget, they also have to tell us where the savings will come from.

As we progress with our just transition to net zero, it is vital that we prepare our workforce to be able to take advantage of the opportunities that it will bring. Can the Deputy First Minister provide any further information on how the measures in the budget will support the creation of new green jobs in Scotland? What assessment has been made of the progress so far in creating jobs?

The steps that have been taken in the budget are designed to ensure that we take a very focused approach to the delivery of new employment in the green economy and the journey to net zero. It will take place across a range of programmes; indeed, as I said in my statement, we need to see the interrelationship of public services, the journey to net zero and the attack on child poverty as part of a journey in which all these different themes are joined together to ensure that we are creating employment opportunities that help families get out of poverty.

The measures in the budget with regard to the investment in our colleges and universities and the investment in employability programmes such as no one left behind and fair start Scotland are all designed to support that journey for individuals, and the investment funds for the low-carbon economy will support companies in creating those new opportunities as our economy changes. Through that combination of effort, I am confident that we will be able to stimulate employment in the green economy.

The claim that there will be £550 million more for local government is clearly smoke and mirrors and all about more ring fencing, and the huge real-terms cut to core services through the general revenue grant will be disastrous, coming on top of the house-building budget being slashed by £176 million.

Last week, SNP councillors in COSLA—not, I should say, councillors from any other party—talked about

“services”

being

“either significantly reduced, cut or stopped altogether”

and said:

“When councils can’t focus spend on prevention ... the NHS will end up spending significantly more money”.

Has the cabinet secretary assessed the additional costs that will be borne by the NHS and the impact on care and people needing emergency interventions when councils are left with no option but to scrap preventative services?

Local government’s expectation from the resource spending review was of a flat cash settlement, which would have meant no more money next year compared with this year. I have just announced £550 million of additional expenditure. Is it impossible for anybody in here to welcome the fact that that is a departure from the resource spending review and that it addresses in a significant way the issues that local government has put to me?

I said in my statement that we would work with local government on addressing its concerns about ring fencing and the level of reporting in certain programmes, but Parliament also expects to hear from local government about the performance and delivery of certain issues that really matter to members of Parliament. Indeed, Mr Griffin and his colleagues ask these very questions. We will take forward that discussion with local government to create a partnership in which we can work together, and that approach will be greatly assisted by the fact that we have just allocated £550 million of new additional resources to local government.

As the Deputy First Minister has outlined, the Scottish child payment will increase by 150 per cent, which should help to lift 50,000 children out of poverty. As we try to reach targets for reducing child poverty, the UK Government is taking action to push more people into poverty by causing inflation rises, by failing to act on soaring energy costs and much more. Can the Deputy First Minister expand on the action that is being taken in the budget to eradicate poverty and will he contrast that with the damage being done by the UK Government?

Research work undertaken by the Government earlier this year indicated that, if the UK Government had reversed its measures to restrict benefits, it would have put £780 million into the pockets of people in Scotland. That is a measure of the scale of the erosion of the financial support that is available for people on low incomes.

The Scottish Government has brought forward measures that substantively address some of those issues, in addition to the measures that we have already brought forward to, for example, mitigate the effects of the bedroom tax. We are doing as much as we possibly can do to address those issues, within the resources that we have and the powers that are available to us, but the scale of the challenge gets greater as a result of the negative actions of the UK Government.

The Deputy First Minister mentioned the Bute house agreement, which states that the SNP-Green Government will deliver 110,000 affordable homes. Today’s budget cuts the housing budget by £215 million in real terms, which comes on the back of last year’s cut to the housing budget. That decision will undermine jobs in the construction sector. The SNP Government is now driving a housing crisis in Scotland. Why has the Government today ripped up its housing policies, and what is it going to do to make sure that affordable homes are actually delivered?

I can tell Miles Briggs what is driving the housing crisis: the increases in interest rates that have been fuelled by the economic mismanagement of the United Kingdom Government.

The Scottish Government is supporting sustained investment in our housing infrastructure over the long term. Very good progress has been made—indeed, in previous sessions of Parliament, the Scottish Government has delivered on all of our housing targets. We are determined to ensure that we do that. I have been candid with Parliament about the challenges in our capital programme. Capital projects and anything that relies on input prices will be more difficult in terms of cost because of the energy crisis, energy prices, the rise in interest rates and the effect of inflation. Those are all substantive issues that have been fuelled by the actions of the United Kingdom Government.

I welcome the announcement of the £60.9 million for Ferguson Marine in my constituency, which will safeguard shipbuilding jobs and opportunities. The Deputy First Minister spoke of his frustration with the UK Government for not providing additional funding. Will he provide an update on the Scottish Government’s latest engagement with the UK Government regarding funding, and will he continue to press the UK Government for additional resource?

I have set out what the perspective looks like in relation to the spending available from the UK Government in future years. It becomes extremely challenging in the later years of the spending review. I have engaged with the UK Government and set out the perspective of the Scottish Government, and we will continue to do that.

In relation to this financial year, I have encouraged the UK Government to recognise the extraordinary inflationary pressures with which we are wrestling. The UK Government has decided not to change the financial position this year, which increases the financial strain with which we are wrestling. I appeal to the UK Government to revisit these issues, which must be causing significant difficulties in UK departments. That call has been echoed by my colleague in the Welsh Government, who has made a similar plea to the UK Government.

I again ask for short and succinct questions and responses.

I am grateful to the Deputy First Minister for his engagement on tax policy and his consideration of the proposals that I made on behalf of the Scottish Greens, which build on the changes that were already made by the Government and the Greens in 2018.

What is the overall benefit to our public services as a result of the changes that our parties have agreed since income tax powers were devolved a few years ago?

The figure that I can give Mr Greer is that, in the next financial year, the combined effect of all of the tax changes that have been made over the past few years will be to increase the resources that are available to us to the tune of £1 billion. That is the consequence of opting for the progressive measures that we have put in place. That money has been generated to the advantage of Scottish public finances as a consequence of our dialogue.

The director of the Fraser of Allander Institute, Mairi Spowage, recently said that the inflexibility of the Scottish Government’s budget meant that a “strong case” could be made for enhancing fiscal powers. She said:

“The lack of any real ability on the part of the Scottish Government to be able to flex its budget within year in response to unanticipated shocks remains a real limitation of the existing fiscal settlement.”

Does the Deputy First Minister agree with that assessment? What response has he had from the UK Government in that respect?

I have been very open with the Parliament about the enormous constraints with which we are wrestling in this financial year, which is the first financial year in the history of the Parliament in which inflation has been a particularly significant factor. We have learned about the acute difficulty created by the limitations of our resource borrowing powers, and we have no ability to address the volatility other than by redirecting spending from one programme to another. Obviously, I have had to do that on two occasions.

As I indicated in my statement, I have not yet found a sustainable path for this financial year to fully balance the Scottish Government’s budget. Those are real practical issues. The UK Government has not indicated a willingness to address those questions, but I will continue to make that case to it.

Last month, I was at an emergency summit to look at the issue of empty shop units on Aberdeen’s Union Street. Our town centres are desperate for help. Can the Deputy First Minister tell us how the cuts to the city’s investment and strategy and the regeneration budget of £66.4 million will help the situation? That feels like the kiss of death to our high streets.

Those budgets reflect the pattern of expenditure for city deals around the country. A variety of factors affect those budget lines on an annual basis, and they will vary because of the profile of the deals around the country. Therefore, I encourage Mr Lumsden not to read too much into that particular factor. After all, the city deals that have been put in place are sometimes for 10 or 20 years.

Obviously, I have acceded to the request of business organisations to freeze the business rates poundage. I have done that, and that provides substantive assistance and, indeed, significant savings, because those business rates should ordinarily have increased in line with inflation. I have opted not to do that in the budget statement.

Brexit continues to hamper Scotland’s efforts to establish a wellbeing economy and maintain parity with the wealth and prosperity of our small northern European neighbours. Does the Deputy First Minister agree that the fiscal damage as a result of being ripped from the European Union has made the budget more challenging than it had to be? Does he look forward, as I do, to the transformative economic opportunities to come when Scotland re-enters the European single market?

The Office for Budget Responsibility has estimated that the effect of the United Kingdom leaving the European Union has been to depress GDP by 4 per cent. That is simply an act of total economic vandalism. We did not have to leave the European Union in the fashion that we did. We could have maintained membership of the single market. However, the Conservatives were determined to ensure that that was not the case, and that was disastrous.

The only route for Scotland to gain access to European markets with the degree of freedom that we previously enjoyed is through its being an independent country. In my view, the sooner that happens, the better.

I commend the cabinet secretary for his uplift of more than £140 million in spending on ferry services on top of the £60 million allocation to Ferguson Marine. I am sure that the Turkish shipyard that has been awarded the latest CalMac Ferries contract for the Islay class ferries will be incredibly thankful for his generosity. Indeed, the GMB trade union has calculated that every pound of capital spending on a shipbuilding project in a Scottish shipyard generates an extra 35p in the local economy for wage and supplier payments. I will press the cabinet secretary. Does he think that the capital spending that he has allocated is value for money for the Scottish taxpayer and Scottish economic growth, or are the real winners the people of Turkey?

The Government is focused on ensuring that we take forward the construction of ferry vessels to meet the needs of island communities. We are taking decisions that are consistent with the approach that is necessary for public procurement projects. We are committed to the investment, and I am glad that, at least in some measure, Mr Sweeney was able to welcome it.

Although the groundwork has been laid, there remains much to do to fully address the poverty-related attainment gap. Can the Deputy First Minister outline how the Scottish budget will support that essential mission?

We are taking steps in the budget to ensure that our expenditure focuses on delivering the outcomes that Mr Dey wants to secure. That will be a constant focus of the Government in taking forward the budget and ensuring that the agenda, on which we are making progress, can be intensified in the years to come.

The budget for Scotland’s motorways and trunk roads in 2023-24 has been cut by £76 million. Will the cabinet secretary finally admit what my Highlands and Islands constituents and his Perthshire constituents know, which is that the promised dualling of the A9 between Inverness and Perth will not be completed in 2025 or, indeed, any time soon?

The Government’s position on the completion of the dualling of the A9 remains intact. We are taking forward steps in the budget in that regard, and there is provision in the budget to do exactly that. I have made the point openly to Parliament about the hard realities with which we are wrestling. Capital projects will be more challenging because of the effect of input prices. That situation has been caused by all the circumstances with which we are familiar, which have been fuelled by the mistakes of the United Kingdom Government. All of those factors are making capital projects more difficult to deliver. [Interruption.]

Thank you, members.

The Government will address the implications of that on a constant basis, as we take forward our policy and capital programmes, to ensure that we can deliver on the expectations of people around the country.

Last week, when I was speaking to councillors from Glasgow City Council, one of their main requests was for more money. Therefore, I very much welcome the extra £550 million for local government. Can the Deputy First Minister say more about the flexibility that he mentioned in his statement? Local authorities, including Glasgow City Council, would like more flexibility, but I accept that, at the same time, we have national programmes.

That is the dilemma with which we have to wrestle. I aired that matter in a conversation with COSLA leaders a couple of weeks ago, and I returned to it in a conversation with the COSLA leadership last night. There is very close parliamentary interest in the implementation of a number of key programmes and policy commitments, but, equally, there will be a local desire to have some degree of flexibility about how those priorities are taken forward. We have to create a climate of assurance as we address issues of flexibility, which local authorities are seeking. We have to strike that balance in those discussions and, along with the Cabinet Secretary for Social Justice, Housing and Local Government, I will take those forward as we advance such issues with local government.

Our schools in Scotland have lost nearly 100 teachers in the past year, before this real-terms cut to core local government budgets. Pay for teachers currently accounts for one third of council net revenue expenditure. What modelling has the Deputy First Minister undertaken on the number of teachers who will be lost as a result of his budget?

That is a practical illustration of the point that I have just been addressing with Mr Mason. The Government does not employ teachers; they are employed by local authorities, but Mr Marra, of course, wants to hold the Government to account for the employment of those teachers. I have come to Parliament today to set out a £550 million increase to the budget for local government. That is higher than this year’s budget and is higher than local government could have expected. Local government has the opportunity to take forward the employment of teachers and investment in public services, because the Government has delivered a funding settlement that is higher, greater and more emphatic than the arrangements that are in place and than local government could have expected.

The Deputy First Minister might be aware of calls from Marie Curie Scotland to use Scotland’s social security system to provide enhanced support for those who are terminally ill. I appreciate that that would be a new and additional cost in our challenging financial climate, but will the Deputy First Minister work with the palliative care community to see what additional support can be provided and, more specifically, what support will be allocated to palliative care services in this Scottish budget, given the increased number of deaths in community settings?

The health secretary would be very happy to meet palliative care organisations to address those questions. Obviously, we are giving a very significant generic increase to the health and care budget in Scotland. There will be opportunities for organisations to interact with the health system with regard to how the matter can be taken forward, and I am sure that the issues that Mr Doris raises on behalf of that sector, which plays an invaluable role in the quality of life of our citizens, can be properly and fully considered as part of the budget implementation.

It will come as a shock to the public that the Deputy First Minister, as the man who had to check that there were no banana skins in the Ferguson Marine deal, is allocating a further £60 million to deliver the two ferries, when they should have already been serving our island communities. Will the Deputy First Minister tell us which budget he had to cut in order to fund that further spending on ferries that should have been delivered by now?

As Mr Kerr will know, the Government looks at its entire capital programme on an on-going basis. We look at the phasing of, and the delivery arrangements for, projects in order to allocate resources accordingly. I thought that, on behalf of the public, Mr Kerr would have said that they expect us to complete the vessels and ensure that the needs of island communities are met, which is precisely what the Government is doing.

Peak-time fares on trains are a huge drain on household budgets. Extortionate prices prevent many from choosing rail over the private car, which damages our climate and drives down passenger numbers at a time when they need to build back up. How will the budget deliver fair fares for people while boosting the climate and our newly nationalised ScotRail?

We have agreed to put £15 million into the fair fares review, which will specifically focus on taking forward an exercise to reduce peak rail fares. It will operate over a six-month period in the course of the next financial year, and the Government will consider carefully the impact of that measure and the long-term sustainability of such a proposition. If it is successful, the Government will wish to continue it for a longer period.

Between us, the Deputy First Minister and I have represented for nearly 50 years people who use daily and who rely on the A9. I know that he is as aware as I and other members are of the tragic death toll that we have seen on that road this year, almost all on single-carriageway sections.

In the budget, I heard no reference at all to any new or additional funding for delivery of dualling of the A9, or the A96 in my constituency. I am afraid that that will be disappointing to my, and I suspect his, constituents. When will we deliver on our pledges that were first made 14 years ago? Will the Deputy First Minister commit to publish early in the new year—because I fully understand the commercial and other pressures that he described and that we face—a revised timetable for delivery of our now somewhat aged pledges?

As Mr Ewing knows, significant progress has been made on dualling the A9. In my constituency, relatively recently, the section between Luncarty and Pass of Birnam was opened and it is making a significant impact. I also recognise the tragedy of the death toll on the A9, which, as a consequence of many road safety measures that have been taken for a considerable time, has been avoided for many years. However, the issue has reached an intense level in the past 12 months, which causes enormous distress to the individuals affected. I welcome the work, which Mr Ewing will be aware of, that the Minister for Transport is taking forward to set out measures to improve road safety on the A9. That has a constant part of her attention.

I reassure Mr Ewing that resources are available in the budget to continue the programme of dualling the A9. Ministers are reviewing the capital programme to ensure that we can support the financial commitments in the light of the commercial pressures that are prevalent in capital programmes because of the increase in input prices.

The statement confirms the position that was set out in the resource spending review, in which an increase of more than £550 million was allocated. In a recent letter, COSLA indicated that there is a black hole of around £1 billion. Council leaders have already indicated that, if that amount is not provided, they will struggle to provide even the basic essential services that communities rely on. Therefore, what services does the Deputy First Minister suggest that councils further cut back on due to the lack of funding that he is providing in the budget?

I just want to point out the argument that has been marshalled in front of me by Mr Stewart. His front bench has attacked me for increasing tax in order to increase the resources going into the public purse. If I did not do that, we would have less money. If we have less money available—[Interruption.] I hear the Tories saying no—they are even more economically illiterate than I thought.

Mr Stewart then asked me to increase the money to local government. I just want to give the Tories a warning, and it is given with all the kindness that I can generate for the Scottish Conservative and Unionist Party. Every single time a Conservative comes here asking the Government to spend more money on any aspect of policy, we will remind them of their hostility to increasing tax and their support for starving the public purse of the resources that we require.

We know that local businesses in town centres across Scotland will be facing increased costs due to inflation, and that will compound pre-existing issues that they have been facing due to changing shopping habits. Can the Deputy First Minister say any more about how the budget will support our local high streets and town centres in this very difficult time?

The principal thing to which I can refer Audrey Nicoll is the decision that I have taken on freezing the business rate poundage, which is designed to help those who are in the sectors to which she refers, operating in town centres. Obviously, the Government takes forward other work through our regeneration activity, which is designed to assist the development of town centres. The dialogue will continue around the country to support communities that are affected by the difficulties and challenges that are faced.

The Government sets water charges for a year ahead based on the consumer prices index. In October, that was 11.1 per cent. As the Deputy First Minister has said, that is soaring inflation. At a time when the Government is telling people to settle for pay deals below the inflation rate, why, in the middle of a cost of living crisis, is the Government hammering families—including those on low incomes, who all pay water charges—with such an eye-watering hike in their bills?

As a matter of fact, the Government does not set water rates. They are set by the board of Scottish Water, and the directors of Scottish Water have a responsibility to take forward that decision. I am quite certain that the board of Scottish Water will be aware of the cost of living challenge that people are facing around the country and will consider those issues when it takes a decision about the level of water rates in Scotland.

In all the big budget figure announcements, it might be possible to forget a smaller number that is more significant in its importance—the number of young people who most need our continued support. What will the budget do for our care-experienced young people, and how will the Scottish Government, and the Deputy First Minister personally, deliver on their commitment to keep the Promise of continuing support for Scotland’s care-experienced young people?

There are two elements of the budget that are relevant in answering the very important question that Fiona Hyslop puts to me. The first is the investment that the Government is making of £50 million to further develop whole-family wellbeing, which is a holistic family-based support programme. We have also allocated £30 million in the budget to support our on-going commitment to the Promise. I hope that those two commitments give Fiona Hyslop, and the care-experienced community in Scotland, confidence in the sustained commitment of the Government to ensuring that we improve the opportunities and life chances of young people who have experience of care in Scotland.

The Deputy First Minister acknowledged that

“Ferry services are vital in sustaining connectivity with our island communities”,

yet, in the face of massively increasing fuel and maintenance costs, Mr Swinney is delivering a real-terms cut to funding for Orkney’s lifeline internal ferry services. How does he believe that that will help to sustain connectivity for island communities in Orkney and how much of the £440 million capital spend will go towards helping with the urgently needed replacement of the ageing internal ferry fleet in Orkney?

I discussed those issues recently with Councillor James Stockan, as I recorded in the exchanges that I had with Mr McArthur yesterday. I am keen to take forward further detailed discussions with Orkney Islands Council on the ferry replacement issue. I recognise the scale of the issue for that relatively small authority, and the Government will engage constructively and actively with Orkney Islands Council on how we can work together to address that challenge.

We all support the third sector, but we are seeing a cut in its budget again this year. At last year’s budget statement, the finance secretary said that the Government would meet voluntary organisations to look for a three-year deal. The Social Justice and Social Security Committee recently had evidence that neither the Cabinet Secretary for Social Justice, Housing and Local Government nor the Deputy First Minister has met with the Scottish Council for Voluntary Organisations. Will he make that pledge again and, this time, will the Government follow through on it?

I am very happy to confirm the Government’s support for such an approach. That reflects the decisions and discussions that we have taken in Cabinet about the way in which we wish to proceed on that. I had extensive discussions with the third sector in the preparation of the budget in advance of today’s announcements and I know that the cabinet secretary regularly meets with the third sector, so I am happy to confirm our desire to take forward those discussions.

Despite our not being able to hold the referendum next year that the people of Scotland asked us to hold, I am glad to hear that the £20 million that was earmarked for it will be used for a good cause, in mitigating one of the worst effects of remaining in the union by tackling fuel poverty. The Deputy First Minister will be aware that, in my Highlands and Islands region, folk are often hardest hit by that and other rises in the cost of goods and services and that they face some of the highest levels of fuel poverty in the country. Will he expand on how the extra cost of living in the Highlands and Islands has been taken into account when designing the budget?

We want to make sure, with the fuel insecurity fund, that we support those who face the greatest challenge and assist them in every respect that we can. The learning that we have had from the fuel insecurity fund this year, which has provided very welcome assistance to individuals, will be replicated in the fund that we take forward in the next financial year.

I agree with Emma Roddick that the issue that we are dealing with is a consequence of the energy frameworks within the United Kingdom, which do such damage to householders in all parts of Scotland, but particularly in the north of Scotland and particularly to people in remote areas and on low incomes. One of the arguments as to why Scotland should be an independent country is so that it can design a more appropriate energy policy that meets the needs of our people, particularly those with vulnerability.

What provisions will be made in the budget to support the life-saving services provided by Rape Crisis Scotland centres right across the country, amid fears that 28 jobs are at risk due to uncertainty over Scottish Government funding for that trusted and vital charity?

I am aware of the concerns that have been raised. I very much value the services that Rape Crisis Scotland provides. The Scottish Government has made financial commitments that provide funding that will continue into the latter part of 2023, but I understand that there are earlier challenges to that. I assure Monica Lennon that the Government will engage constructively in addressing that issue. It is not all about next year; some of it is about this year, which, as I have recounted to Parliament, is particularly challenging for us. However, I come at it from a sympathetic point of view and will try to address those issues.

How can this be a budget for skills when it cuts Skills Development Scotland’s budget? There is already a freeze on additional apprenticeship places. So says the Scottish Training Federation, which states that

“The current freeze on Apprenticeship places will see ... training providers going out of business”,

that there will be redundancies, and that

“Apprentice training will be disrupted.”

Will the Deputy First Minister confirm that the SNP has abandoned its target of 25,000 apprenticeship places, as seems to be the case? Does he recognise that common sense should tell us that this particular cut to SDS is the very last thing that our economy needs at this time?

Here we go again. Here we have another Conservative who does not believe in our raising tax to increase the size of the public purse, and who wants us to spend more money on a particular issue however important that policy commitment might be. Let me just—

You have cut the budget.

I am afraid that there is going to have to be an awful lot of basic arithmetic here. I know that Liz Smith is a great fan of basic arithmetic, because she was always telling me that when I was education secretary. I say to her that Mr Kerr needs some assistance with basic arithmetic. He is asking me to increase the budget for Skills Development Scotland at the same time as members on his party’s front bench are telling me not to increase public expenditure as a whole. Just to reassure Mr Kerr—

You have cut the budget.

I have just addressed that point, Mr Kerr. No amount of waving papers at me, shouting and all the rest of it will change that.

I will just repeat it all, although I am being encouraged to be brief. The Government is absolutely committed to the target of 25,000 apprenticeship places. Indeed, before the pandemic, the Government was on the verge of achieving its target of 30,000 modern apprenticeship places. There is capacity in the modern apprenticeships programme at this stage, and we are confident that those targets can be achieved.

I also point out to Mr Kerr that, as part of the budget—he did not welcome this bit—more resources have been allocated to universities and colleges, which obviously contribute to the skills opportunities and capacities of our country.

That concludes the ministerial statement on the Scottish budget 2023-24.

On a point of order, Presiding Officer. Further to Daniel Johnson’s earlier comments, I am disappointed, but not surprised, by the Deputy First Minister’s attempt to shift blame for the shameful leak of the Scottish Government’s budget away from him and his party when the details could only have come from his office. He has made some very serious accusations. That is right out of the Deputy First Minister’s playbook, and I am afraid that it confirms my view of the party in government’s disrespect for this Parliament.

Presiding Officer, may I ask whether you have a commitment from the Scottish Government that it will properly investigate and report on the leak? Given the deceitful tactic that was employed earlier by the Deputy First Minister, what confidence do you have that the categorical assurance that the leak was not from the Scottish Government is in any way dependable?

That is not a point of order, Mr Kerr. I addressed the earlier points of order in earlier business today, and I have had a thorough discussion with the Scottish Government on the matter.