Pre-Budget Statement
The main item of business this afternoon is a debate on motion S1M-1357, in the name of Henry McLeish, on the implications for the Scottish Executive of the Chancellor of the Exchequer's pre-budget statement, and an amendment to that motion.
I welcome the opportunity to speak to Parliament about the pre-budget report that was presented last week by the Chancellor of the Exchequer. I warmly welcome the chancellor's statement. It is clear to everyone that his skilful direction of the United Kingdom economy has laid the ideal foundations for the programmes that I am now taking forward with renewed vigour with colleagues in Scotland.
One of the key objectives of the chancellor's report is to deliver, through growth and productivity, full employment for all in our generation. Already, we have created 86,000 jobs in Scotland since 1997 and employment now stands at the highest level since records began in 1960. Our long-term ambition is that a greater proportion of people should be in work than ever before. Currently, 73.4 per cent of Scots of working age are in employment—that is a higher percentage than at any point in the past 20 years.
Does the First Minister agree that, when we consider social justice, it is not enough just to get people into work if the wages that they are paid are inadequate? Does he agree that we are in danger of continuing to make not only the unemployed but the employed poor unless we set a higher minimum wage?
It is important to point out that we introduced the minimum wage, which was a significant step forward. The family income guarantee has also been a considerable help to those who are in work but who have had a low income. I understand the aspiration and we must ensure that people do not move out of unemployment into work that is not paying. The Government has shown its intent on both those fronts.
We want to do more in relation to our aspiration for full employment. I want to concentrate today on how we intend to achieve full employment and the employability of all Scots. I will illustrate how the pre-budget report helps us further in meeting our social justice objectives.
We have already discussed the economic framework for Scotland, which has provided the macro-economic stability that we need. Against that background, inflation is down to 2.25 per cent in 2000. Interest rates are low by recent standards and have been stable since February. The Chancellor of the Exchequer has brought stability to the fiscal accounts for long-term sustainable economic growth. Moreover, UK gross domestic product has grown strongly for many years and growth will be around 3 per cent this year.
In consequence, unemployment in Scotland stands at 6.9 per cent according to the International Labour Organisation figures; the claimant count figures show unemployment at 4.6 per cent. We have grown continuously and steadily since the early 1990s. However, there should be no hint of complacency. Part of our economic challenge is a higher growth rate in Scotland, which demands competitiveness and productivity. We should be clear that achieving macro-economic stability is a feat that has escaped many Governments, which is all the more reason to welcome it now.
The union with the rest of the UK is providing us with the stability and economic strength to make record resources available to meet our priority commitments. Spending review 2000 has provided a real-terms increase of almost 14 per cent over the next three years, which we are now directing to key programmes on the economy, social justice, education and health. That demonstrates the fruits of a strong UK economy. We should all welcome the fact that partnership for Scotland means progress.
Will the First Minister reflect on the following quote?
"The Chancellor will still have spent in this Parliament less of the national cake on education and health than the Conservatives did".—[Official Report, House of Commons, 8 November 2000; Vol 356, c 333.]
That is not an SNP quote, but one from the economy spokesman of Jim Wallace's party—Matthew Taylor of the Liberal Democrats.
The SNP makes such claims constantly. However, it is important to point out to the people of Scotland that, regardless of talk about previous Conservative Administrations, the result of the spending review is that the Scottish Parliament will have a record budget and sustainable growth. We are interested in the politics of the future, rather than the dreary politics of the past, which are so keenly embraced by the SNP.
We are the future.
I disagree. The SNP has a set of old and weary policies, which are uncosted, unquantified and badly focused. We do not have to hear any lectures from the nationalists about where the economy is going.
A moment ago, the First Minister mentioned productivity in Scottish business. Will he reflect on the fact that some companies make great efforts to improve productivity only to have their achievements skewered and undermined by the chancellor's macro-economic policies, his fiscal decisions and the impact that they have on interest rates? Does the First Minister acknowledge that connection and recognise the frustration of business when the Government says one thing but does another?
The chancellor has provided low interest rates, low inflation and sustainable, strong public funding for our services. I acknowledge John Swinney's point about productivity, which is why I referred to productivity in my initial remarks. We could be doing much better. That is the key to economic success. The chancellor is working with the grain of Scottish and UK business rather than against it.
Let me focus on full employment and the many challenges that lie ahead. Although macro-economic levers are concentrated at Westminster, we have significant levers to bring about change in Scotland. Those levers are the responsibility of the Scottish Parliament and we must use them, particularly in higher and further education, to equip Scotland with the skills that it requires.
In creating economic opportunities for all our people, we are concerned not only to build up the skills of those who are currently in the work force, but to make sure that those who are coming into the labour market from school have skills as well. In a nutshell, we need to improve the efficiency of the labour market and the skills of all those who can participate in and benefit from our economic progress.
On matching vacancies with the unemployed, some people will find it curious that we have 120,000 vacancies in Scotland and 112,000 people who are out of work. Clearly, there is no simple match, because there is a skills gap and various barriers to people getting into work. I suggest to all my colleagues in the chamber that we need to work in a more focused way to match the jobs that exist with the people who are looking for work. That means looking at pay, as Tommy Sheridan said. It means looking at literacy and skills and utilising the desire for work that everyone has to match people to the opportunities that exist in every part of the country.
That is why in August we brought together a 12-point action plan to provide local plans, not just a national UK or a Scottish framework for economic development. There will be a local action plan in each area so that we can start to do some of the focused work that will undoubtedly reduce the unemployment queues even further. The rich mix of policy initiatives at Holyrood and Westminster will win success for this country. It is a clear demonstration of the huge benefits of working in tandem with our UK partners in addressing our Scottish vision.
Of course, full employment and the economy are vital, because they are the foundation on which we can build social justice in the way that we wish. That is why it is crucial to recognise that we have injected an extra £6 billion into Scottish services over the next three years. That includes a 15 per cent increase in health spending over the three years, a 17 per cent increase in education spending and a 20 per cent increase in the social justice and housing budget.
It would be churlish of us not to applaud what the Chancellor of the Exchequer has done for pensioners. Significant improvements have been announced, which will come in at the next budget. It is important to recognise that the Executive is complementing those measures and is addressing the plight of our 900,000 pensioners with free central heating systems for 70,000 pensioners, free off-peak bus travel for our pensioners and an investment of more than £120 million in community care. Those are substantial sums of money but, more important, they are targeted on real need in Scotland, which is much welcomed in pensioner households.
We have to acknowledge the geography of Scotland. That is why rural Scotland should be given a much higher profile in this Parliament and in the work of the Executive. Having spoken to Susan Deacon, I know that that issue is to the fore in health. Special problems and special needs have to be taken care of. Only then will this Parliament be able to welcome the involvement of every part of Scotland in what we are doing.
I am heartened to hear the First Minister say that he is concerned about the problems in rural Scotland. Does he accept the findings of the Automobile Association report that was released today? It said that, on average, the rural driver, who has to travel further and pay higher fuel costs, will suffer each year a surcharge of £300 on fuel and £160 on additional maintenance costs for his car. If he accepts that, what will he do about it? Does he agree that the pre-budget statement is bad not only for rural Scotland, but for the environment?
I think that I can rise to the question. I was more interested in what Fergus Ewing was quoted as saying in The Courier and Advertiser on Wednesday this week:
"We have the highest fuel tax in the world and the fact that it's set by a Scotsman is outrageous."
The complaint used to be "London Labour", but now it is "London Labour led by Scotsmen". I reject utterly that narrow, parochial thinking, which Fergus Ewing often expresses in this chamber. We all acknowledge that there are difficulties in relation to fuel. That is why the Chancellor of the Exchequer responded to farmers, hauliers and motorists. That is why he responded to the pleas that had been made on behalf of pensioners. Our policies on inner cities and rural areas have also brought substantial benefits. When on earth will Fergus Ewing realise that he cannot continue to rant day in and day out about problems that bear no relationship to reality?
We were talking about pensioners, for whom our Executive budgets also provide a way forward.
Rural areas are crucial. The rural dimension is serious. It cannot have escaped anyone's notice that, throughout the fuel demonstrations over the past few months, the big issue for Scotland has been what is happening in the Highlands and Islands. However, that seemed to disappear off the agenda, because the issue was UK-wide. In the next few months before the chancellor's budget, I would like to ensure that we return to some of the issues that are particular to the Highlands and Islands and that have no similarities to issues in any other part of the United Kingdom. Jim Wallace will develop those ideas.
I do not wish to deflect the First Minister's attention from rural areas but, as a member who represents Glasgow, I often feel that Glasgow is neglected. Will the First Minister give an assurance that the policy review will at least consider the capital receipts clawback rule?
I say to Tommy Sheridan that Glasgow is not missing out on what the chancellor or the Executive are doing in Scotland. Housing, economy and education projects are boosting the city. We will announce—at the start of next week, I think—an initiative to ensure that our cities share even more in the prosperity that lies ahead. That will go some way towards answering Tommy Sheridan's concerns. Those matters may have to be downplayed slightly in today's brief debate.
The First Minister talked about housing in Glasgow. Is he aware of the delay to the Glasgow ballot? Is he also aware that Glasgow has lost out to the tune of more than £170 million in housing investment since new Labour came to power three years ago?
I am conscious that we want to take the people of Glasgow with us. That is important. Every time that a comment is made about Glasgow, we tend to forget that the Glasgow tenants will decide their own future. That is democratic and positive, yet the SNP sometimes seems to argue against it. I believe that we are on track to achieve significant change in Glasgow, which will be in its interests. Glasgow will act as a beacon throughout the country for positive policies on housing.
What about the capital receipts clawback rule?
The stock transfer is a new exercise to promote housing. It will open up a tremendous opportunity to invest and to improve the quality of stock. We should be more concerned about that than about the capital receipts issue.
I have talked about a range of policies and will conclude with education. An extra £17.2 million will be provided for Scotland's schools. The Minister for Education, Europe and External Affairs will be making a statement about that next week. In addition, there will be a further £0.5 million for e-learning in our schools.
At the heart of the Executive's vision is our objective of full employment, with all Scots having the capacity and the opportunity to play a full part in the nation's economic progress. The pre-budget report makes a major contribution to that vision. It is the UK's critical contribution to our objectives. We must now focus on what we can achieve in Scotland. I look forward to the Parliament joining the Executive in ensuring that we can drive forward on those vital areas to improve the quality of life, to ensure that full employment becomes a reality and to make Scotland a more confident, competitive and caring country.
I move,
That the Parliament notes the implications of the Chancellor's pre-Budget statement for the Scottish Executive.
The speakers list is very thin. Will any members who have not yet pressed their request-to-speak buttons please do so now?
If I take the hint from your message, Presiding Officer, I may prepare myself for a long oration to Parliament. I hope that members are ready for that, although I see the Deputy First Minister expressing his usual enthusiasm. I may include in my remarks some optimism about his prospects in office or the work of the Liberal Democrat economy spokesperson at Westminster, but we will see what the debate throws up.
I say at the outset that it would be churlish if we did not welcome a number of the measures in the pre-budget statement. Over the past few days, we have made it clear that we give a warm welcome to some of the substantive measures. We welcome the above-inflation increases in the basic state pension for 2001-02 and 2002-03 and the increase in winter fuel payments from £150 to £200. I noticed that, the other day, the Secretary of State for Foreign and Commonwealth Affairs intervened in the Anniesland by-election to remind us of that increase. We also welcome the substantial increase in the minimum income guarantee, which will assist in protecting some of pensioners' incomes, but we express a cautionary note in relation to the extension of means-testing to a greater number of people in the system.
We welcome any action taken by the chancellor to reduce the crippling burden of fuel duty and I take particular note of the freezing of the level of duty for two years. However, the chancellor's comments on low-sulphur fuel require a little examination. All his commitments to reduce the duty on low-sulphur fuel are conditional on, as he said in his statement to the House of Commons, "cheaper, cleaner fuel" being "available in every garage" in the country. That will take some considerable time to achieve and passes the responsibility from the Government to the oil companies. It is, therefore, outwith the Government's ability to deliver on that commitment. I want ministers in the Scottish Executive to give guarantees to the Parliament that the types of decreases in duty—the hype of lower duty—proposed by the chancellor will be delivered. When will the conditions kick in? We also welcome other initiatives that were included in the pre-budget statement, such as the simplification of the VAT regime for small businesses and a regeneration package.
The lengths to which the chancellor had to go to undo the damage of his financial statement to the House of Commons in March 2000 characterised the statement and gave it real shape. Members might call me old-fashioned but, when I was a lad, pre-budget reports were about outlining the economic conditions that provided the backdrop for the financial statement and budget report in March of each year. I did not expect much from the chancellor's pre-budget statement because he said that there should be no short-term fixes.
However, the chancellor gave us a reactionary, pre-election mini-budget, which, as the First Minister said, responded to the concerns of pensioners, motorists, hauliers, farmers and representatives of our fishing industries. That tells us that, however welcome the measures of the pre-budget statement in November may be, they were a direct response to the failure of the chancellor to get it right when he set out his budget report in March 2000.
No one pointed that out more clearly than Matthew Taylor, the member of Parliament for Truro and St Austell, who said to the House of Commons:
"Three years of cuts in public service are followed by a general election splurge to buy back the electorate."—[Official Report, House of Commons, 8 November 2000; Vol 356, c 333.]
I hope that that will be the tone of the Deputy First Minister when he sums up the debate tonight. If so, his tone will be enlivening. I hope that there will be some consistency between the arguments of the Liberal Democrats in Edinburgh and those of the Liberal Democrats in London.
The damage caused by the budget statement in March is clear and was additional to a lot of other damage, such as the 75p increase in the basic state pension, the 40 per cent cash-terms increase in the price of a litre of petrol and the fact that the Government stuck to the Conservatives' spending plans for its first two years in power. Those measures were never going to be popular, so the chancellor had a great deal from which to recover.
In this debate, the SNP will push for answers on how the Executive intends to respond to the climate created by and the issues raised in the pre-budget statement. Last week, I raised one of those issues, which lies at the heart of what the public expects of this Parliament. Will the Government respond positively and implement the final series of recommendations in the Sutherland report by paying for the personal care costs of our elderly in Scotland? It is all very well to be reassured by the fact that, at long last, after three years in office doing pitifully little to protect our pensioners, the chancellor is increasing the basic state pension by £5 a week. However, those self-same people may be exposed to paying personal care costs that are 17 times higher than that increase—a £5 increase in the state pension cannot compensate for a £85 weekly bill for the personal care costs of some elderly people. That does not seem to be a fair deal for our pensioners, and we want to know whether the Government will take action on that point.
We also want to know what dialogue the Scottish Executive had with HM Treasury in London about the formulation of the pre-budget report. What did the First Minister ask for? Did he ask for cuts in fuel duty? Did he ask for assistance for rural petrol stations? Did he ask for increases in the state pension? What initiatives of the pre-budget report were achieved as a result of the First Minister's interventions? I think that we need to know the nature of that dialogue to determine whether the First Minister had any effect in changing or influencing the direction taken by the chancellor.
My colleague, Mr Gibson, suggested that the opinion polls might have had an effect on the chancellor's decisions. He might say that, but I would not dare venture to suggest such a crude mechanism. Nevertheless, I would like to know whether the First Minister had any influence on the decisions that were arrived at by the chancellor. If we are supposed to accept that the framework of macro-economic policy and major social welfare policies are set by the Westminster Parliament, we must understand and be aware of the bargaining pitch and negotiating power of the First Minister.
We also need to know whether members of the Executive were singing from the same hymn sheet, if I may use that religious expression. We need to know whether Mr Wallace was arguing for the same things as Mr McLeish was, or whether Mr Wallace and the Liberal Democrat economy spokesperson in London were arguing from the same point of view. I do not know, but it would be interesting to know whether the Liberals were speaking with one voice.
The pre-budget report gives us the opportunity to consider some other major issues as they affect the Scottish economy. For example, it set out the fact that oil revenues are expected to be £5.3 billion this year and £7.3 billion next year. If we assume that an independent Scotland would collect 80 per cent of those revenues, that equates to an injection of £9 billion over a two-year period to the end of 2001. What impact of that revenue are we seeing in the Scottish economy while public finances are stewarded as they are at the moment?
The tax burden in the UK as a whole is rising, despite the fact that the basic rate of income tax is reduced. Tax revenues, as a percentage of gross domestic product, have risen from 35.2 per cent in 1996-97 to 36.9 per cent this year and they will peak next year at 37.5 per cent. That is from an honest Government that told us that it would cut our taxes. The Government cannot have it both ways. It cannot sustain those lines of argument while subjecting the public to rises in unfair, indirect taxes, of which fuel duty is just one perfect example.
Although we are paying more taxes, there has been no discernible improvement in the quality of our public services. The point of the SNP amendment is that Scottish public expenditure has fallen from 23.2 per cent of GDP when the Conservatives left office to 21.2 per cent this year. We are spending less of the nation's wealth on public services than at any time in the past 25 years. What a scandalous admission it is to say that even that bunch on the Tory benches could deliver more to public services than that combined bunch on the Labour and Liberal Democrat benches. What a sad reflection that is on the state of our nation.
I see that the Presiding Officer is signalling to me to wind up.
You still have two minutes.
In that case, I have plenty time to deliver the final part of my speech to the First Minister and Deputy First Minister. What strikes me as the most important point about the pre-budget report is that it illustrates the condition and influence of our Parliament and the influence of the Executive. The Executive's motion refers to noting
"the implications of the Chancellor's pre-Budget statement for the Scottish Executive."
The chancellor's pre-budget statement may have implications for individual pensioners, because pensions are a reserved matter, and there may be implications too for motorists, hauliers, fishermen and farmers from the decisions that have been made on fuel duty, which is also a reserved matter.
What strikes me is that the pre-budget report has been a perfect illustration of the issues that the Scottish Parliament should normally and naturally be undertaking if we had the full powers to undertake all the major decisions that affect our society. We would then be having a debate about how we could excite and energise the Scottish economy by investing our oil wealth progressively and positively, rather than contributing it to the revenue flows and the war chest of the chancellor. If in this Parliament we had our own pre-budget report, setting out the macro-economic future and framework for Scotland, we could be talking about this Parliament taking bold and mature decisions about the future of the economy. Then we could really meet the ambitions of the people of Scotland by delivering the type of programme, the action and the change that they are hankering for.
Our amendment is essential, as it gets to the heart of the issues in this debate. This Parliament needs to take responsibility for all the issues of macro-economic policy. I would like to hear today whether the Executive supports that principled and positive stance, which would take this Parliament forward.
I move amendment S1M-1357.1, to insert at end:
"but regrets that at the end of the budget period the Chancellor will be investing less of the nation's wealth in public services than when the Conservative Party left office."
On a point of order, Presiding Officer. I did not wish to interrupt the previous speaker, but will you indicate what action will be taken against John Swinney, who during First Minister's question time indicated that information about people leaving the employment register was contained in a Scottish Parliament information centre document? He implied that the document was available to all members, but as far I can judge it is not generally available.
I will give Mr Swinney an opportunity to respond briefly, as I am not familiar with the facts in this case.
We asked SPICe to produce the information to which Dr Simpson refers. SPICe responded to that request, which is exactly what I told Parliament today.
Richard Simpson will appreciate that I do not know the background to this matter. I will have inquiries made and report back to the chamber before the end of the debate.
I would like to explain the timings for the debate. When the First Minister sat down, only two names were showing on my screen, so I allowed Mr Swinney a significant overrun. I am therefore duty bound to allow Mr McLetchie and the Liberal spokesperson an extra two minutes each. If subsequent speeches are kept to about four minutes, just about every member who wishes to speak will have an opportunity to do so.
I trust that my speech will be a model of brevity and quality.
I listened with interest to the opening speeches by Mr Swinney and the First Minister. Mr Swinney's amendment pays a back-handed compliment to the previous Conservative Government, but we are happy to take praise from every quarter, however grudgingly or back-handedly it is delivered.
Undoubtedly the First Minister is indebted to his fellow Fifer Gordon Brown for the latter's assistance in securing for him his present position. In that context, the First Minister's lavish praise for the pre-budget report is understandable. However, if the Scottish Executive believes that the chancellor's statement will be the answer to its political prayers, it had better think again.
The truth is that the Chancellor of the Exchequer has been found out. For the past three years, he has been systematically fleecing the British and Scottish taxpayers, as part of his stealth tax strategy, and he has now been caught redhanded. No one seriously believes that the chancellor would have made the concessions that he made in the pre-budget report on pensions and fuel, had he not been forced into them by the weight of public opinion and protest. The pre-budget report confirms that since 1997 the tax burden in the United Kingdom has risen by some £25 billion, despite Mr Blair's promise at the last election not to increase taxes.
Gordon Brown has confirmed that he now plans to increase public spending faster than the trend rate of growth in the economy. If he ever gets the chance to implement his plans over the period for which they are contemplated, that can mean only higher taxes and higher borrowing in the years to come for taxpayers here and in the rest of the United Kingdom. Despite the Government's record of raising tax burdens over the past three years, we are now expected to be pathetically grateful to Gordon Brown for the fact that he has given us back some of our own money—money that he has hoarded as a result of over-taxing us in the first place.
In contrast to the chancellor's policies, the next Conservative Government will increase spending on improving public services, but within the economy's trend rate of growth. We will share the proceeds of economic growth between better public services and tax cuts for hard-working families, pensioners and businesses. That would restore the essential balance between tax and spending, which has been put out of kilter by Gordon Brown's stealth taxes on motorists, pensioners and families.
David McLetchie mentioned tax cuts, but part of that equation is the suggestion that there will be public expenditure cuts. The estimate for my constituency of Paisley South is that those cuts would come to £24 million. Can he explain to my constituents where Tory cuts will fall in Paisley South?
There will be no Tory cuts. There will be sustained improvements in public services. If Hugh Henry's constituents think that the fantasy spending programmes that have been devised by Gordon Brown will be delivered by a future Labour Government, they are living in a fantasy constituency. Those spending programmes are unsustainable because in the long term they are in excess of the trend rate of economic growth. They can be sustained only at the expense of a higher tax burden, more unemployment or higher borrowing, all of which will have undesirable consequences for Hugh Henry's constituents.
That is our approach to spending. There are aspects of the Government's approach that we welcome. We welcome the increases in the basic state pension that the chancellor announced. However, a Conservative Government will do better because under us the weekly pension will be higher. It will be higher because we will roll up the winter fuel payment, the Christmas bonus and the free television licences for the over-75s and use that money, plus the millions saved on administering those schemes, to pay a higher rate of weekly pension.
Will Mr McLetchie give way?
I will give way in a second.
Tax and benefit thresholds would also be adjusted to ensure that pensioners would not lose any of that additional money in higher taxes or benefit reductions.
If those allowances were rolled into the pension, that money would be taxed, so pensioners would not benefit from Mr McLetchie's proposal. They would lose on the £200 that they currently get from the chancellor because it would be taxed.
If Mr Kerr had listened to the last words that I said before I accepted his intervention, he would have known that part of the policy is to increase the taxation and benefit thresholds so that the consequence that he fears will not occur.
The Labour Government patronises our pensioners with its gimmicks. Labour believes that older people should be told what to spend their money on. What is next? Food stamps, clothing vouchers and telephone tokens? It will not be long before Gordon Brown hands out ration books instead of pension books.
Pensioners do not want Labour's gimmicks. They want to be treated with dignity and respect and to be given in their hand the higher weekly income to which they are entitled. The truth is that pensioners cannot rely on Labour's short-term gimmicks; the previous Labour Government failed to pay the Christmas bonus in 1975 and 1976. Our policy gives extra money to all pensioners, including those living in residential and nursing homes, who do not benefit from Labour's gimmicks.
Does Mr McLetchie agree with John McAllion's position, expressed at the Labour party conference, which is also that of Robert Brown of the Liberals and that of the SNP, that the link between average earnings and pensions should be restored to give pensioners the dignity to which he refers?
No, I do not believe in the restoration of that link; neither does the Government. I believe that we must get rid of the gimmicks and give people the money in their hands so that they can judge their own household budget, run their own household economy and not have to follow the diktats of a nanny state, a Labour Government and a Labour chancellor.
The chancellor's stealth taxes on fuel have done enormous damage to Scotland's economy and nearly brought us to a standstill. The chancellor has refused to give the fuel tax cut for the whole country that people wanted. Instead, in typical new Labour fashion, he has announced a tax cut on a petrol that almost no one can buy. That is nothing new. It is a mythical tax cut because the Brown economic miracle is a myth. He is swimming against the international tide by imposing £5 billion of new business taxes, and a £5 billion-a-year burden of new regulations.
Our economy is growing at half the rate of the US economy and at a lower rate than those in euroland. Our productivity growth has been cut in half and the savings ratio is at its lowest point since 1963. The First Minister may be willing to believe all the Gordon Brown hype, but there is no economic miracle and people in Scotland are not so gullible.
I welcome the debate on the chancellor's pre-budget report. Many of the announcements in that report were welcomed by the Liberal Democrats—indeed, they were Liberal Democrat policies that the chancellor chose to implement. Today's debate is on the consequentials for the Scottish Parliament, which amount to £17 million extra for education. I shall concentrate on the way in which that money will be spent.
The money is extremely welcome and reaffirms our commitment to investing in education. I have a number of questions for the Deputy First Minister. First, when will the money be delivered to our schools, many of which are crying out for more investment? Secondly, how will the money be delivered: will it go directly to schools or via local authorities, as happened the previous time? Thirdly, will the money be ring-fenced or will individual schools and headmasters have some input in decisions on where the money is to be spent? Fourthly, is this money a one-off payment or is it part of the three-year spending announcements for local authorities that the Executive will make over the next month or two?
After the Scottish Executive's previous announcement of money being delivered directly to schools, the money was delivered through the local authorities to the schools. The announcement was welcomed by all the schools in my constituency. The sting in the tail was that the local authority decided to claw back some of the school budgets, with the effect that it was a status quo budget with no increase at all. I ask the minister to guarantee that the money will be given directly to schools and that it represents an increase on what the Executive planned to spend over the coming year.
Another important aspect of the pre-budget statement, which has been much discussed over the past few months, is fuel duty. The fuel protesters in Edinburgh again brought the matter to the attention of the Parliament. I welcome much of what Gordon Brown had to say on fuel duty. In the debate in Parliament, four or five weeks ago, Liberal Democrat members laid out our policies on fuel. Many of those policies have now been announced as part of the chancellor's pre-budget statement.
Nevertheless, many motorists in the Highlands and Islands and in rural Scotland will believe that Gordon Brown has failed to deliver solutions to the problems that they face—especially those motorists in the Highlands and Islands whose fuel is up to 10p a litre dearer than that in the central belt. The opportunity to narrow that gap has been missed.
A recent study by EKOS demonstrates how the gap between fuel prices in the Highlands and Islands and in the central belt could be closed. That would involve a reduction not in the fuel price, but in the cost of fuel to the motorist. The solutions are contained in that document. If Gordon Brown had followed what is in that study, he would have reduced vehicle excise duty for motorists in the Highlands and Islands to £10 by using the postcode area as a mechanism for identifying those motorists. The EKOS report shows that, if that had been done, the reduction in VED would more than outweigh the current effects of the difference between fuel prices in the Highlands and Islands and those in the rest of Scotland. The total cost to the Exchequer of implementing that policy would be a miserly £5.35 million. As the total budget giveaway is £2 billion, the chancellor could surely have found an extra £5 million to close the gap right down between the cost of motoring in the Highlands and Islands and in the rest of Scotland.
I welcome the First Minister's commitment to rural Scotland and hope that, in his summing-up, the Deputy First Minister will agree that the Scottish Executive should continue to press the chancellor to implement this worthwhile and sensible solution that does away with the huge discrepancy between the central belt and the rest of the Highlands and Islands once and for all.
The chancellor constantly argues that there will be no repeat of the Tory years of boom and bust in economic policies. We should pay our respects to that policy statement. Its aim has been achieved; we have not experienced Tory boom and bust. However, when it comes to investing in our schools, hospitals, roads and railways, the policy seems to be the reverse; we have had three years of bust—and in the case of the railways, I really mean "bust"—followed by boom, three years of famine followed by feast. If the Executive and Parliament had not followed the failed Tory policies of continually cutting investment in our public services—in our schools, hospitals, roads and trains—and indeed had sought the same stability in public service spending policies as in overall economic policy, we would not have found ourselves having to tackle the legacy of underinvestment and neglect in those services that was started by the Tories and continued by Labour in its first three years.
Before we go to open debate, members will remember the point of order raised by Richard Simpson and John Swinney's subsequent point of order about SPICe papers. I can now tell members that the research referred to was undertaken for an individual MSP. The general position is that SPICe requires that a member's permission be granted before the research can be released to anyone else. In this case, SPICe is still actively trying to contact the member.
The debate gives us a welcome opportunity to comment on the sound management of the economy. Indeed, it is heartening to hear words of praise—albeit sometimes grudging—from the Opposition parties. There is a recognition that things are moving forward.
However, Presiding Officer, I crave your indulgence to mention something that I had hoped to raise during First Minister's question time. As a result of the sound management of the economy, an ex gratia payment can be made to ex-prisoners of war, such as my father, who were held by the Japanese.
It is too late for many.
As Winnie Ewing said, it is too late for many. However, I am pleased that this Government has acted where previous Governments failed to do so. I hope that, if the First Minister is talking to the Prime Minister soon, he will express the anger felt by survivors that the money has come from the UK Government, not from the Japanese Government, and that there has been no apology.
Having craved the Presiding Officer's indulgence, I will now move on to the specifics of the debate. There has been substantial help for a broad range of my constituents in Paisley South. For example, 2,437 families are benefiting from a guaranteed income of at least £214 a week through the working families tax credit. Furthermore, families are also benefiting from substantial rises in child benefit.
I do not know whether Hugh Henry is aware of a difficulty with the working families tax credit. When people switch from their previous benefit to that benefit, they find that it is paid a month in arrears, which means that for a whole month they find themselves in difficult circumstances. I wonder whether the Executive could make representations on that issue to the UK Government.
I am aware of a number of anomalies in the benefits system. Indeed, my Westminster colleague Douglas Alexander has been pursuing that problem. I am sure that if Christine Grahame speaks to her local MP, he or she will be more than happy to pursue the issue as well.
In Paisley South, I am also witnessing some of the benefits of record investment in education. Unlike George Lyon, who has had some difficulty in his area, I welcome Renfrewshire Council's commitment to ensuring that the money allocated in the next round goes to direct improvements in schools. I look forward to the same happening again. I am aware that there is an aspiration for the money to be spent on repairs and equipment. I know that schools such as Bushes primary school in Glenburn, which has suffered vandalism problems, look forward to receiving money, albeit in small amounts, the spending of which is at their discretion. Langcraigs primary has already used money imaginatively. Last week, I was at Thorn primary in Johnstone to see what investment in education means to children in that community. I ask the Scottish Executive to encourage local councils to give more discretion to head teachers to spend budgets that will allow them to tackle some of the immediate issues that confront them in their schools.
Last but not least, the pre-budget statement brings substantial benefits for pensioners in my constituency, such as the pensioners from Glenburn who visited the Parliament recently, who will welcome the increase in the basic rate and the increase in the minimum income guarantee, and some of whom will benefit from the television licence. They will all benefit from the winter fuel allowance and will benefit generally from other Executive initiatives, such as the installation of central heating for people who do not have it.
All in all, we are beginning to see the signs—belatedly—of long-overdue and welcome progress. Both the chancellor and the Scottish Executive are to be congratulated on measures that will have a lasting impact on our communities.
It is apposite that I follow Hugh Henry, because I think that things can only get better for Scotland's pensioners. I would call the recent announcement damage limitation, following the two-packets-of-crisps-a-week rise that pensioners received this year. Hugh Henry may think that what I am about to say is dreary, but the reality is that since new Labour came to power in 1997, Scotland's pensioners have seen no change in their poverty. I did not dig that up; the Liberal Democrat MP, Robert Maclennan, issued a press release which stated:
"The figures showed that a third of pensioners in Scotland are living in poverty, exactly the same figure for the period 1996-97 when the Labour Government came to power."
Mr Maclennan said:
"Labour has wasted valuable years in the battle against pensioner poverty."
I have no doubt that Mr Maclennan's colleagues in the chamber and Mr Wallace, in his summing-up, would want to support Mr Maclennan. Today, we do not start from fresh on pensioners; we started three and a half years ago.
Age Concern's statistics show that there are 70,000 Scottish pensioners living in severe poverty, many of whom have income that precludes them from the national minimum income guarantee. I will return to the problems of benefits and the minimum income guarantee shortly.
With a rise of 73p or even £5 a week, pensioners still face the real world, in which heating bills and water charges are rising. Pensioner may get free eye tests, but they pay for their glasses, which cost a lot. There is no doubt that the nearly 1 million pensioners in Scotland—all of them voters and those most likely to vote—the pensioners' forums and their representatives, Age Concern and Help the Aged, pushed London into a partial U-turn on pensions. However, it is only partial, because the essential link between pensions and average earnings has not and will not be restored. The link was introduced by the feisty Barbara Castle—who still fights for its restoration—and abandoned by the Tories and now new Labour has adopted the Tories' clothing, as it has with so many policies. We do not want bits and pieces and neither do Scotland's pensioners. We want a decent basic state pension, linked to the nation's profits and wealth through earnings.
In the 1970s, the average pensioner income was 25 per cent of average earnings. Today, the gap between earnings and pensioner income has grown and that income now stands at 17 per cent of average earnings. We are witnessing the deliberate demise of the universal state pension. Incidentally, if the link between earnings and pensions had not been broken, a single pensioner would have had an additional £29.95 a week and a couple would have had £47.90. That puts the £5 rise, next year's £8 rise and the following year's £3 rise into context.
Something else puts those rises into context: the cost of a residential place in the Scottish Borders is £265 a week, the cost of a nursing home place is £355 a week, and the cost to the pensioner is the sale of their home. Yet the Executive dithers and swithers over the funding of personal care. I am proceeding with my member's bill and meeting the non-Executive drafting committee next week. I held off doing so because I thought that the Executive was going to deliver, but I do not think that it will.
I refer the Executive to its equality strategy document, which says that it is
"taking steps to make real improvements to the lives of older people, working in partnership to improve take-up of income and benefits".
That is not what Scotland's pensioners want. They do not want to go out with a begging bowl for benefits. Currently, two out of 10 pensioners are obliged to fill out a 42-page form listing their income and savings before they can receive benefits. It is forecast that six out of 10 pensioners will face means testing in the next three years. An article in today's Daily Mail refers to independent examination by the House of Commons library that has unearthed that statistic. Incidentally, 33 per cent of pensioners who are entitled to take up the minimum income guarantee do not do so. There are a variety of reasons for that, among which is pride. The minimum income guarantee is no guarantee to 33 per cent of pensioners. I should point out that 17 per cent of the funding for a benefit system goes on the administration.
I say this to the pensioners: there are some touchstones that would be put right in an independent Scotland. The Executive cannot deliver equality, dignity, independence or choice. An independent Scotland would. It would deliver personal care free and would deliver a decent basic state pension that was linked to earnings.
I must indicate to members that speeches are slipping over the four-minute time limit. As we have more members than we have time for, I ask members to keep their speeches as short as possible.
Today, we heard the First Minister trying to defend the chancellor's failure to use a golden opportunity to stimulate Scotland's economy. At the base of everything that everyone has talked about—everyone has been talking around it, but no one has said it out loud—is the fact that we need to stimulate wealth creation in Scotland. From that, we get the taxation income that we need to run our public services—it must come first. When Henry McLeish was Minister for Enterprise and Lifelong Learning, he talked regularly about Labour's vision for an enterprise economy in Scotland. Unfortunately, all he did was talk about it. Gordon Brown has followed the same lame game: empty words and spin with little positive action. Tinkering with VAT does not remove the burden of bureaucracy on business in Scotland. There was absolutely no mention of that in any of the stuff that came up from Westminster.
People have talked at length about our pensioners. It is true to say that new Labour has treated them shabbily. Instead of treating those people with the respect that they deserve and raising the basic rate of tax relief so that they can keep more money and choose how they spend it, Labour introduces complicated gimmicks and soundbites of no substance.
Mr McLeish knew of the Scottish Conservatives' plans in advance and, in spite of his proclaimed largesse, he has not come near to them. Just because the First Minister has been taken in by the string of minor changes, he should not assume that the people will be. Does the Executive realise that merely freezing fuel taxation is of little comfort to rural Scotland and its businesses and commuters? When will the Government accept that goods must be delivered and that there is little alternative but to use the roads? What happened to the slogan, "No gain without pain"? In Scotland, all we get from Labour is pain. We should be grateful that the Liberal Democrats have no influence on policy, or we would be looking at an 8 per cent a year real-terms increase in fuel duty.
Low-sulphur petrol has been a well-kept secret. The secret has been kept so well that, when I met Brian Wilson at the BBC last week, he told me that that was the first time that he had heard about it. I wonder whether we have joined-up government after all.
Four years on and Labour still does not spend as much on the public services as the Conservatives did. The only thing that Labour increases is taxation, and it does so in a multitude of ways. But for what? To build a fund to buy an election result. People have already talked about the huge hikes in taxation, which will be 37.5 per cent of gross domestic product next year.
The First Minister struggled to be credible today, but he is in good company. He has his loyal ally Sonny Jim and the Liberal lackeys to back him, although there are not many of them here today—they must be a little embarrassed about the statement. I feel sorry for Mr Wallace because he is being forced to endorse the Brown budget in his winding-up speech. Before he speaks, he will perhaps consider the fact that in supporting Labour today he is publicly endorsing what we already know: a vote for the Liberals is a wasted vote, as it is only a vote for Labour.
Instead of reading out his new Labour script, Mr Wallace should tell us why so many of his actions in Scotland are at odds with Liberal policy in the rest of the UK. Does he recognise the following words?
"The Chancellor's Labour predecessors introduced mini-Budgets in times of financial crisis precisely because of boom and bust, whereas"
Gordon Brown
"introduces them at times of political crisis to bring in policies of bust and boom. Three years of cuts in public service are followed by a general election splurge to buy back the electorate . . . For all the real pension increases that he announced today, which we welcome, he will leave millions of pensioners to the indignity of means tests."—[Official Report, House of Commons, 8 November 2000; Vol 356, c 333.]
They were said by Matthew Taylor, the Liberal Democrat shadow chancellor. Will Mr Wallace tell us whether Mr Kennedy gave him permission to be here today to be the biggest toady to the Labour party that we have seen? I find it impossible to understand how a Liberal party that made so many promises to Scotland before the election can now just walk away.
Will the member remind us which party broke the link between pensions and earnings? Could he remind us what the Conservatives did on the 75p increases? Did they support that or did they abstain?
Please come to a close on the point.
I ask Mr Rumbles in return what the Liberal party's position is on the link between pensions and earnings, given that the Executive does not support it. He asked the question; he should answer it himself.
In conclusion, what we should talk about today is the lack of incentive for businesses to increase their productivity and to increase investment in new technology, plant, equipment and premises so that they create a competitive business sector, which will provide the sustainable jobs that Scotland needs. We live in an ever more competitive world. Why did the chancellor not go further when he stated that he would not treat the oil industry as a cash cow by opting for a windfall tax this year?
Please come to a close.
Why did the chancellor not state clearly that he would not consider it again for a fixed period? That would have given a much-needed period of fiscal stability to encourage further investment in the North sea.
Our public services are at breaking point, yet we still do not receive the support for them that we have offered but the chancellor has not. Scotland badly needs to have confidence in its future funding, especially as councils have to bid ahead for their tax statements. Once again, to use the First Minister's own words, it shows a lack of ambition to deliver for Scotland.
I will not be able to call all the members who wish to speak because of the length of time that members who do speak are taking.
On Monday, I addressed a conference in my constituency on fuel poverty and sustainability, organised by the excellent local energy efficiency agency SCARF. There were perhaps 100 people at the conference. The fuel poverty that they are concerned with is not to do with the price of diesel or the level of road tax on a truck, important though those issues are; their concern is the hundreds of thousands of Scottish households who cannot afford to heat their homes to a decent level of comfort or who have to pay out more than 10 per cent of their disposable income in order to do so.
Many of those households are pensioner households. Their concerns need to be addressed in two ways: by improving the energy efficiency of their homes and by increasing the cash incomes at their disposal. Gordon Brown's autumn statement was good news on both counts. First, it gave increases in real terms in pensioner incomes, targeting in particular those on lower and middle incomes and adding £50 to the winter fuel allowance. Secondly, it offered continuing support for energy efficiency initiatives to cut the cost of heating homes.
Thanks to Gordon Brown's sound economic management, there is a Scottish Executive programme to secure investment of £350 million over five years to ensure a central heating system in every pensioner's house and every council house in Scotland. He has had other things to say about fuel and energy costs. I welcome measures such as the reduction in the cost of ultra-low-sulphur petrol and diesel. Unlike the pessimists in the Opposition, I look forward to a rapid reaction from the oil industry to ensure that those fuels are made available on every forecourt in Scotland by the time of the spring budget.
I want to give a particular welcome to the chancellor's decision not to impose a windfall tax on the production of North sea oil. Although some seem to think so, oil revenues do not grow on trees—
While the member applauds the chancellor for saying that he will not impose a windfall tax, will he say whether there should be a greater tax on the profits that have already been made?
The issue that we have to face, which the chancellor has faced fairly and squarely, is not the past 20 years but how we sustain the oil industry for the next 20 years. Gordon Brown is right to focus on that. When Brent crude sold at only $11 a barrel a year ago, hundreds of Scottish jobs were lost and thousands were put at risk. It is now selling at $33 a barrel and there are oil industry investment plans worth billions to the Scottish economy. The chancellor was right. The autumn statement told the oil companies—just as he told the fuel protestors—that what goes up on the global oil market can come down just as quickly. Fiscal plans must be based on that recognition. The job of prudent government is to provide the fiscal stability to secure the future of our oil industry and to secure industry investment in competition with other oil provinces all over the world—
No, thank you.
Scotland cannot live by oil alone. I welcome the chancellor's and the Executive's clear commitment to the development of renewable energy. Robert Gordon University in my constituency and many of the oil and oil-related companies based in Aberdeen are desperate to invest their offshore expertise and skills in putting Scotland at the forefront of wave-power technology. On the day the first commercial wave-power generation venture gets under way on Islay, I ask the Executive and the Westminster Government to work together to ensure that the national grid is strengthened to carry power generated by wind and wave from every part of Scotland—not just from the central belt, but from the north, the north-east, Aberdeen and the Highlands and Islands, so that all those areas can play a full part in the next generation of energy industries in Scotland.
I now call Iain Smith, but I must ask him to keep his remarks as brief as possible.
I will do my best. I am delighted that so many Opposition members are so taken with what Matthew Taylor MP said in response to Gordon Brown's statement and seem to support it as much as we Liberal Democrats do. I assure them that we support his statement and do not support the actions that Gordon Brown has taken since 1997; we believe that there have been wasted opportunities—three wasted years for our pensioners, schools and hospitals—because of underinvestment by Labour at Westminster.
Does the member appreciate that if he is critical of the chancellor for not spending as much on education as the Conservatives did, he is also criticising the coalition Government, which is doing exactly the same?
That is absolute nonsense. The Scottish Executive is increasing spending on education and health; those are our priorities and that is what we have done since we came to power in 1999. I am talking about the record since 1997, not since 1999. Perhaps it is time that the SNP understood that difference.
We welcome the new money for pensioners that Gordon Brown announced. It does not go as far as the Liberal Democrats would like: in addition to the £5, we would like an additional £5 for all pensioners, £10 for those over 75 and £15 for those over 80, because it is in the older age groups that pensioners experience most poverty. We would like extra on the basic pension rather than reliance on means testing. I remind the Conservatives that their party did not oppose the 75p increase in pensions when the Liberal Democrats led the opposition to that change earlier this year.
I do not have time to give way; I have been asked to be brief. If we add up the Tory proposals and take away the benefits that the Tories would cut, the result comes to a miserly 42p a week extra for pensioners.
I would like to issue a couple of challenges to Andrew Wilson, who I presume will wind up for the SNP. John Swinney spoke about oil-rich Scotland. In the Edinburgh Evening News yesterday, Andrew Wilson commented on the Chantrey Vellacott report into oil revenues. He said:
"This is game, set and match to the economic case for independence. It leaves the SNP's unionist opponents in disarray. It is a heavyweight analysis".
He said exactly the same on 15 March 2000, using exactly the same words—"game, set and match". He used exactly the same words on 15 February 2000—"game, set and match" and "a heavyweight analysis". Of course, he did not say that when the same group of economists at Chantrey Vellacott said in 1998, when oil prices were down to $10 a barrel, that there would be a huge deficit in Scotland. He described that as "economic gibberish". Apparently, when an opinion does not support the SNP's case it is "economic gibberish" and when it does it is "a heavyweight analysis". The analysis is the same; only the price of oil has changed. Will the SNP accept that if we were extremely oil dependent, our economy would be volatile and, for every dollar per barrel the price of oil went down, our economy would suffer with the equivalent of 2p on income tax? That is the reality of the figures.
Will the member give way?
I am sorry, but I do not have time. I am already running late and I have another point to make.
The SNP seems to be obsessed with public spending equalling gross domestic product. In reality, in a recession, if public spending equals GDP, spending has to be cut significantly. There was a recession between 1992 and 1997 under the Conservatives. If the SNP's proposals had been implemented at that time, public spending would have been cut. We do not believe in such policies; we believe that investment is necessary in health and education and that that should not be linked entirely to GDP.
I would like Andrew Wilson to explain the SNP's policy on fuel duties. The SNP believes that this Parliament should have responsibility for fuel and vehicle excise duties. Does that mean that if the SNP did as it intends to do and cut fuel prices to the European average, it would have to find £400 million from the Scottish block to fund that cut? How would it do that? Would it increase personal taxation? Would it cut services? The SNP owes the people of Scotland an explanation.
We move now to the closing speeches. I apologise to members who wanted to speak but were not called.
I too would like to welcome warmly the chancellor's pre-budget report. That sentiment would be echoed by the majority of hard-working Scots. Pensioners throughout Scotland, including the 13,500 in Kirkcaldy, will especially welcome the package. The report clearly illustrates a Government that is focused on attacking the ills of pensioner poverty, ensuring that all pensioners share in the rising prosperity of the nation.
The multifaceted approach of the minimum income guarantee, the pensions credit and the winter fuel payments, coupled with the significant increase in the basic state pension, demonstrates how more resources and targeted spending can be combined to ensure that those who need the most help get it.
Does the member agree that the loud message from pensioners' forums is that they want the link between pensions and average earnings to be restored?
Under our policy, £2 billion more will be spent over a four-year period than would have been spent if that link had been restored.
The increases in the minimum income guarantee mean that, by 2001, no pensioner will be living on less than £100 a week. The pensions credit is a pioneering and progressive scheme to reward pensioners who have planned for their future and who have modest savings for which they have worked hard throughout their lives.
I welcome the increase in the winter fuel allowance and I commend the Executive on its innovative proposals for central heating for all pensioners and for concessionary travel. We must promote social justice for everyone in our society and prioritise resources to ensure the eradication of poverty. That is what our policy does.
Our policy will see additional spending and an approach of progressive pragmatism—it will not see separation at all costs or tax cuts at the expense of public investment. Pensioners need a Government that is committed to an all-embracing agenda of social justice and fairness. That is what this budget and this Executive are delivering.
Pensioners are by no means alone in gaining substantial benefits from last Wednesday's announcement. The pre-budget report delivers a welcome package for Scotland's motorists, worth an equivalent of a cut of 8p per litre. Benefits to the motorist have been combined with a reaffirmation of our commitment to the environment. Short-termism—an all-too-common policy disease in the past—must never again block a long-term approach to the goals of a stable, dynamic and sustainable economy and employment for all. Investment today equals new opportunities for all in the future. The philosophy of opening up the potential of everyone in society underpins the statement made by the chancellor last week.
The proposals give more money directly to schools. I welcome that on behalf of my constituents and I am sure that all members welcome the extra funding for education—a 17 per cent increase.
Proposals to raise the children's tax credit to £10 per week will benefit many working families in Scotland. I also welcome the £1 billion package for deprived areas.
All those measures can be implemented only through a stable economic framework. We have delivered that. We have the lowest unemployment in 20 years. In the past three years, unemployment in Kirkcaldy has decreased by 16 per cent. We have achieved the highest sustained period of investment in our schools, hospitals and pensioners. We have achieved sound public finances, from a black hole of £28 billion of debt. All that would be destroyed by independence. For the SNP, two plus two really does equal five: 1p can rebuild a nation. That is fiction, not fact.
The only guarantees that the Tories have offered us are £16 billion of cuts—that is £24 million of cuts in vital public services in my constituency and others throughout Scotland. Will the Tories tell the people of Scotland the truth about their pension plans? Tory policies would leave millions to sink, allowing a select few to swim.
The pre-budget report sets out the fundamental choices facing Scotland in today's global economy. We have stability, growth, jobs, low inflation, record levels of investment and an expansive vision of a socially just and inclusive Scotland. The report builds on Scotland's economic stability in the UK and will deliver long-term prosperity for everyone. Labour's vision is clear. It is a vision of growth, jobs and security. That is how Scotland will achieve opportunity for all.
Members will forgive me if I rise with less than unbridled enthusiasm for the Executive's paean—an unashamed hymn of praise to a pre-budget statement that was reactive rather than measured and political rather than principled.
There were some measures that we welcomed, particularly the simplification of VAT for small businesses, the incentives for research and development, tax relief for share capital and the limited help for the haulage industry. There were others that I was going to mention later on, but I have been told to keep my speech short.
The First Minister should have been gracious enough to acknowledge the debt owed to Kenneth Clarke for the golden economic legacy that he left the Government—but the First Minister is not noted for graciousness. The Executive is more to be pitied than laughed at. It should be pitied for its pathetic attempt to pull the wool over the eyes of Scotland.
The First Minister made a statement more notable for its omissions than for its content. Instead of acknowledging the difficulties for businesses faced by the highest fuel costs in Europe, the First Minister acts as an apologist for a chancellor who had to perform more flips than a performing seal when he was dragged kicking and screaming to offer concessions for motorists. According to The Sunday Times, those concessions will never be passed on: they apply to a fuel that is available to only 5 per cent of Scottish motorists. I hope that the Deputy First Minister will assure us that, by April, 100 per cent of motorists will have access to low-sulphur fuel.
Let us not forget that it was the chancellor who caused the problem by upping fuel tax by 3.4 per cent and upping pensions by a miserly 1.1 per cent. The Labour party promised the end of means testing, but it is subjecting our old-age pensioners to the indignity of increased means testing. The Labour party has increased the tax burden from 35.2 per cent at the general election in 1997 to 37.8 per cent today. It was the chancellor who filched £25 billion from the pockets of the British people.
John Swinney's speech was uncharacteristic—he does not often show such a lack of economic skill. What would happen to the rate of inflation in Scotland if £9 billion was poured into the Scottish economy? Having said that, I thank John Swinney for his kind words to the Conservatives earlier in the debate.
Let us not forget the other omissions, not just from the First Minister, but from the Chancellor of the Exchequer in his statement to the House of Commons. Where was the mention of the rise in national insurance, that tax on work, which will see modest earners in Scotland paying another £200 per year? Where was the mention of the extra burden on married couples, with the switch from the married persons tax allowance to the child tax credit?
On the business front, Labour plays a dangerous game with its spending and tax plans, which jeopardise growth and business stability and erode Scotland's competitive advantage. Already, we have seen our economy growing at half the rate of that of the United States of America, productivity growing at half the rate at which it grew during the previous UK Parliament and the UK share of exports falling.
As the First Minister crows atop his midden of self-congratulation, let him consider what David McLetchie said about personal freedom and remember the words of Enoch Powell—we all remember Enoch Powell—who said that whenever the state had taken economic decisions away from the citizen, it had deprived them of other liberties as well.
Presiding Officer, I am proud that I have kept within my allotted time.
A unique distinction, Mr Johnston.
I am glad that we have had this debate, although it would appear from the number of Labour members who have attended throughout that they are not. Only one in 10 Labour MSPs has bothered to show up for this debate, which was led by their own First Minister. That shows his lack of support in his party—
Will the member give way?
I would be delighted to. I am barely into my speech, but if Lewis Macdonald has something good to say, let us hear it.
Will Andrew Wilson acknowledge that at one point his party managed to muster only three members in the chamber, which is fewer than any other party at any point during the debate?
That is a good topic, but the debate was led by the First Minister—[Interruption.] The Liberal Democrats can rest; at least they turned up. The debate was led by the First Minister. Today's attendance has shown the confidence that his own back benchers place in him.
As John Swinney and other colleagues have said, there are many measures in the pre-budget statement—on pensions, particularly the winter fuel allowance, and the minimum income guarantee—that we welcome. However, it is clear, as Christine Grahame said, that much of the pre-budget statement undoes the damage of previous Gordon Brown budgets—such as the last one, in which he gave a paltry rise in pensions, made a damaging increase in fuel tax and made a needless cut in income tax.
I hope that, in his summation, Jim Wallace will answer John Swinney's points, particularly those about the coverage of low-sulphur fuel and the assurances the Executive can give on what will happen should it not be the expected 100 per cent. What will happen if such coverage does not occur until after the election? We have the promise that it will come before then.
A key point about pensions, which Christine Grahame alluded to, needs to be discussed: the end of universality for the state pension. We see it withering on the vine. She made the point well that the average income of a pensioner was 25 per cent of average earnings in the 1970s but is now only 17 per cent—so for every pound earned by someone on average earnings, a pensioner has barely 17p. That is Scotland's shame, which this pre-budget statement has not reversed or addressed in any detail. Personal care is a key issue that the Executive can address. Rather than lauding the chancellor, let us look at what the Executive can do to redress some of the issues.
I hope that, in his summation, Jim Wallace will also answer John Swinney's question about what, specifically, the Executive asked for in the pre-budget discussions—if it had any—with Gordon Brown. What specifically did the Executive ask for? What did it get? What did it lose? Did the First Minister ask for the rise in indirect taxation that we have seen? Did the Liberal Democrats ask for the fall in the proportion of national wealth that is spent on public services, which will go on not just through this Parliament in Westminster, but until the end of the spending period?
I was bemused when Iain Smith welcomed Matthew Taylor's comments, because what Matthew Taylor referred to is happening in Scotland as well. Less is being invested in public services as a share of the national wealth than was invested even under the Conservatives, which is why we lodged our amendment. I hope that members who are of free mind will support it.
There are many measures in this pre-budget statement that are to be welcomed, but there are also a number that have to be criticised, and it is our job to do so. Scotland is now the highest-taxed part of the United Kingdom. We have seen unfair taxes and the overall tax burden rise under Labour. The highest-taxed businesses in the United Kingdom are in Scotland. The highest-taxed council tax payers are in Scotland. We have been spending less of the nation's wealth on public services than at any point under the Conservatives, with health and education spending rising more slowly in Scotland than in the rest of the UK. We in the Parliament can do little about that, because we do not have the power to put Scotland's wealth to work in Scotland's interests.
If we trusted the Scots with the normal powers of a normal independent country rather than with the partial powers that we have at present, the situation would be different. Perhaps we would look after the pensioners every year, and not just in a pre-election year. Maybe people would begin to trust chancellors and Governments when their money was taken in tax and they asked for it to be spent on matters that they cared about.
We should think about Scotland's benefits and consider North sea oil to be a bounty, rather than an inflationary threat, which Mr Johnston called it. At present, I would love to have an inflationary threat to the Scottish economy. The long-term investment work to which Norway has put its oil wealth shows what can be done. We can welcome the work of London accountants when they deal with the Government's analysis, which has been criticised before. On the basis of the Government's shoddy analysis, Scotland is sending more in tax to London this year than it is receiving in public spending.
Mr Wilson is winding up.
We are in surplus more years than the UK Government has been in the past 25 years. It is the Government at Westminster that has a problem with deficits, not the Scottish Government. We should aim to invest that money for the long term. With the normal powers of a normal country, that would be possible. At present, we must instead take second best from Westminster.
Several themes have emerged from the debate. Most parties have welcomed the increase in pensions, although the Conservatives were more grudging and thought that they could do better. They want to take away the winter fuel allowance, concessionary TV licences and the Christmas bonus. Our calculations show that with those measures removed, the Conservatives' plans add up to a 42p increase for pensioners. The Conservative party's sums do not add up and, as a tax-cutting party, it cannot prove that it could afford its plans.
David McLetchie says that the chancellor is giving pensioners gimmicks that they do not want. I do not know whether he has ever been on the doorsteps and heard from pensioners who want help with their fuel bills or who want concessionary TV licences. By supporting the Conservative position with a quotation from Enoch Powell, Nick Johnston showed how out of touch the Conservatives are with what pensioners want.
The Executive has ensured that our pensioners get a better deal. Hugh Henry, Lewis Macdonald and Marilyn Livingstone made it clear that £350 million will be invested in central heating for our pensioners. Pensioners will also have free concessionary travel.
The minister is probably aware that we have taken back £641 million in capital consents during the past three years. That is nearly double the £350 million that will be invested in central heating. I asked the First Minister about that earlier in the debate. Does the Deputy First Minister support a change to the capital receipts clawback rule?
As the First Minister said, more fundamental action will be taken to address that issue. If I have time, I will describe what is being done about regeneration in urban areas to try to meet some of the concerns that Mr Sheridan has raised.
John Swinney and Christine Grahame mentioned the problem, with the minimum income guarantee, of form filling. I have a lot of sympathy with that point, but I hope that Christine Grahame was not suggesting that the Executive is wrong to encourage the take-up of entitlement when it exists. It would be perverse if, just for the sake of making a political point, she said that she did not expect pensioners to take it up.
When the Deputy First Minister is on those doorsteps, are pensioners not telling him—as they are telling me and all their organisations—that they want the link with earnings to be restored and that they do not want the indignity of applying for benefits?
The increases of £5, £10 and £15 that my party proposed are the increases that the chancellor has delivered. That does more, in this parliamentary term, than restore the link with earnings.
I am sure that Matthew Taylor will be delighted at the copious references to his speech that the Conservatives have made. Unlike most Scottish National Party MPs, I was in Westminster to hear what he said. He and I were singing from the same hymn sheet when we asked for a freeze on fuel duty and the extension of measures on vehicle excise duty—the very things that the chancellor delivered. Matthew Taylor and I, along with other Liberal Democrats, voted regularly against the fuel tax increases that the Tories imposed—and indeed the ones that were imposed in the first two years of the present Government.
Will Mr Wallace give way?
We heard Mr Davidson speak earlier—it was like a worn record stuck in the groove. I do not think that we want to hear it again.
I will come back to fuel duty—Mr MacAskill might get a chance then.
I will concentrate on two or three issues that have featured in the debate: the all-important education sector, rural issues and, if time permits, the regeneration of deprived communities.
George Lyon asked about the £17.2 million of consequentials that the Executive will receive from the pre-budget report. As Henry McLeish indicated, Jack McConnell will make a full statement on that issue next week, but I can say that the money will be channelled through local authorities. The resources must be seen to be in addition to existing planned education spending and spending on individual schools. As George Lyon knows, when we entered the partnership agreement we urged for more money to be spent on books and equipment and stressed the importance of dealing with the backlog of maintenance and repairs in schools. We identify the £17.2 million as going a long way towards addressing those issues.
We all welcomed the First Minister's statement of the Executive's commitment to rural Scotland and, not least, to the Highlands and Islands. From my own constituency experience, I can testify to petrol prices that are more than 90p a litre. That is why we made representations to the chancellor on the high cost of fuel both generally and specifically in the Highlands and Islands. We will continue to press specific points on that issue, such as the extension of the current small lorry vehicle excise duty scheme to islands that are not currently eligible.
Will the minister give way?
I will take Mr MacAskill's intervention.
This week, members of the SNP and of the minister's party met members of the Peoples Fuel Lobby. Were they a mob? If not, why were those same people, many of whom demonstrated five weeks ago, called a mob by the minister at that time? Will he now withdraw that scandalous remark?
There was a peaceful and responsible demonstration this week. From what we sometimes hear from the SNP benches, I think that we all know a mob when we see one. [Laughter.]
Members have referred to the 3p reduction in the fuel duty on ultra-low-sulphur petrol. It is important to recognise that the chancellor indicated that that reduction would be conditional on nationwide availability. It is crucial that all areas of the United Kingdom, including the most remote rural areas, are able to benefit from that initiative and I confirm that the Executive will monitor the development of the scheme to ensure that it takes place.
Will the minister give way?
Will the minister give way?
I will give way to Mr Stone.
Aw.
That shows the advantage of being a Liberal Democrat in the Scottish Parliament.
I, too, welcome Mr McLeish's commitment to working hard for the Highlands and Islands, which is good news indeed up where I come from. As the Deputy First Minister knows, visitor figures have been catastrophic. Will he give an undertaking that those difficulties will be high up the Executive's agenda when it funnels through the money?
During the past week, it has been made clear that the promotion of tourism in Scotland is a high priority for the Executive. Indeed, I understand that the leader of the Conservative party visited Glasgow today—we are always willing to welcome the casual passing tourist.
I will address briefly the issue of regeneration, which Mr Sheridan raised. The package includes stamp duty relief for the most deprived areas, accelerated tax relief for cleaning up contaminated land and VAT measures to reduce the cost of property conversions and of creating flats from under-used space above shops. In relation to the stamp duty exemption, the Treasury recognises that the Scottish Executive is responsible for identifying deprived areas in Scotland and we intend to get together with ministers from the Department of the Environment, Transport and the Regions to work out how stamp duty relief will work in practice. We will seek to ensure that Scotland's disadvantaged areas fully share in the benefits provided by these measures.
Despite increasing oil prices, the prospects for Scottish business remain positive. Scottish GDP growth picked up in the second quarter, year-on-year growth is broadly in line with the long-term trend and business survey results are positive. By historical standards, unemployment is low and employment is high and rising. The Executive wants to build on that, not least to ensure that we can deliver public services in a way that enables the people of Scotland to benefit from the additional resources that are being put into health, education and public transport by the Executive. There is much to which we can look forward in the years to come.