Budget Process 2010-11
Good morning. The first item of business is a debate on motion S3M-5405, in the name of Andrew Welsh, on the Finance Committee's report on the Scottish Government's draft budget 2010-11. I call Andrew Welsh, the convener of the committee, to speak to and move the motion.
I commend the Finance Committee's "Report on scrutiny of the Draft Budget 2010-11" to the Parliament.
Our report could hardly be debated under worse economic circumstances: a world economic crisis; a fragile United Kingdom economy that has saddled itself with record debt levels; and a banking crisis. We are faced with consequent pressures on our resources. Our Parliament not only faces its tightest UK financial settlement at a time of limited resources and ever-increasing demands on public services but has limited fiscal powers and little room for manoeuvre.
How do we protect and defend the daily local and national public services for the Scottish people? Within our limited resources, we must look to maximise every public pound that is spent and ensure value for money, economy, effectiveness and efficiency if we are to eke out the value of scarce resources, and we must do so by Parliament and people working together.
If fiscal imprudence and financial greed got us into these problems, working together using the more traditional Scottish financial prudence and best use of resources can get us out of them. Indeed, that will be essential if we are to survive this exceptionally difficult world financial crisis. Action that is based on a realistic appraisal of where we are and how we use Scotland's £35 billion budget to organise financial survival and recovery will require the combined effort and wit of all parties in the Parliament, working together with the wider community of Scotland. Such action is needed if we are to sort out our formidable problems. Blaming one another will not help; what will help is honestly seeking practical solutions to practical problems. The Finance Committee's report does not have all the answers, but it has some of them.
I put on record our thanks for the contribution of the Parliament's subject committees. Their reports this year showed an increasing use of financial scrutiny based on knowledge that they have gained through their work on the scrutiny of bills and in their inquiries. Some committees indicated that budgetary information would form a significant element of their forthcoming inquiry work. The Finance Committee welcomes that mainstreaming of financial scrutiny, which we encourage.
Subject committee reports and evidence helped the Finance Committee to identify and illustrate wider trends and general points that can assist more accurate financial decision making. Although the subject committees made no firm alternative spending proposals, our report notes a number of issues that they have asked the Scottish Government to consider as priorities. We expect the Government to assess, consider and respond, saying whether evidence-based change is required and whether that change can be made.
Our report outlines the overall figures in the draft budget for 2010-11 and the various changes that have been made, for example, through Barnett consequentials and accelerated capital spending since the Government first set out its plans in spending review 2007. However it is interpreted, it is clear that the draft budget for next year is substantially different from those original plans. Providing additional discretionary spending to stimulate demand is not possible in Scotland because of our fixed budget, but the Scottish Government can reallocate demand to parts of the economy where recovery may be stimulated or areas that have been particularly adversely affected by the recession.
In its 2010-11 draft budget, the Scottish Government stated clearly that its priority is to protect front-line services and support economic recovery and growth. However, there appears to be a pro rata approach to applying reductions on previous spending plans.
Although we recognise the desire to minimise the disturbance to the spending plans that different areas of Government had been expecting since spending review 2007, the committee is concerned that it is not sufficiently clear how the decisions in the draft budget correspond to the objectives that the Scottish Government has stated. Subject committees also emphasised that point. We look to the Government to provide a clearer explanation of how it approaches prioritisation.
The draft budget assumes an inflation rate of 1.5 per cent, as opposed to the 2.75 per cent that was originally predicted for this year. The real value of the 2010-11 budget will in theory be greater than initially anticipated and will go some way towards offsetting other pressures. However, we know that pressures are not the same in all sectors, so we have asked the Government to provide an analysis of the inflationary pressures and how they have influenced spending allocations.
The issue of efficiency savings has always exercised Finance Committees. This year we have asked the Government to consider anew the transparency and independent verification of efficiency savings so that their genuine impact on the funds that are available for service delivery is clearer.
For Scotland's public services, one of the immediate implications of recession is that the levels of demand for different public services might shift and previous assumptions about income might not be sustainable. We have asked the Government for its analysis of those effects and how they have influenced its budgeting.
The Finance Committee and a number of subject committees considered the possibility of the UK Government's recent pre-budget report permitting further capital acceleration from future years to bolster the capital budget next year. Regardless of whether capital is accelerated, the committee has sought analysis from the Government of how it will prioritise the profile of capital projects over the next 10 years and how it relates different priorities in the capital budget to its outcome targets.
The committee specifically asked subject committees to examine the budget in the light of a medium-term public spending context that has changed dramatically since spending review 2007. We know that a challenging budget process is not going to be a one-off for 2010-11; the committee has thoroughly examined the reasons for that previously. That means that significant challenges and strategic choices must be addressed for the 2010-11 budget with the explicit recognition, where at all possible, of the effect that they will have in future years.
However, the draft budget 2010-11 gives very little clue as to future spending choices and priorities. Subject committees were not able to bring forward any evidence that spending departments are demonstrating long-term thinking. Of course, from the Government's perspective, a lack of clues as to the future is perhaps understandable as it does not yet have even indicative figures for the years beyond 2010-11. Nonetheless, the direction of travel beyond next year is clear. The committee set that out in our "Strategic Budget Scrutiny" report in June, and the picture has been confirmed by subsequent announcements and analysis.
Uncertainty over future budgets stems from the electoral cycle and from the projections for public spending, which are overall totals and do not show how they will translate to the Scottish budget in due course. We are now at the stage where action is required—the pain will only be worse the longer action is delayed.
The Auditor General for Scotland's recent report on the public finances re-emphasised our conclusion in June that across-the-board efficiency savings will not be sufficient to meet future challenges.
We highlighted a number of broad potential areas through which a more targeted approach to achieving savings might be pursued. An honest and substantial debate on how maximum value can be achieved in public services is urgently required, and we see the seeds of that emerging from different sources. The committee will consider how it can pursue that in its future inquiry work. We urge the Scottish Government to explain how it plans to lead that process.
The key lessons to be drawn from considering the medium-term context are perhaps about the need for developments in the information that is available to support budget scrutiny. Concern to improve budgetary information has been a perennial issue in parliamentary budget scrutiny and we acknowledge the improvements that the Scottish Government has made. We welcome the equality statement and the groundbreaking carbon assessment that were published alongside the draft budget and we look forward to their developing into being clearly integrated with budget decision making.
The importance of budgetary information has been heightened by spending constraints. It must be possible to back difficult decisions by evaluation of what has worked and of what spending is likely to contribute most to achieving priority outcomes. This year, subject committees' reports have increased the spotlight on budgetary information. I have outlined some of the frustration that was expressed about whether prioritisation is sufficiently clear in budget decisions.
We have recommended progress on several fronts. The linking of expenditure to outcomes has exercised the Finance Committee and its predecessors in the first two parliamentary sessions. In a budget of £35 billion, that task is—undoubtedly—highly complex and difficult. However, it is essential for us to be able to consider how effectively accelerated capital spending has got into the real economy and achieved its aims, for example. We have asked the Scottish Government to report on how the link between spending and outcomes will develop further and how it will be formally reported to the Parliament.
Looking back to scrutinise what was spent in the past and to assess previous performance is an essential starting point for the scrutiny of future spending plans. We acknowledge the live information that is provided through the Scotland performs website, but that is not the same as formal reporting by the Government to the Parliament, so we have asked the Government to consider urgently how it will provide performance information to the Parliament to support the budget process.
We have highlighted how no one budget line or group of budget lines can be linked clearly to particular outcome targets. That means that no link is obvious between performance against those targets and decisions on allocating spending.
Committees have continued to express concerns about their inability to scrutinise effectively the large portion of the Scottish budget that is allocated to health boards and local authorities. We acknowledge the desire to scrutinise that spending effectively and appropriately and we have asked the Government to consider how it can improve information.
Equally, the Finance Committee understands fully the Government's desire to focus on outcomes rather than inputs and we acknowledge the aim of reducing ring fencing in order to maximise the flexibility for public bodies to use resources to meet their objectives. Nonetheless, concerns are felt about the principle of parliamentary scrutiny of budgets. It is in everyone's interest to address those concerns and ensure that our budgeting is as focused as possible in the current climate.
It is essential that the whole Parliament has the information to allow it to examine future priorities strategically when it begins scrutiny of the 2011-12 budget with the strategy phase in spring 2010. Given the need to link past performance properly with decision making for the future, we urge the Government to respond positively on such issues and we invite subject committees to think carefully about how to approach that strategic scrutiny.
The Finance Committee has produced a sound, balanced and noteworthy report. Our recommendations were agreed unanimously. Throughout the process, we tried to keep the economic situation and the medium-term context at the forefront of our minds. I hope that the report offers positive and sensible suggestions that the Government can take on board in the constructive manner in which they were produced.
I thank ministers and their officials, organisations and witnesses for the quality and expertise of the evidence on which the report was built. I thank everyone who participated in the draft budget scrutiny. In particular, I thank the committee's adviser, Professor David Bell, for setting our work in the wider context. I also thank the research staff in the Scottish Parliament information centre and the committee clerks for all their hard work in producing the report, which I commend to Parliament.
I move,
That the Parliament notes the 7th Report 2009 (Session 3) of the Finance Committee on the scrutiny of the Draft Budget 2010-11 (SP Paper 349) and refers the report and its recommendations to the Scottish Government for consideration.
I welcome the opportunity to debate further the Scottish Government's draft budget for 2010-11, which sets out portfolio by portfolio our spending plans for the public services on which people rely. I welcome the Finance Committee's thoughtful report on the draft budget. We will respond formally in the normal way, ahead of the introduction of the budget bill, in the new year; I look forward to doing so.
We devoted time to our economic and financial position in yesterday's debate in the Parliament on the Chancellor of the Exchequer's pre-budget report. Like the PBR, the committee's report offers comments on next year's budget and on the medium-term perspective for the UK as a whole. That is the right approach, given the scale of the financial challenge that we face.
As challenging as the budget next year will be, it will be only a prelude to the sustained contraction in spending that we can expect in future years. The Institute for Fiscal Studies projects an annual average reduction in total departmental expenditure limit spending at UK level, in real terms, in the range of 3.2 per cent between 2011-12 and 2013-14. That represents a major and unprecedented challenge to the Government and to Parliament. The Finance Committee has—unanimously—done Parliament a great service by setting out the scale of the challenge that we face. The Government takes seriously the questions that the committee raised about the impact of the future spending profile, and I hope that that seriousness is reflected in Parliament, because we cannot avoid the real situation that we will face in the very near future. Public expenditure will be deeply constrained. In such a context, regardless of the outcome of the UK general election, the Scottish Parliament and the Scottish Government will be forced to take a series of difficult decisions.
On that point, I can see nothing in the draft budget about the most important infrastructure building project in the north-east: the Aberdeen western peripheral route. The Scottish ministers said that they would make an announcement about the matter before Christmas, but today is the final day before Christmas on which such an announcement can be made to the Parliament. Does the cabinet secretary have news on the Aberdeen western peripheral route for people in the north-east?
The Government said that its decision would be announced before Christmas, and I confirm to Mr Rumbles that that will be the case.
Our spending plans for next year are framed by the current economic climate. At a time when many businesses and families are facing challenges that the recession has brought, it is imperative that the Government responds effectively and decisively to support them. However, as all members know, the Scottish Government's budget for 2010-11 will reduce in real terms, compared with this year. That will be the first real-terms cut in the Scottish budget since devolution.
At a time of weak private sector demand, it is vital that the public sector maintains its support for the economy. That is why the Government chose to accelerate £347 million in capital spending and why we made a case to the chancellor to continue that practice in 2010-11. It is essential that we create the economic conditions in which we can encourage and motivate a recovery in private sector activity. That is important if we are to have any chance of achieving the growth expectations that the chancellor has set for 2010-11, on which many judgments about public spending in future will be based. Much will depend on that economic performance.
In that context, the argument about the acceleration of capital expenditure is significant. The issue has a direct impact on our budget for 2010-11, because a number of our capital budgets are proposed to be diminished in 2010-11, given the need to repay capital that was brought forward. For example, concern has been expressed about the social housing budget. I accept that the social housing budget is lower in 2010-11 than in 2009-10, but the Government committed itself to spending £1.6 billion on social housing over the course of the spending review, and that is precisely what we have done. We have done it in a different shape, I admit; we have done it earlier in the programme than we expected, but £1.6 billion is proposed to be spent on social housing over that period. I hope that members will acknowledge that the Government has maintained its commitment in that respect, despite the numbers for 2010-11 being lower than was first proposed at the time of the spending review.
I am interested in the cabinet secretary's argument about social housing. In effect, he said that there is no cut in the social housing budget, because it is the same over three years. Surely if he uses that argument for social housing he must use exactly the same argument for the totality of the budget. He cannot then get away with talking about a real-terms cut.
There are other decisions that have restricted expenditure, some of which relate to issues that concern members of the Labour Party. I will set out exactly where we have constrained expenditure to meet the constraints of the real-terms cut in public spending that we have described. The argument that I have made on social housing is absolutely valid.
Essentially, the committee's report focuses on whether sufficient priority has been given to economic recovery and whether we have done what is necessary to promote front-line services. I now turn my attention to those questions. The recent update to our economic recovery plan sets out how we are supporting the Scottish economy through three broad themes: supporting jobs in our communities; strengthening education and skills; and investing in innovation and the industries of the future.
As I made clear in yesterday's debate, economic recovery sits at the heart of our draft budget. We are maintaining substantial investment of £2 billion in skills and higher and further education and are investing more than £1 billion in Scotland's transport infrastructure. We are backing Scotland's businesses by continuing the small business bonus scheme, which has helped the owners of more than 64,000 business properties. In 2008-09, the scheme benefited small businesses across Scotland by £73 million. That is a direct investment in supporting and prioritising economic recovery in Scotland.
The Government has made assertions about the number of jobs that it has created. I invite the cabinet secretary to respond to the briefing that the Parliament's independent financial scrutiny unit published on Tuesday, which states:
"Without full details on the profile of capital spending, it is difficult to examine whether the Government's estimates relating to the impact on employment are reasonable."
Will the Government provide more details, as the Parliament's financial scrutiny unit requests?
The Government has already published details of the impact of capital expenditure across sectors. If those need to be published again so that people notice that they have been published, I will do that.
Mr Purvis rehearsed some of the same arguments at Tuesday's meeting of the Finance Committee. We assess these factors using a much-respected input-output model that is available through the Government's information channels and is used by most academic sources in Scotland as a reliable means of calculating economic impact. If it were not for the Government's input-output model, the Fraser of Allander institute would not be able to make some of the calculations that it makes about impact on the Scottish economy. That strikes me as a pretty robust and reliable method of calculating the information on which our judgment depends.
We are protecting front-line services by including in the budget an average 2.7 per cent uplift for national health service boards, compared with 2009-10. That will allow us to maintain the fight against hospital-acquired infection, to make effective preparations for the flu pandemic and to deliver major public health programmes, including on alcohol abuse. The budget provides a fair settlement for local government. An increase of approximately 2.8 per cent in the local government settlement will enable local government to deliver many of the front-line services for which we depend on it. As part of the Government's programme, we are delivering extra police numbers and putting in place the resources to fund fully the council tax freeze. As the convener of the Finance Committee said, the Government has set out the implications of the carbon assessment, which has been important in enabling us to make a judgment on the budget's impact on carbon emissions.
Mr Chisholm asked me about spending constraint. The Government has set out in the draft budget a number of areas in which we are constraining spending. We are pursuing our efficient government programme, have reduced significantly the Government's administration budget and are reducing spending on communications and marketing by 50 per cent. We have deployed a variety of measures in the budget to support that approach.
Another major area of spending constraint is the Glasgow airport rail link project. The Finance Committee has asked the Government to establish how we can address the constraints on capital spending that will come in the future. I cite the difficult decision at which we have arrived in relation to the Glasgow airport rail link as evidence of the fact that the Government has taken difficult decisions. That is in the context of a substantial programme of expenditure on infrastructure and transport improvements in the west of Scotland, with £1 billion being spent on the M74 and the M80, £842 million on—
Will the cabinet secretary give way on that point?
I am afraid that I am in the last moments of my speech. I will give way to Mr Brown in my closing speech, if that helps.
We are also spending £300 million on the new Glasgow city centre colleges building. There are a number of investments in the west of Scotland.
There are tough decisions in the budget, but they are necessary, as the Finance Committee convener set out, because of the financial circumstances that we face. If the Government faces up to those decisions, it is incumbent on all parties in the Parliament to face up to them into the bargain.
I thank the clerks to the Finance Committee for their patience and endurance in putting together this year's report on the Scottish Government's draft budget. I thank all those who gave evidence, written and oral, and our committee adviser, Professor David Bell.
This is something of a groundhog day—déjà vu is associated with this morning's deliberations as, only yesterday, most of the same participants were in the chamber to go over the Chancellor of the Exchequer's pre-budget report. In his closing comments yesterday, Mr Swinney seemed to suggest that he was actually looking forward to my speech this morning; I am not sure how long that will last.
Given the thorough preparation that Mr Swinney does for these events, I know that he will have read the committee report from cover to cover, as well as all the witnesses' evidence. He will therefore know that his draft budget does not pass muster this year—not that it did at the first time of asking last year, either, but that is another story. We in the Labour Party will keep repeating that Mr Swinney has more money at his disposal in 2010-11 than has been available at any time over the past 10 years. Over the past two years, he has spent £1.5 billion of end-year flexibility moneys—money put by for a rainy day by prudent Labour finance ministers. As a result of the PBR, a further £23 million is heading his way.
Like finance ministers around the world, Mr Swinney is being tested to use what he has to maximum economic impact. The clear view of the big six business organisations, and of other witnesses appearing before the Finance Committee and the subject committees that contributed to the report, is that, in his draft proposals so far, Mr Swinney has failed that test.
The main purpose of the Scottish National Party Government is:
"creating a more successful country … through increasing sustainable economic growth."
I doubt if anyone in the chamber takes issue with that. However, we differ on how to achieve that purpose using the finance that is available. Different parties have different priorities, but it is the SNP that is in government here in Scotland; it is the SNP's draft budget; and it is the SNP that is failing.
Yesterday, the cabinet secretary told us that he is attempting to support economic recovery and protect core front-line services. I may even have described the Labour Government's pre-budget report as having the same aims. Where Labour and the SNP differ is on how we would spend Scotland's budget. The debate is not helped by the First Minister, his Cabinet colleagues and SNP MSPs constantly misrepresenting what is happening with their budget. First, there was a £500 million cut; now it is £800 million. Neither figure actually takes account of the accelerated capital that the SNP asked for and which now has to be repaid.
The member says that our two parties differ in how they would spend Scotland's budget. However, having read all the committees' reports, I have not seen a single suggestion from the Labour Party about how it would change the priorities in the budget proposed by John Swinney.
I am pretty sure that Mr FitzPatrick was present at the vote on the GARL project, which I will come on to discuss in a minute. That is one area where we clearly disagree.
It cannot be denied that the economic situation that we are now living through was not envisaged back in 2007, when the budget lines for this year were being set. To take account of that, the Finance Committee, in its guidance, invited the subject committees to consider how the changes to the original plans for 2010-11 were being managed and to consider carefully whether the plans that were set out in the draft budget take appropriate account of the strategic context.
Although SNP members disagreed—not surprisingly—a majority of Economy, Energy and Tourism Committee members were critical in their submission. I was one such member, as I attended the committee as a substitute member on the day in question.
Well, that was real objectivity.
Of course. From a sedentary position, Mr Swinney is again praying in aid my abilities.
Paragraphs 181 to 183 of the report—perhaps Mr Swinney should listen carefully to this very apposite point—state:
"based on the near universal evidence we received from business organisations, trade associations, economic commentators and the trades unions, we do not believe that the budget proposed is the right one for the economic challenges ahead … Even after accounting for the re-profiling of spend, almost all the relevant budget lines relating to the economy have been reduced … we do not consider that the budget proposed is fit for the Scottish Government's economic ‘Purpose'."
That view was endorsed by five members of the Economy, Energy and Tourism Committee, including the Conservative member Gavin Brown and the Liberal Democrat member Iain Smith.
Of course, Mr Swinney can speak for himself—whether from a sedentary position or otherwise—but he told the committee that
"the Government has actively taken steps to adjust its plans and priorities to deal with the economic situation; those steps have concentrated on the economic recovery plan."—[Official Report, Economy, Energy and Tourism Committee, 28 October 2009; c 2561.]
Those steps, it should be noted, include major reductions in the budget lines for enterprise, energy, European structural funds and tourism.
If Mr Whitton is to give a complete picture of the situation, he should also mention that all the budgets to which he has referred were significantly enhanced in 2009-10 to ensure that we provided for economic recovery.
I will give that point due consideration in my closing speech.
Regarding those reductions, the Federation of Small Businesses said—[Interruption.]
Order. I am sorry, Mr Whitton, but we cannot have front-bench conversations taking place during speeches.
Thank you, Presiding Officer.
The FSB said:
"any reduction in spending on a range of policy areas associated with supporting economic growth is disappointing."
However, the word "disappointing" does not adequately describe the reaction to Mr Swinney's decision to axe the Glasgow airport rail link project. For the benefit of SNP back benchers—who believe that, somehow, it is all London's fault—I should emphasise that Mr Swinney made it clear that the decision was his and that, while he believed that GARL was desirable, the airport rail link was not essential to the Scottish economy. Clearly, I disagree with him on that point, as do the Confederation of British Industry, the Scottish Trades Union Congress, the Federation of Small Businesses, the Scottish Chambers of Commerce, the Institute of Directors and the Scottish Council for Development and Industry. During the Finance Committee's consideration of the report on the draft budget, I had hoped to persuade colleagues to include an amendment to restore the GARL project—as Mr FitzPatrick well knows.
Will the member give way?
I am in the last moments of my speech.
However, as in the past two years, the Tories rode to the Government's rescue by voting with the SNP while the Liberals, strangely, sat on the fence. Clearly, either Mr Brownlee and Mr Purvis have different views from their colleagues on the Economy, Energy and Tourism Committee, or deals have been done somewhere—no doubt we will find out. I am sure that the actions of those parties will have been noted in the great city of Glasgow and the surrounding areas, where both those parties seem to think that they might win seats whenever the general election is called.
In conclusion, it is not too late for Mr Swinney to change his mind. Labour will continue to argue for GARL to be reinstated. Some £60 million was found at the last minute last year for a town centre regeneration fund by reprioritising. Mr Swinney also still needs to find £9 million for a referendum, which is money that could be used better elsewhere. If Mr Swinney's budget is to meet the intentions of the Government's purpose of sustained economic growth, he can still change his mind.
I never thought that I would say this: bring back Andy Kerr.
Let me also start by thanking the Finance Committee's clerks, its adviser and everyone who gave evidence during the budget process this year. I am also grateful for the new financial scrutiny unit—the embryonic parliamentary budget office—which has wide support across Parliament and which I hope will in time develop into an even more useful resource for Parliament in scrutiny of the budgets of whichever party is in power. As members so far have all identified, there is a need to level the playing field by giving greater resources to Parliament for it to scrutinise the budget of the Government.
As in previous years, the Finance Committee's membership has seen some turnover during the year, so I am delighted to see that two now former committee members from the Labour Party have joined us for this morning's debate. I hope that Jackie Baillie is, in her speech, on form as fine as I hear she was on last night. News of the Labour Party festivities spread to the Conservative floor very quickly this morning. I look forward with interest to her speech as, I am sure, does everyone else. Mr Swinney is clearly very excited about Jackie Baillie's contribution.
That has brightened my day.
John Swinney may wish to invite Jackie Baillie to the SNP shindig, which is this evening I believe, in which case she will need to miss the Conservatives' one.
Today's report considers only 2010-11, but we are missing the point if we consider the issue only in the context of 2010-11. The Finance Committee convener mentioned the strategic budget inquiry that we conducted earlier in the year. Yesterday's debate on the pre-budget report touched on many of the broader issues that shape the budget. In effect, if we do not consider this year's budget in the context of the years ahead, we will fail to do justice to the subject at hand.
I can summarise the Government's view as being the supertanker argument. The Government is beginning to turn around the profile of public spending in Scotland and, having slowed the rate of growth, it will be prepared for reductions in the future. Whether or not we take that at face value, it requires us to take on trust that the Government is preparing to take the tough choices that will be required in the years ahead.
The point that I made yesterday—that just because this is not a spending review year does not mean that we should avoid the need for strategic decisions—is still apt. We are talking about a possible £3.6 billion in real terms coming out of the Scottish Government's budget by the end of the next parliamentary session. That will require significant restraint and it will require that difficult decisions be taken.
The cost pressures that have been raised by the subject committees range from concessionary fares, which were debated last week in Parliament, to equal pay in the NHS, which was raised by the Equal Opportunities Committee. That committee talked about the need to quantify the exposure on equal pay. That is a good example of a cost pressure. Additional resources that will go towards meeting liabilities that have been incurred will not lead to better health outcomes, but will just redress inequalities that arose in the past. That is an example of a cost pressure that does not do anything to improve a service, although it performs a necessary correction.
The Health and Sport Committee raised the issue of inflation in the NHS. That committee quoted the British Medical Association, which takes the view that 1.5 per cent increases are required simply for the NHS to stand still. That coincides with the deflator that is being used in this year's budget. It strikes me that we need to stand back and take a more active view of how we manage cost pressures within the NHS, as within other parts of Government. A significant part of the cost pressures arise through the wages bill. There are also technological advancement and rising public expectations. However, simply to accept that it is inevitable that inflation in the NHS must run ahead of general inflation is to abdicate responsibility for trying to maintain costs and deliver best value within the health service.
The Economy, Energy and Tourism Committee raised a point that was evident in the Auditor General's report, which is that the scale of the likely reductions in spending is so great that it will simply not be possible to address them by efficiency savings alone. It is worth commending that committee for a thorough report, although I cannot tell whether that was due to Mr Whitton's last-minute appearance at committee. It was a good report that helpfully considered in detail the longer-term pressures on spending.
On the broader issue of efficiency, the latest determination for Scottish Water, which is one of the few areas in the budget that is reducing in 2010-11, shows an expectation of a 14 per cent efficiency on capital. The expectation on capital spending that the Scottish Futures Trust has been given is to deliver 3 per cent efficiency. That recalls evidence from Joe Armstrong in the strategic budget inquiry, about the possibility of extending the regulatory regime, or for some form of the regulatory regime in the water industry to be extended more broadly throughout the public sector in order to manage costs. That idea is worth serious consideration as we try to manage costs downwards.
Mr Swinney mentioned the Glasgow airport rail link as an example of the difficult capital budget decisions that the Government has taken. However, in paragraph 124 of the Finance Committee report, the committee unanimously agreed that that was a "comparatively small example" of dealing with the challenge. The recommendation in paragraph 126 for setting out in detail the indicative capital budget for the next 10 years to show where the pressures are and, as far as possible, the expectations of Government for the size of the capital budget, would greatly help people in assessing impacts. It would also, perhaps, go some way towards reassuring Mr Rumbles about the Aberdeen western peripheral route, which is a project that the Conservatives very much value.
It is disappointing that the Economy, Energy and Tourism Committee did not appear to get the level 4 information that had routinely been provided to it in previous years. The Finance Committee was right to ask for level 4 information to be routinely published. I know that the Government is not necessarily keen on revisiting that subject, but that would aid scrutiny in the years ahead.
I am not convinced that the budget as it stands does enough to deal with the economic situation. We all accept that the Scottish Government's budget cannot deal with the recession in its entirety, but there is a need to demonstrate how the budget's economic impact will be maximised. It is not simply about saying that we should give more money to the enterprise agencies because that is not the only way of boosting economic growth—if indeed it does that.
I hope that the cabinet secretary will consider the points that I have made and respond to them in due course.
Over the past few weeks, the Government's refrain has been that £814 million has been cut from the 2010-11 budget by Westminster. Specifically, that was the First Minister's refrain last week. We know that approximately half that amount is the result of reprofiling of expenditure; the Scottish Parliament information centre report clearly indicated that, as the Finance Committee has done in its work. We also know that part of the reduction has been the result of decisions that the Treasury has taken.
However, there is something unacceptable in how the Government has handled the budget, as was clearly shown in what the cabinet secretary said. I apologise for having made points to him from a sedentary position; I will make those points on my feet. He claimed that there had been an £800 million cut by Westminster, but when he was asked to explain why the enterprise budget was being cut next year, he said that that was the result of the Scottish Government's largesse last year and that it should take credit for the increase in the budget at a time of difficulties in the economy. The Government simply cannot have it both ways. Most people outside Parliament know that money cannot be spent twice. As much as the Government claims that that money should be spent twice, it knows that it cannot have it.
There is a genuine argument about the right time and the right way to bring forward expenditure from planned programmes to have an impact on the economy. We support having that argument, but we divide from the Government when it misrepresents the reality. Perhaps the cabinet secretary wants to make a point about that. It does not take much to have a genuine debate about the right time and the right way to spend capital.
I want to make a point about the enterprise budget. Full and proper assessment of that budget demonstrates that a number of programmes have been transferred from it to other organisations, which has resulted in some of the decline in that budget. In addition, capital expenditure has been brought forward and is now being paid back. Finally, at the Government's request, and in response to the enterprise network reform, Scottish Enterprise and Highlands and Islands Enterprise have reduced their operating costs. I thought that the Scottish Liberal Democrats' objective was to deliver greater operational efficiency in the public sector.
It is curious that Skills Development Scotland has more staff now than it had when it was established as a breakaway organisation from Scottish Enterprise. The Government has never explained that.
The cabinet secretary cannot simply get away with saying that it is just about reprofiled capital expenditure going back, because the enterprise policy and delivery line has gone down by £77 million, £35 million of which represents the capital acceleration decrease as a result of reprofiling. There is no explanation about why money for enterprise support for businesses has been reduced by £40 million while the country continues to be in a recession. It is no surprise that the business community in Scotland has expressed significant—indeed, unprecedented—concerns about the scope of the Government's budget.
The totality of the reprofiled expenditure in the economic recovery plan is approximately £200 million of an overall Scottish budget of £30 billion, as the convener of the Finance Committee said. That is not a proportionate response to the "economic storm" that has hit Scotland, to use the cabinet secretary's description of the situation.
The pre-budget report of last week, which we debated yesterday, does not necessarily help us to see a clearer picture. The Government has put off decisions into the medium term, like a sadistic dentist who promises a little bit of pain now but significantly more pain in the future. The Scottish Parliament is not able to sniff more gas to offset that, but regardless of what is said at the Christmas parties of the respective parliamentary groups this week, we must make decisions now about how we establish the Scottish budget going forward. That is why we have been arguing that more needs to be done to address one of the critical aspects of the recession in Scotland—the impact of unemployment among young people.
The Government announced yesterday—in a regrettably complacent press release that said that
"there is absolutely no scope for … the slightest complacency"—
that we are doing better than any other part of the United Kingdom. However, the Government has not expressed concern about the fact that the claimant count in Scotland of people claiming jobseekers allowance is 45 per cent higher than it was a year ago and that the biggest element of that is young people. Colleges throughout Scotland are turning away as many as six times the number of young applicants that they turned away last year. There has been no adequate response to that. Neither has there been an adequate response to the fact that many businesses are still having real difficulty in accessing finance. It is simply not acceptable that, two years on, there is still no agreement between the Treasury and the Scottish Government. It is not a matter of apportioning blame between the two; it is a matter of finding ways of providing the kind of support that is required now.
We know that longer-term decisions must be taken in the budget, but in the 2010 budget, the decisions have been put off with regard to the highest-paid people in Scotland. Liberal Democrat research shows that, in the health service alone, 2,250 people are paid more than £100,000. Under the Government's approach, some of them are due annual bonuses of £75,000 in the spring. That is not sustainable expenditure, nor is it fair expenditure. The Government's response is, unfortunately, insufficient to address the pressures that have arisen as a result of the state of the economy and to support our business community.
It is also not taking an approach to the budget that would examine the right areas of expenditure into the medium term. As much as the PBR put off decisions, it is regrettable that there is no strategic long-term view in the Scottish budget. The Government is simply looking to the 2011 election rather than the 2010 election.
We now move to the open debate. Time is fairly tight, so I will not allow members to go more than a few seconds over their six minutes.
As this is the season of goodwill, I wish every member, their staff and everyone who works in the parliamentary estate a very merry Christmas and a happy new year. As I was unable to attend the debate on the pre-budget report yesterday afternoon, some of the issues in my speech may cross over into that debate. However, I am sure that the Deputy Presiding Officer will keep me in check in his customary fashion.
The Christmas spirit stops here, I am afraid.
Bah! Humbug!
The Finance Committee's report was an interesting read. I commend all members of the committee, as well as the clerks, for their efforts in producing the report. I am sure that there were some lively debates in the committee, particularly around the Glasgow airport rail link, which has been touched on already this morning. The three options that were proposed by the committee highlight the fact that there was no consensus on that project continuing.
If there is no consensus, why does Stuart McMillan think the big six business organisations have all condemned the SNP's decision?
As I said, there was no consensus. On page 21 of the report, we are told that three different proposals were made by three different members of the committee, none of which was accepted by the committee. So, there was no consensus in the Finance Committee. Much has been said in Parliament and outwith Parliament about GARL, and I am sure that much more will be said about it in the future. However, the bottom line is this: the Scottish Parliament operates within a fixed budget from Westminster, and the Scottish Government of the day must put forward its budget as it sees fit and allow Parliament to decide on it accordingly.
With that in mind, the Finance Committee highlighted a few things. It noted that the Transport, Infrastructure and Climate Change Committee did not back the reinstatement of GARL; that not one subject committee proposed alternative spending proposals, despite politicians bleating to anyone who would listen that the budget is not the best for Scotland; and that all the subject committees acknowledge that the Scottish budget is being cut by the Westminster Government. That last is a key point, especially after last week's pre-budget report. The Economy, Energy and Tourism Committee's report states that members of that committee agree that there has been a 0.9 per cent reduction in the Scottish Government's budget from the Westminster Government.
I am not sure which budget Stuart McMillan is reading, but if he goes back to the figures, he will find that this year—2010-11—the Government has more money than it has ever had. That is a fact.
I direct David Whitton to the Economy, Energy and Tourism Committee's report to the Finance Committee, which says that there has been a 0.9 per cent reduction in the budget.
As the First Minister revealed at question time last week, Scotland's budget is to be cut by £814 million instead of the previously announced cut of £512 million. That figure comes from SPICe.
Will the member give way?
I have already given way twice. I need to make some progress.
Now that there is consensus in the Parliament that the Scottish budget is being cut by Westminster and is expected, whether Labour or the Tories win the Westminster election, to be cut for many years to come, one thing is abundantly clear: Scotland can no longer afford to be part of this bankrupt union. I am sure that the next knock on the Chancellor of the Exchequer's door will be not carol singers singing festive songs and looking for donations but the International Monetary Fund offering a handout. It is obvious that Gordon Brown and Alistair Darling are bankrupt of ideas on how to fix the mess that they have created. Well done, Mr Brown and Mr Darling. I actually have a tinge of sympathy for the chancellor, because he inherited an almighty mess. However, although he was left to deal with the financial disaster that was created by Gordon Brown, he added to it during his tenure.
I know that politicians are not known for their prophetic skills, but I have to query how Gordon Brown got it so wrong. In his last Mansion house speech, in June 2007, he came out with the following fantastic words:
"I believe it will be said of this age, the first decades of the 21st century, that out of the greatest restructuring of the global economy, perhaps even greater than the industrial revolution, a new world order was created."
He also said:
"I congratulate you Lord Mayor and the City of London on these remarkable achievements, an era that history will record as the beginning of a new golden age for the City of London."
This is a good one, as well:
"By your efforts Britain is already second to none … we are flexible, and in being vigilant against complacency, we must be, as I believe we are ready to become even more flexible."
Those words must stick in the craw of any traditional old Labour types on the benches—if there are still any there.
With the failure to accelerate capital spending, the Scottish budget will suffer. More importantly, so will jobs. Putting in jeopardy 5,000 Scottish jobs is not a good legacy to take to the Scottish people in an election. A host of projects have been identified, but time is running short, so I will have to stop.
In the election in 2010, new Labour will have a terrible legacy to take to the Scottish people.
I have great respect for the Cabinet Secretary for Finance and Sustainable Growth, but he was talking illogical nonsense in his speech. He said that there had been no real-terms cut in the housing budget because the amount of money was the same over two years, only it was accelerated. However, he went on to stand that argument on its head by saying that there had been a real-terms cut in the overall budget because of that same capital acceleration. The fact is that without reprofiling, there is a 1.3 per cent real-terms increase in the budget for next year. That is not as much as we have been used to, but it is still significant and—unfortunately—better than what we will get in subsequent years.
There are two additional factors that make the budget slightly better, other than that 1.3 per cent increase. First, as the Finance Committee points out on page 8 of its report, end-year flexibility to cover the £128 million reduction in the health capital budget will be added to the budget later on. Secondly, the inflation level is, at 1.5 per cent, less than was anticipated at the start of the spending review, when it was predicted that it would be 2.7 per cent. I accept that that 1.5 per cent does not cover all areas, but it is still better and—as the Finance Committee's convener reminded members—the committee has asked for the Scottish Government to analyse the inflationary pressures that are anticipated in different areas of the budget.
Additional capital acceleration also featured in the cabinet secretary's speech. I will not repeat all the arguments that I and others used in yesterday's debate, although I remind members that I pointed out the rather large list of projects that the anticipated £300 million is going to pay for. I also pointed out that Alex Salmond had a rather different list from John Swinney's.
The more important point in relation to today's debate, however, is that a great deal can be done to support the economy within the budget over which the cabinet secretary has control. At the Finance Committee on Tuesday, the cabinet secretary said that the £300 million that he wanted from capital acceleration would make the difference between growth and recession. If he really believes that, it is quite astonishing that he has not done more in his own budget to support areas that would boost economic recovery. The cabinet secretary says that that is one of the two main objectives of his budget, but it does not seem to be borne out by the evidence in the budget document.
The Finance Committee, on page 12 of its report, states:
"the Centre for Public Policy for Regions stated that the main areas cut in this budget are the capital and revenue areas most usually linked to economic development. While many budget lines contribute to economic activity, none of the budget lines directly related to economic development initiatives have risen compared to the 2010-11 plans set out in Draft Budget 2009-10."
I will make two points about that. First, it is amazing that after this year of economic turmoil, there have been no changes to the economic budget lines. Secondly, the point is made that the cuts are significant. The Finance Committee goes on to point out that, even after accelerated capital is stripped out, there is a real-terms reduction of £16.7 million in the enterprise agencies' budget line. The Scottish Council for Development and Industry's useful submission to the Economy, Energy and Tourism Committee states:
"Every £1 million invested by Scottish Enterprise generates £5 million for the Scottish economy".
The Skills Development Scotland budget is being cut by 4 per cent in real terms, which is a real concern. Labour emphasised modern apprenticeships in the budget last year, and we will do so again this year. There is no budget line for the 7,800 apprenticeship places that we secured last year, and that issue must be addressed before the budget bill reaches its final stages.
I will not talk about GARL, as my colleagues have already done so. I will, however, mention in passing that the tourism budget has been cut by 11.5 per cent. I also remind members of the section that David Whitton quoted from page 44 of the Economy, Energy and Tourism Committee's report, which is in volume 2 of the Finance Committee's report. The EETC says that, based on universal evidence, it does not believe that the proposed budget is the right one for the economic challenges ahead.
The other main objective of the cabinet secretary's budget is protection of front-line services. When the cabinet secretary was asked about that at the Finance Committee's meeting in Glasgow, he said that
"a front-line service is a service that has an impact on the lives of individuals".—[Official Report, Finance Committee, 9 November 2009; c 1661.]
That is a very broad definition, and, even more significantly, it is difficult to ensure that that happens, because of the massive budgets that are handed out to health and education authorities. Such an objective is very difficult to track: the Education, Lifelong Learning and Culture Committee was particularly concerned about that in relation to schools—a good example of an area in which the Scottish Government has no mechanism for protecting budgets. As I said to the Cabinet Secretary for Education and Lifelong Learning, it needs to try to develop such a mechanism very quickly.
Of course, schools are part of local government budgets, and the committee makes several observations about that, mainly pointing out that the headline 3.1 per cent real-terms increase in revenue for local authorities is not all that it seems because of budget transfers. It would be good if that was made more explicit in the budget documents.
I am running out of time, but I want to comment on two other sections. On strategic budget issues, the committee makes many recommendations, including that the Government should prioritise its capital budgets. I support that. Finally, in the section on development of budgetary information, the committee says, among other things, that there should be a greater connection between outcomes and budgetary choices. That is true across a range of areas, but I highlight my particular concern about the 2012 homelessness target. The budget must be focused on delivering that outcome. Let us look at the housing budget and its distribution, particularly because Edinburgh has the greatest shortage of social rented housing.
I add my thanks to the Finance Committee's clerks and adviser for helping to see us through the production of our report on our examination of the draft budget.
The Scottish Government's draft budget for 2010-11 is welcome news for Scotland after the disaster that was the UK chancellor's recent pre-budget report, which has failed families and businesses throughout Scotland. Alistair Darling has damaged our economy by refusing to continue capital acceleration and by failing to introduce measures to support our industries, such as tax relief for research and development of computer games. In stark contrast, the Scottish Government's draft budget for 2010-11 delivers the best deal for the people of Scotland in the face of the largest-ever reduction to the Scottish block grant.
Despite all the times when the Labour Party has argued to the contrary, it is clear—the fact has been published in SPICe—that next year's Scottish budget has been reduced by more than £800 million.
I am grateful to Mr FitzPatrick for giving way. I am not so grateful to him for continuing to repeat the nonsense about an £800 million reduction. Surely he accepts that it is because the Government is having to repay accelerated capital that it has already spent.
Had Mr Whitton waited for the next paragraph of my speech, he would have heard me address that, but I let him intervene because he was eager to do so. I will carry on and answer his question in my next paragraph.
The reduction is a direct result of the cut by the Westminster Government of nearly £500 million from Scotland's expected budget and the chancellor's refusal to allow continued capital acceleration of £350 million, which puts thousands of jobs in Scotland at risk. Those two decisions by the chancellor and his Westminster Government have resulted in an £800 million cut to Scotland's budget just when we do not need it. It comes at exactly the wrong time—when we are trying to get out of recession.
John Swinney has without doubt brought the best possible budget to Parliament, given the reduced funds that are available and the limited fiscal powers that we have at our disposal here in the Scottish Parliament.
As a point of fact, is the 2010-11 budget bigger than the 2009-10 budget?
The budget that we have is a draft budget. It is more than £800 million less than the budget that would have been had the chancellor made the correct decisions not to cut Scotland's budget by nearly £500 million and not to refuse to allow us to accelerate £350 million of capital.
SNP initiatives such as the council tax freeze, the small business bonus and removal of tolls from the Tay and Forth bridges will continue to support families and businesses through Labour's recession. The fact that not one alternative spending proposal was made by any of the committees is testament to the fact that John Swinney has wrung every last penny from our Westminster block grant. Even Mr Kerr could not bring himself to lodge any amendments at the committee stage. His tacit consent to the draft budget is most welcome.
In the early days, there was a modicum of disagreement on how to deal with the budget reduction, and there was an awful lot of huffing and puffing from the Labour Party on GARL. The decision to cancel GARL was regrettable, but we are in difficult times and it was the right decision, given that no serious alternative cuts have been proposed that would allow that project to go ahead. I say that there were no serious alternatives because the proposal to reinstate tolls on the Forth and Tay bridges to pay for GARL was met with disbelief by my constituents and those of my colleagues Shona Robison and Tricia Marwick.
The silence from the Labour list members of North East Scotland and Mid Scotland and Fife spoke volumes; unfortunately none of them is here to confirm whether they would have been prepared to sell out their constituents on this issue in the same way that Glasgow's Labour MSPs were prepared to sell out Glasgow by voting to push through the unwanted Edinburgh trams project at a cost of £500 million.
There has also been some confusion on the Labour benches about accelerated capital. Of course, the whole issue is now somewhat academic after the chancellor snubbed Iain Gray in last week's PBR; however, the fact remains that brought-forward capital means that schemes that are earmarked for future budgets can start early. Schemes such as GARL that are not in the budget cannot be brought forward without our cutting something else. No matter whether it happened in this year's budget or in future budgets, a large cut would have to be made somewhere to reinstate GARL and, as we have seen, the Labour Party has failed to put any viable alternative on the table.
Just for clarity, is Joe FitzPatrick saying that if the accelerated capital had been obtained from Westminster he would have supported GARL's reinstatement? That is what he seems to be suggesting.
My point is that that could not have happened. Because GARL has not been included in the budget, it cannot be brought forward. Something cannot be brought forward without something else being cut. It does not matter whether the cut is made in this year's budget or future budgets; we have to be able to say what we are prepared to cut, and the Labour Party has singularly failed to say what it wants to cut either this or next year to allow GARL to proceed. Brought-forward capital is not new capital; because it comes from future budgets, we have to say what has to be cut in those budgets. As I have said, the Labour Party has failed to do so.
We are making progress. All the subject committees have recognised that the Scottish Government's budget is being reduced and have supported the draft budget without proposing any amendments. Given the difficult circumstances, the Scottish Government and John Swinney have done the best possible job. They have taken the difficult decisions to protect front-line services and sustain jobs, and I look forward to the whole Parliament's support for the budget in the new year.
It will come as no surprise to members that this morning I will concentrate on health spending; however, I do so as a former member of the Finance Committee, where, I am pleased to note, consensus appears to have broken out in my absence.
First, though, I must correct certain scurrilous remarks that Derek Brownlee made. My contribution to the Labour group's night out was indeed very minor when compared with the guest appearances of John Swinney and Nicola Sturgeon and, of course, our very own James Kelly, who—with physical enhancements—appeared as Big Eck.
Let me be serious for a minute. Before I turn to the 2010-11 budget, I will briefly consider the budget for this financial year. Many members will be familiar with Audit Scotland's report "Overview of the NHS in Scotland's performance 2008/09", which makes it clear that NHS boards are having to make more than £175 million in recurring savings and £25 million in non-recurring savings. In other words, they will have to make £200 million of savings simply to break even this year. By any stretch of the imagination, that is a substantial amount of money. The report goes on to say:
"This presents a significant challenge for many NHS bodies, and their auditors have stated that it will be difficult for some to achieve the required level of savings without any negative impact on the services they provide."
So front-line services will be affected.
Although I welcome the Scottish Government's commitment to protect front-line services next year, any such commitment needs to be real. Frankly, if it is unable to protect such services this financial year, one is left to question whether its prospects of doing so next year are realistic. The Government also has to spell out what it means by "front-line services". Do they include clinical staff such as nurses and doctors? What about cleaners and porters, who also do vital jobs? Does the Government accept that reducing staff has a direct impact on services?
The Finance Committee concluded worryingly that there is little evidence that front-line services are being protected and said that the budget document contains no analysis of the definition that was provided by Mr Swinney, and no indication of how it had been applied and services prioritised. That view was supported by other subject committees, which emphasised the difficulty of ensuring that—and tracking whether—this prioritisation of front-line services happens at all.
Let me illustrate that with what we know is going on in NHS Greater Glasgow and Clyde, which has still to produce its cost savings plan for 2010-11. However, its 2009-10 plan describes the cost savings challenge that it faces in order to secure a balanced financial outturn and identifies £55 million of savings that it will have to make simply to break even. Its list of cost savings includes several service redesigns that have no supporting data that demonstrate that they are real efficiency gains. It includes traditional mechanisms such as vacancy management, which is short term and not a recurring efficiency, and cuts in discretionary spending. Again, none of those provides analysis of the impact on front-line services. When we take a closer look, no less than 15 of the 20 proposed savings are identified as having staffing implications. In a labour-intensive service, it is difficult to see how such savings will not impact on front-line services.
We in the Labour Party highlighted the lack of transparency over NHS savings last year. It is disturbing to see that that lack of rigour continues. Little output information has been provided to validate efficiency gains. Service reductions are referred to as "efficiency savings", and savings are being used to balance the books, not for reinvestment. I have to say that 2010-11 looks like being a very tough year for health boards, too.
I have listened to some of the contributions and, despite best wishes for Christmas and the new year, the SNP still has its single transferable excuse, which is to blame someone else—in this case, it is Westminster. Unfortunately, the facts in respect of health services do not bear that out. The SNP is responsible for giving health its worst budget since devolution, as is clear whether we look at it in cash terms or in real terms. We need to go back to the days of Michael Forsyth to match how bad the current allocation is. This year, the real-terms increase has been 0.9 per cent in the health line alone, if capital acceleration is included. However, if that is taken out of the health line, the increase reaches an all-time low of 0.1 per cent. Last year, the NHS got 2.5 per cent, and we can see evidence that it struggled.
We need to compare that with the NHS in England receiving a 6.7 per cent increase year on year for the same period.
I am not challenging the figures that Jackie Baillie has used, but is one of the issues not that the per capita spend on health in England is still lower than it is in Scotland, so Barnett consequentials will always be lower until we reach parity on the per capita spending?
It is true that the per capita spend in Scotland continues to be higher, although the gap is narrowing, but we have not delivered the outcomes that we would expect from that increased health spending, and there is a lack of the transparency that would enable us to understand why that is the case.
Of course, Mr Swinney might seek to contradict me, but he might be less willing to contradict the British Medical Association, the Royal College of Nursing or Unison. The BMA said recently that there has been a reduction in front-line staff. The head-count increase that has been so lauded by the Cabinet Secretary for Health and Wellbeing actually masks a cut in the number of medical posts. Figures show that the number of nurses dropped by 2.1 per cent and the number of consultants by 0.2 per cent, and that there was a staggering 13 per cent drop in accident and emergency specialists.
The member will have to conclude, I am afraid.
That is not a record to be proud of. I ask the cabinet secretary to reflect further on the needs of the NHS.
This is the third year of the SNP Government's administration, and there can be no doubt that the budget bears its stamp. It is no longer based on choices inherited from the previous Government or ministers, or hangovers from earlier decisions. The budget represents the SNP's choices, priorities and philosophy.
Major policy failures mark and mar the record of the SNP Government. Whether it is the dismal failure on teacher numbers and school buildings, the struggle to keep up the pledge on the 1,000 extra police officers, the broken manifesto promises on student debt, or the resources that have been wasted on the Scottish Futures Trust and the national blether, we and the Government know that those monumental failures are SNP failures of conception, delivery and promises made to the public at the last election.
Of course, the SNP says that it is all the fault of Westminster and the Labour Government cuts. I believe that the Prime Minister and the Labour Government bear a major responsibility for the financial crash, the inadequate regulation that contributed to it, and the inaction while house prices and debt soared to unsustainable levels. Liberal Democrats warned repeatedly about those things, but for all the parallel universe that is occupied by Stuart McMillan and his colleagues, we and others in the chamber recall Jim Mather going round the rubber-chicken circuit of the business community calling for lighter-touch regulation. He seems to have forgotten something about that.
Alex Salmond and John Swinney want to have it both ways. If they had formed an independent Government, they would currently be imposing the swingeing, painful and, dare I say, deflationary public spending cuts that we see in Ireland. There would be no question of their demanding, in outraged terms, that Westminster bring forward investment from next year. The SNP Government must try to take responsibility for the fact that it is a Government, because accountability goes with that position.
I want to talk, in particular, about the Glasgow airport rail link. I note the absence from this debate of the Minister for Transport, Infrastructure and Climate Change; it is not the first time that he has been absent from a debate on GARL. Since the debate on GARL a few weeks ago, it has become clear that, far from a reluctant John Swinney being forced to cut GARL from the programme, he in fact welcomed the cancellation of GARL.
Will the member take an intervention?
May I make a bit of progress? I will come back to the member, if I may.
It is true, of course, that the Minister for Transport, Infrastructure and Climate Change, Stewart Stevenson, was misguided enough to claim that Glasgow "luxuriates" in Government spending. However, it was John Swinney, rather than Stewart Stevenson, who made the decision on GARL and who refuses to discuss or reappraise the decision with anyone. He would not do so with me when I wrote to him asking him to look at alternative funding models, nor would he do so with Glasgow City Council, Strathclyde partnership for transport or the chamber of commerce, which pleaded with him to rethink the cancellation of that vital project. There is no lateral thinking, no imagination and no engagement. John Swinney, with his "Niet", has become the Nikita Khrushchev of the SNP Government.
Does Mr Brown support Iain Smith's move at the Economy, Energy and Tourism Committee to reinstate GARL, or does he agree with Mr Purvis, who abstained when the issue was moved at the Finance Committee?
Mr Kelly and Mr Whitton are well aware that, when those matters were discussed at the Finance Committee, the Liberal Democrats adopted a position—it is recorded in the Official Report—that was in support of GARL and critical of what had happened in that regard.
We must talk about the way forward on the issue. In that regard, I repeat my invitation to the Cabinet Secretary for Finance and Sustainable Growth to call a public or private round-table conference, under Chatham house rules or otherwise, to re-examine the future of GARL and associated issues, without preconditions. Let such a conference look at timescale and phasing, different funding models, such as that used for the Waverley line, and the potential for sharing.
Let it examine the benefits of associating GARL with crossrail, or a reduced crossrail, to circumvent and relieve the capacity problems at the two Glasgow stations and maximise the revenue stream from GARL.
Will the member take an intervention?
No. I will continue, if I may, because I have taken an intervention already.
Instead of a minority Government making an inexplicable, or at least unconvincing, decision on GARL, Parliament should and must achieve consensus on the matter and try to find a sustainable and better way forward. I return to the wise comments of the convener of the Finance Committee, who indicated at the beginning of the debate that there must be wider consensus on such matters looking forward to a budget for Scotland.
Let me turn to the justice budget. As members are aware, the Justice Committee is considering the Criminal Justice and Licensing (Scotland) Bill, one of the key proposals of which is to reduce the number of short-term prison sentences and replace them with effective community payback orders. The Government, to its credit, has provided worthwhile resources to improve and speed up the current community service orders. However, if the new policy is to work and command public confidence—though it is probably a matter more for future budgets than for the current one—it will require proper resources. It is regrettable that the 2010 budget appears to show a real-terms decrease of 3.2 per cent in the budget head for community justice spending and a decrease in the level of criminal justice social work grant. It is true that £6 million is promised to continue strengthening the community service system, but it is a peculiar way to budget to say in advance, before the budget has commenced, that that will have to be found from underspend in other areas. In fact, I have never before seen such a proposal in budgeting.
A wind of change is sweeping over many areas of our society, which has changed forever the privileges and standing of parliamentarians, bankers, public service broadcasters and many others. Jeremy Purvis talked about the issue of top public servants, who are not immune from that change; their roles, functions, accountability and salaries are increasingly under the same scrutiny as those of others.
The Government must reflect on all those matters and try to progress and adapt the budget so that it becomes a budget for Scotland that can command support across the chamber.
I echo the thanks to all who took part in the compilation of the report.
This is the first time that I have seen through a budget process as a member of the Finance Committee. It was an interesting time at which to join the committee. As the report says:
"a number of factors have meant that the Draft Budget 2010-11 is significantly different from the original plans."
Under the good stewardship of the committee's convener, Andrew Welsh, our budget scrutiny was an interesting operation.
In the main, the Finance Committee and subject committees' recommendations are requests for further information and not recommendations that seek to point the Government in different directions from its aim in drafting the budget. The information that committees seek will become increasingly important as we move forward. As the cabinet secretary said, our budgeting in the years to come
"presents a major and unprecedented challenge".
Audit Scotland made it clear in its analysis that
"by 2013-14, the gap between planned Scottish Government spending and the budget available could be between £1.2 and £2.9 billion."
We are entering a time when public expenditure will prove increasingly difficult. As John Swinney said, that will probably be for
"the best part of 20 years".
Paragraphs 131 to 138 of the report indicate in no small measure the budget pressures that arise from the massive, and rising, costs of PFI and PPP. The report highlights
"PPP contracts for 2010-11 to be £820 million".
The Scottish Government will have much less room for manoeuvre in future years.
Does the member agree with the comments that Sir George Mathewson made at yesterday's meeting of the Economy, Energy and Tourism Committee, that PPP schemes have been labelled as expensive and dishonest?
I agree absolutely with that. I have said that many times in the Parliament.
I turn to subject committee reports to the Finance Committee. Interestingly, there were no calls for alternative spending proposals; the general view is that the Government is on the right track. For example, the Local Government and Communities Committee said that the Government
"should continue to consider ways of maximising its expenditure on tackling fuel poverty in ways that help those most in need."
That is not a proposal to alter spending plans; it is more of a plea to keep on doing good work.
In considering prison running costs, the Justice Committee sought an assurance from the Government that it keeps costs under review. Again, that is not a proposal but a plea to keep an eye on things. Surely any Government would seek to respond positively to such a scenario.
We have heard a lot about economic growth—of course, that is the objective of Mr Swinney's work. The Economy, Energy and Tourism Committee noted that the freezing of the budget for internationalisation activities in the enterprise agencies was a cut in real terms; we heard a lot about that in the Finance Committee and in this morning's debate. The Economy, Energy and Tourism Committee questioned, as is its right, whether the correct decisions had been taken and asked for a review of the budget line. If borrowing powers and the normal levers of economic and fiscal management were available to us, we could inject funds into that area and many others, which would help to drag Scotland out of recession. As the convener said, we are dealing with a fixed pot of money; decisions have to be made about where best to spend the money.
I think that it was Malcolm Chisholm who talked about a reduction in the budget for VisitScotland and noted that the Economy, Energy and Tourism Committee had asked for that budget line to be reviewed. As I said, there is a fixed pot of cash.
Homecoming brought record numbers of visitors to Scotland. It would be good if we could build on that and see additional results, but it is simply not possible to create money that does not exist.
Will the member give way?
No, thank you.
I turn to the Economy, Energy and Tourism Committee's recommendation that the Scottish Government consider using the additional £10 million for renewable energy projects for a successor to the wave and tidal energy support scheme. In addition, the committee is looking for a commitment from the Government that moneys will continue to be provided on a year-to-year basis. The Government has already shown leadership in the promotion of renewables with the saltire prize. The UK Government seems only now to be catching up on that.
Will the member take an intervention?
No, thank you.
Flexibility is important in ensuring that things keep moving forward. Locking the country into fixed spending in future years does not provide the flexibility for us to deal with the very big issues that are coming up. I only wish that Westminster would be a bit more flexible. I hope that the cabinet secretary and Iain Gray, leader of the Labour group, will keep lobbying Westminster for further acceleration of cash. Such fiscal stimulus is absolutely required. As we heard yesterday, we seem to be the only country in the G8 that is not looking for any kind of fiscal stimulus.
I know that I have to finish, Presiding Officer. The absolute fact of this budget process, which was reflected by the Finance Committee, is that no other committee proposed an amendment to the budget. No one brought forward an amendment on GARL, either—we are hearing a lot of empty rhetoric about GARL. There is no seriousness there. No alternative to the cabinet secretary's proposal has been suggested.
I welcome the opportunity to take part in the debate. As others have done, I thank the clerks and committee members for the work that they put into producing such a comprehensive report on a very important subject for the Parliament.
There are many great traditions in this Parliament, such as First Minister's question time and time for reflection. The pre-Christmas debate on the Finance Committee's report on the draft budget is another. Given that I am a former member of the committee, I could not resist coming back to take part in the debate before we break up for Christmas.
The other reason why I wanted to take part in the debate was to explode the myth that we heard from Alex Salmond last week at First Minister's question time, which has been repeated by SNP members this morning—that the budget has been cut by more than £800 million. The fact is that, in cash terms, the budget has increased by £943 million to £35.5 billion. That is a record budget under devolution. The Government has also had at its disposal over the spending review period £1.5 billion. In addition, as Malcolm Chisholm said, the gross domestic product deflator figure is less—at 1.5 per cent—which potentially provides an additional value of £880 million. With all those assets at its disposal, the Government should focus on how to get the best out of the budget, rather than bleat and complain to Westminster.
It belittles the position of the First Minister for him simply to say that the capital acceleration that was spent in a previous year is now a budget cut. He is a bit like a kid who eats his ice cream before dinner and then, when it comes to the ice cream course, wants to eat somebody else's. He cannot have it both ways—that is just not good enough.
There are clearly some black holes and gaps in the budget. At the Finance Committee's meeting in Glasgow, when the cabinet secretary was questioned about the referendum bill, it was clear that there are no lines in the budget to cover the £9 million for the referendum.
In the justice arena, there are flaws in the budget process, to which Robert Brown has alluded. The Labour Party is opposed to the SNP's policy of introducing a presumption against short-term sentences, although I do not want to dwell on that today.
On the Government's attitude to the Criminal Justice and Licensing (Scotland) Bill, I believe that there are flaws in the financial memorandum and the budgeting. The financial memorandum stated that take-up of community service orders would be between 10 and 20 per cent, but it gave no evidence to back that up. Just short of 7,300 prisoners are received on sentences of six months or less. If the bulk of them were not to go to prison to serve their short-term sentences, the cost would be in the region of £22 million a year, which has not been budgeted for. As Mr Brown said, in next year's budget, the money will be found from underspends, but we hear continually how much pressure the budget is under. It is bizarre at least to say that the money will come from underspends. That is a black hole and that does not represent a good approach to budgeting.
We heard from the cabinet secretary about increased police numbers. In recent weeks, he has spoken about what he regards as an excellent local government settlement. However, Strathclyde police authority reckons that its budget for next year will have a £16 million shortfall as a consequence of pressures on local government budgets, whose effect we have seen in recent weeks in the collapse of some SNP education policy commitments. Police boards will experience more pressure to deliver police numbers at the front line and to police effectively overall, because backroom services will also be under pressure.
Will the member take an intervention?
Yes.
Briefly, Mr Brown.
Does James Kelly accept that the police budget has a structural deficit because of continuing effects of the existing pay settlement?
Such problems in the budget must be addressed, but the cabinet secretary must take forward overall justice issues as the debate develops.
I realise that I am pressed for time. Labour's priorities in the budget debate—GARL, apprentices and increasing concessionary travel for people who receive the disability living allowance—are important and show that Labour has appropriate values. Budgets are about not just numbers, but values. The process has shown that the SNP's budget has gaps. As we move into 2011, those gaps will become more focused.
The member must finish now.
I look forward to exploring those issues as we move through the process.
I will concentrate on the proposal by the Health and Sport Committee, of which I am a member, that spending on hospital consultants' distinction awards should not increase by £2 million as planned but should be capped at £28 million, which is itself a fairly massive expenditure. The recommendation is on page 22 of the Finance Committee's report. This is perhaps the first time that a subject committee has recommended a decrease in the budget that covers its remit.
When Jon Ford of the British Medical Association gave evidence to the Health and Sport Committee, he described how the distinction award system came about. He said:
"When the NHS came into being, those who were charged with paying consultants had to address the fact that, at that time, the very top consultants earned huge amounts of money in private practice. When they were subsequently translated into the NHS, a question arose as to how to replicate the range of professional incomes and give a small number of doctors very high levels of reward when there was no market to determine who should get them. The distinction award system therefore had clinical excellence as its main criterion. A few consultants were permitted to earn large sums in the NHS and they were peer reviewed as to clinical excellence."—[Official Report, Health and Sport Committee, 7 October 2009; c 2280-1.]
The then Minister of Health, Aneurin Bevan, more prosaically described the exercise as stuffing the consultants' mouths with gold to attract their support for the fledgling state service.
However, things change. The consultants who retire today were scarcely infants when the scheme was introduced more than 60 years ago. The BMA says—rightly—that today's awards are bestowed for virtues such as leadership and service contribution, as well as clinical excellence, and that the selection methods have been refined and made fairer. However, other things have also changed. In particular, other groups of health workers—especially nurses—exhibit leadership and clinical excellence and make an enormous service contribution. Is it fair that their contribution goes financially unrewarded? Do we still need to stuff consultants' mouths with gold?
Something else has changed, too. Back in the 1940s, only the very top consultants' pay was augmented by a distinction award. Today, even though the proportion of all consultants who receive an award is quite small, 50 per cent of all consultants who are retiring receive one. That is because awards are usually given in the last few years of working life. As a consultant's pension is based on final salary, the benefit of an award goes on for the rest of his or her life, although the original award money is recycled on retirement for the next consultant coming along. That means that the overall cost to the taxpayer is much more than the £28 million or £30 million indicated in the draft budget, but by how much no one is able to say.
Some argue that a scheme that distributes £28 million to about 500 health workers, all of whom earn around six-figure salaries or more, is offensive and unfair; I tend to agree. Indeed, Dr Linda de Caestecker, director of public health for NHS Greater Glasgow and Clyde, has gone further and suggested that all high earners in public service should accept a pay cut of 5 per cent, a proposal that has my support and which I would willingly accept for myself as an MSP provided that it was part of a general settlement and not a meaningless, individual gesture. It would help to preserve front-line services.
Apologists for the continuation of distinction awards say that they are necessary to prevent a mass emigration of top talent, but it is unrealistic to suppose that many 50-something consultants would up sticks and leave the country in which they have so many roots, or indeed that many better-paid jobs would be available to people of that age in other countries. I do not suggest, however, that the scheme should be scrapped immediately. Academic general practitioners, for example, come under it and the difference between an ordinary GP's pay and that of a university lecturer is so great that it would be impossible to attract talented GPs into university departments without some sort of subsidy. There may be other similar situations in which an award is justified. It is possible that other health workers should come under the aegis of the scheme.
Of more importance is the relationship between the scheme in Scotland and what happens south of the border. If hospital consultants in England continue to be eligible for pay enhancements that can add more than £75,000 to their basic salaries, and those in Scotland do not, it is easy to see that young consultants might seek their first jobs in England, knowing that there they have at least a chance of receiving such largesse later in their professional lives.
I support the Health and Sport Committee's recommendation to cap the money going into the scheme.
I support Ian McKee's general thrust, although I believed that he wanted to remove distinction awards completely. Does he believe that spending £30 million on bonuses for consultants is the right priority for the NHS in Scotland, when only £21 million is being spent on tackling HAIs?
No, indeed. Before Jackie Baillie's wise intervention, I was about to say that after capping the scheme this year, our Government should open negotiations with the English Department of Health with a view to parallel reform in a big way, because such payments must be a drain on its finances, too.
The bottom line is that a scheme that rewards some of the highest paid workers in the public service, let alone in the NHS, with awards ranging from around £32,000 to £76,000 a year, which are not taken away even if the award criteria are no longer met, has no place in 21st century Scotland and is an anomaly that should no longer be tolerated.
The Transport, Infrastructure and Climate Change Committee was opposed to the cancellation of the Glasgow airport rail link without a parliamentary debate being held, given that the project had been the subject of an act of the Scottish Parliament. It was said that GARL is not in the budget, but it is in the budget. The Government has not lodged an amendment to remove the project from the budget in this financial year; GARL is not in the draft budget for the next financial year.
The Transport, Infrastructure and Climate Change Committee believes that without further specific details about the information and advice on which the decision was made to cancel GARL, the project should not be cancelled. The committee was clear that it was in opposition to the removal of GARL. The time at which that will come forward for consideration by the Finance Committee is at stage 2 of the budget bill. I say to Robert Brown that abstention is not normally the method that is chosen to indicate support for a capital project. I hope that the Liberal Democrats will support the reinclusion of GARL when the time comes.
Des McNulty will be aware that, in his comments on the Transport, Infrastructure and Climate Change Committee, he set out in almost precise terms the position that was taken by the Liberal Democrats in the Finance Committee. Does he accept that and will he clarify the record in that regard?
The Liberal Democrats can clarify the record by the way in which they cast their vote at stage 2 of the budget process.
In the Finance Committee's report, the cabinet secretary is quoted as saying that
"the local government budget shows an increase in the budget that allows local authorities to invest in their services."
He also stated that the Scottish Government agreed
"with the Convention of Scottish Local Authorities that the shared priorities that we are delivering through the concordat and single outcome agreements should remain at the heart of our delivery programme."—[Official Report, Finance Committee, 9 November 2009; c 1642, 1638.]
If the money to sustain and to invest in improving services is being provided and the concordat ensures that national priorities will be delivered, why have post-probationary teachers been abandoned? Why is the number of teachers 2,000 lower in 2009 than it was in 2007? Why has the pipeline of new school buildings been emptied? We must wait at least two years before any new proposals begin to be brought forward. Why is teacher training to decimated, even though the Government cannot explain to universities and colleges how the measure will be put into effect and what financial consequences it should have for them?
Why has the Government's free school meals pledge been watered down, as it undoubtedly has? Why has the extension of care for the pre-fives been withdrawn? Why have kinship carers been let down? Why has Mr Russell, who apparently thinks that everything in education is hunky-dory, set himself a new pass mark of 20 per cent for reducing primary 1 to primary 3 class sizes and indicated to the Convention of Scottish Local Authorities that he is willing to abandon almost every other SNP pledge in return for a fifth of what was originally promised on class sizes? If everything is okay and the Government has provided all the money that is needed for local authorities to do what the SNP says they should do, why are things going wrong on the ground?
We did not get much from Mr Russell's pantomime performance yesterday, but the situation is serious. The administration in Edinburgh, which is a Lib Dem-SNP coalition, is proposing reductions in school staffing and cuts in school budgets of 2.5 per cent—not just next year, but each year for the next three years. Rightly, Mr Swinney points to financial pressures on budgets arising from the recession and the consequences of the rescue of the banks, from which Scottish institutions benefited more than most. However, in England, which is faced with exactly the same financial pressures, every school will benefit from a real-terms increase in funding of 0.7 per cent. Again, that has been promised not just for one year, but for three years.
In reality, the SNP is in denial about what is happening in Scottish education. Not just in Edinburgh, but throughout Scotland, money has been stripped out of schools and services that provide support for children and young people. The point applies not only to school budgets. Youth work budgets, pre-fives budgets, social work budgets linked to children and child protection budgets are all under greater pressure than other local authority budgets and, even more important, other budgets over which the Government has direct control.
Mr Swinney says that he has provided the money for services to be maintained and invested in and that the concordat is delivering services. What measure of truth will people find in those statements when they see schools in their areas losing teachers, not able to afford jotters and suffering because of decisions that Mr Swinney made when he put in place the concordat and decided that national educational priorities should be delivered by local authorities, without any levers to ensure that that happened? It did not happen, because Mr Swinney made the arrangements that ensured that it would not. The fault lies fairly and squarely with him.
Stuart McMillan generously offered us all a merry Christmas and a happy new year. We reciprocate that positive message. Your immediate predecessor in the chair, Presiding Officer—the Presiding Officer of Christmas past—was less cheery: there was admonition from the chair about that cheer.
Mr McMillan's contribution went downhill quite considerably after those goodwill messages. He inhabits the sort of Walter Mitty world of economics that we heard about in yesterday's debate. He has a rather odd view of the world. For example, he believes that the £282 billion of cover for the Royal Bank of Scotland's assets could easily have been provided by an independent Scotland. That £282 billion is three times Scotland's entire GDP and, if it had been provided, would in effect mean that Scotland had defaulted. In that case, there would not have been the kind of comments that we have heard from every SNP speaker this morning.
The same argument was rehearsed yesterday in the Parliament. Mr McMillan's colleague, Jamie Hepburn, intervened on me yesterday with a question that was slightly at odds with what Mr McMillan said about an independent Scotland being able to provide all that cover. Jamie Hepburn asked:
"Is it not the case that the major domestic market of both RBS and HBOS is south of the border and that the UK Government would have had a role to play even if Scotland had been independent?"—[Official Report, 16 December 2009; c 22229.]
So the SNP's big idea for the Scottish economy is independence but, for Scottish businesses with any customers outside Scotland, responsibility lies with the other country. It is like saying, "Stop the world, we want to get off."
I described that as Walter Mitty economics yesterday, and we have had Walter Mitty finance today. Malcolm Chisholm exposed that this morning. He was clear about housing expenditure. Speaking about the level of that expenditure, the cabinet secretary said that there was no cut, because it was spread over two years. If it is spread over two years, it can be demonstrated, we heard, that there is no cut to the budget, ipso facto.
On the Scottish budget overall, the cabinet secretary, and every other SNP speaker, has read loyally from the special adviser brief that there is an £800 million budget cut. Joe FitzPatrick came close to a fair representation of reality, but only because he was being pressed by Robert Brown.
We must take issue with the financial scrutiny unit. In its briefing, table 2 indicates the £814 million of changes to the budget. The problem is that the table is on a different page from the explanation of it, which has obviously foxed all the SNP MSPs. The explanation says:
"Changes to the Scottish Government Budget as a result of the UK and Scottish Government decisions are presented in table 2."
Because that is on a different page, the only fair assessment that I can give of SNP members is that they probably did not notice it.
Next year's budget is bigger than last year's, as we know. As Robert Brown accurately said, the decisions that the Scottish Government takes are its decisions alone. Whether or not the aim is to deliver economic development, we hold the Scottish Government to account for its choices. In many regards, those decisions are unravelling.
Let us take education, for example—a purely accidental example of the policy areas that have been royally ditched by the Scottish Government. It was not long ago that the Finance Committee was told by John Swinney that the policy of free school meals was a central part of the Government's economic recovery programme. John Swinney told the Finance Committee:
"All of those measures will help families to wrestle with the difficult financial times that the country faces."—[Official Report, Finance Committee, 9 November 2009; c 1650.]
Supposedly, if we believe the cabinet secretary, it is quite possible to ditch that financial measure, a part of the economic recovery programme, to try to provide cover for a policy on teacher numbers and classrooms. I suspect that briefings are already being written in which that is a central part of the Government's economic recovery programme.
At the heart of the Finance Committee's findings—I think that there was broad agreement in the committee on this point—was that we need more information from the Government on the actual delivery of policies as set against what the Government intends to do. There is much common ground among all parties on the need to look at outcomes rather than inputs but, unless the Government states which budget areas match its priorities for the economy, we will not be able to make a proper judgment on that. Perhaps that actually suits the Government.
I will make a final point about GARL for the benefit of Des McNulty. He said that he regretted that no alternative funding mechanism was put forward and that the case was, therefore, not made for GARL's cancellation. That was, in effect, his message, but that very proposal was made to, and voted on by, the Finance Committee. The result of the vote was:
"For: 4 (Malcolm Chisholm, Tom McCabe, Jeremy Purvis, David Whitton); Against: 4 (Derek Brownlee, Linda Fabiani, Joe FitzPatrick, Andrew Welsh); Abstentions: 0. Proposition disagreed to on the casting vote of the Convener."
That proposition was my proposition, Mr McNulty. If there is to be a debate—
Will the member give way?
I am afraid that I am out of time.
If there is to be a debate about GARL, let us have a debate about how we can ensure its continuation by considering alternative funding mechanisms and ensuring that measures are not put in place that would prevent the project from continuing in future. We need a rounded view of Scotland's transport infrastructure requirements, of which we believe GARL is a central part. Mr McNulty should not misrepresent the view of the Liberal Democrats. By doing so, he misrepresents the view of the Finance Committee and the views of David Whitton, Malcolm Chisholm and Tom McCabe, who all voted for my proposition on the continuation of GARL.
My speech will focus on two main points. First, I will examine whether the draft budget meets one of its stated key objectives of supporting economic recovery. Secondly, I will take a look at some of the medium and long-term implications of the Government's current and proposed policies.
As stated in the draft budget document, the budget has the
"key objectives of investing in frontline services and supporting economic recovery."
The Economy, Energy and Tourism Committee, on which I sit, looked mainly at the latter objective. That committee raised some serious questions about whether the economy is treated as a priority in the draft budget. Our numerous evidence sessions all suggested that that was not the case.
One need only look at the SPICe briefing "Draft Budget 2010-11" to see the cuts that the draft budget proposes to the various portfolios. While the finance and sustainable growth portfolio will undergo a 7 per cent real-terms cut and administration will take a 4 per cent real-terms cut, all the other portfolios will experience either a small increase or a small decrease. Finance and sustainable growth stands out on its own as the portfolio with the largest real-terms cut.
Simply looking at the finance and sustainable growth portfolio as a whole does not give the entire picture, so it is right that we should drill down to look at the various parts of that portfolio. However, the question for the Government is whether the draft budget will provide an increase for any budgets that relate to economic activity. To use the Government's words, have any of those budgets been "prioritised"? Those are the key questions in considering whether the draft budget's purported objective stands up to scrutiny.
If we drill down into the finance and sustainable growth portfolio, we see that tourism comes under that line. The annual tourism budget is to be decreased from £49 million to £44 million. Some of that decrease is explained by last year's one-off injection for the year of homecoming, but that explains less than half of the decrease. Even if we take away the homecoming figure, the tourism budget is still being cut by 6 or 7 per cent at a time when—according to the Government—the budget as a whole is supposedly being cut by 1 per cent. If the entire budget is being cut by 1 per cent and the tourism budget is being cut by 6 or 7 per cent, how can the Government say that tourism is a priority in its six-point plan?
The cut in the enterprise budget was highlighted by other speakers, including Mr Purvis, who talked about that in between talking about sadistic dentists. One's mind wanders occasionally during debates, and I was left wondering whether I would rather spend an hour with a sadistic dentist or an hour with Mr Purvis. I confess to not yet having reached a conclusion. Mr Purvis knows that I say that in jest.
The enterprise budget to which Mr Purvis referred will decrease. The cabinet secretary pointed out that that can be explained by the reprofiling of capital and by items that have been removed from Scottish Enterprise, such as the central marketing of the business gateway, which I understand has been moved to local authorities. However, that does not explain the decrease in its entirety. Scottish Enterprise suggested in its evidence to the committee that, excluding all the items that had been removed, its budget had been cut in absolute terms by about £10 million this year. Again, there has been no explanation of that. If enterprise is a priority, why is it receiving a cut greater than the average cut for the budget as a whole? I hope that the Government can provide some answers.
My colleague Mr Brownlee spent much of his speech talking about the medium and long-term impact of the budget and the decisions that we take. In my view, it is irresponsible to attempt to deliver new services to the public when we will have trouble delivering the current ones. Mr Brownlee referred to economic analyses that suggest that there might be a £3 billion or £4 billion real-terms cut to the Scottish budget over the next four or five years. If it is a cut of that magnitude, we will have serious problems delivering what we already deliver and it is ludicrous to attempt to deliver other policies. The Scottish Conservatives have already referred to free school meals and free prescriptions.
What about the legislation that has already been passed? The Climate Change (Scotland) Act 2009 received royal assent earlier this year. There will be financial implications when the act comes into force. Has any cognisance been taken of that? What about single status and equal pay claims that are left hanging? Has any cognisance been taken of those?
I leave the Government with two thoughts. First, if the Government is to meet its stated objective, there needs to be a boost to support economic recovery. Secondly, the Scottish Conservatives want to see that the medium and long-term impact of current and proposed policies have been taken into account.
It has been an interesting debate. I will come to some of the points made by other members in a moment. First, though, I shall focus on the Finance Committee's recommendations to the cabinet secretary. I am not quite sure what happens to such recommendations. Like letters to Santa, they go up the chimney, never to be seen again. I know that we debate them—there have been some robust exchanges about them—but I hope that, in the spirit of agreement between the Finance Committee and the Government about the budget process, the cabinet secretary is taking note of the recommendations and of what has been said this morning.
In the summary of conclusions and recommendations on page 48 of its report, the committee states:
"The evidence received indicates that it is not yet sufficiently clear how the measures proposed in Draft Budget 2010-11 correspond to the objectives stated for them. It is also unclear how a pro rata approach to addressing the impact of the fact that the budget is lower than originally anticipated … corresponds to the Scottish Government's stated priorities for the budget."
The report goes on to ask the cabinet secretary for more information on how he has approached prioritisation between services and supporting economic growth, and, in particular, for any information on which budget decision would be the most effective contributor to that growth. That is especially relevant to the capital spending programme.
In my first contribution this morning, I talked about the Glasgow airport rail link, which has featured quite heavily in the debate. At the Finance Committee meeting in Glasgow I questioned Mr Swinney about his decision. He told me that GARL, while desirable, was not essential. As I said earlier, that is his view, but I disagree with it. I believe that GARL is an economically important project for the whole of Scotland, not just the west of Scotland, and I would welcome seeing the evidence that the cabinet secretary was presented with that allowed him to make a choice between competing projects. We are still waiting for that.
Another issue that has troubled the Finance Committee—I think that Mr Brownlee referred to it—is a lack of transparency. That is a constant theme. In the past, it was agreed that level 4 information would be provided, but that does not seem to happen as a matter of course. In our recommendations, we suggested that, in future, level 4 information should be provided electronically to the Finance Committee as soon as the draft budget is published. I hope that the cabinet secretary will ensure that that happens. I know that he is a reasonable man.
I turn to what other members have said, particularly Mr Stuart McMillan and Joe FitzPatrick. Both decided to look at the budget through tartan-coloured glasses and to twist statistics in repeating the line about budget cuts. That does not help the overall debate, and it certainly does not help the Parliament. I will give members the facts. The Scottish budget has increased every year under devolution. The budget for 2010-11, at £35.5 billion, is the largest ever. It has increased by £943 million. When she was a member of the Finance Committee, Jackie Baillie interrogated the Government's director general of finance and corporate services about that. The director general was forced to write to the Finance Committee and admit that the budget would increase by 1.3 per cent. Mr FitzPatrick seems to have selective amnesia about that.
Before I talk about Mr FitzPatrick's sycophancy, I will give way to Mr McMillan.
I thank Mr Whitton for his kind comments.
I return to an issue that I mentioned earlier. Does Mr Whitton disagree with the Economy, Energy and Tourism Committee? In its report, that committee said that there would be a 0.9 per cent decrease in the Scottish budget next year.
That is the kind of twisting of figures that I have just been talking about. We have a letter from the Government's director general of finance and corporate services that says that the budget will increase by 1.3 per cent. I would rather accept her word than Stuart McMillan's.
That is what the Economy, Energy and Tourism Committee said.
We have a letter that we can produce for the member if he does not believe me.
I was talking about sycophancy. The two sycophants are sitting together. Mr FitzPatrick said that John Swinney had brought the best possible budget to the chamber. Another reshuffle must be in the offing.
If the Labour Party does not think that the budget that the cabinet secretary has produced is the best possible, why did it not make alternative spending proposals? Why is the Labour Party not prepared to put on the table the cuts that a Labour cabinet secretary would have made?
I will come to that in a minute. The member has pre-empted what I was going to say.
The Economy, Energy and Tourism Committee concluded that the proposed budget is not fit for the Scottish Government's economic purpose.
I am tempted to suggest that Mr McMillan and Mr FitzPatrick should spend some time with Jeremy Purvis's sadistic dentist, but I will not do so. The only Scottish National Party member with whom I agreed was Dr Ian McKee, who made a powerful case for ending special payments to consultants.
My colleagues Malcolm Chisholm, Jackie Baillie, James Kelly and Des McNulty made telling contributions in which they pointed to the faults in the draft budget. I also commend Jeremy Purvis's demolition job. It is unfortunate that he is no longer in the chamber, because I want to say to him that it is a pity that when I recommended in the Finance Committee that we reinstate GARL, he abstained in the vote. If he had agreed with us, we could have argued about the funding for it afterwards. The cabinet secretary may laugh; we certainly laughed when we heard that the Borders rail project will be a PPP project. That is a real volte-face by the cabinet secretary; perhaps he can explain it.
All the subject committees asked questions about Mr Swinney's spending priorities. It is true that attempts at negotiations have been taking place between Mr Swinney and all parties since the publication of the draft budget, to see whether changes can be made. That has taken place in the joint review group that was set up by Mr Swinney. Clearly Mr Fitzpatrick is not included in those talks. If he were, he would understand that that is where some of the negotiations have been going on, although they have obviously failed.
As I mentioned, some alterations will be required to fund a referendum bill if the SNP insists on carrying on with it. There is no budget line to cover the £9 million that that will cost—money that could be used elsewhere.
The Finance Committee asked to see more of the evidence that influenced Mr Swinney's decision making on the budget, particularly information on capital. Without that, it is difficult to make suggestions about what other projects can be delayed or cancelled. The clear message for Mr Swinney is that his draft budget needs a lot of rewriting. I hope that he takes note.
I call Tom McCabe to wind up on behalf of the Finance Committee. I am sorry, I have made a mistake. I call John Swinney. Cabinet secretary, you have about eight or nine minutes.
I thought that we were perhaps returning to the good old days, when Mr McCabe was the Minister for Finance and Public Service Reform. Perhaps somebody has been sniffing gas, as Mr Purvis alleged—or maybe that was just what Jackie Baillie was doing at the Labour Party's party last night.
Unless the cabinet secretary has evidence to back up that remark, will he now withdraw it?
I shall search for evidence to substantiate that remark.
Please, I in no way wish to offend Jackie Baillie; I would never want to do that.
Malcolm Chisholm said that an extra £129 million of end-year flexibility has yet to be added into the budget, but that is not correct. That figure is already in the budget proposals that the Government has set out.
Jackie Baillie made the point that health expenditure is not sufficient to meet the challenges that lie ahead. Even if I accepted her assertion that there is a real-terms increase in the budget of 1.3 per cent, excluding capital acceleration—which is a point that she has asserted for a considerable time—the average increase in the funding for national health service boards is 2.7 per cent. That rather demolishes the argument that, somehow, the national health service is being short changed. Of course, Jackie Baillie is correct that the profile of expenditure increase in the health service is not as great as it has been in the past, but neither is the increase in the total budget that is being experienced.
Mr Chisholm also said that there is no line in the budget for the 7,800 additional modern apprenticeships that we agreed with the Labour Party last year. I confirm to Mr Chisholm that those are provided for in the budget, and I have made that clear to the Labour Party in our discussions.
Mr Purvis made the point that the claimant count in Scotland shows that there is a significantly worse position in Scotland than in the rest of the UK. I say to Mr Purvis that the claimant count rate in Scotland is 4.9 per cent, whereas the UK rate is 5 per cent. Over the past year, the Scottish rate has increased by 1.5 per cent compared to a 1.6 per cent increase in the UK. Claimant count does not capture all the information. The International Labour Organization unemployment figure for 16 to 24-year-olds in Scotland is lower than the comparable UK figure, which is now over 20 per cent. The Scottish figure is approximately 18 per cent. In putting those figures on the record, I am not suggesting that there is not a significant issue—there is. That is why the Government has increased resources for colleges through the Scottish Further and Higher Education Funding Council, in order that they can provide opportunities for younger people. I simply make the point that, comparatively speaking, the performance in Scotland is better as a consequence of our interventions.
Given the public disquiet about the increasing disparity between the most poorly paid and the most richly rewarded in our society, particularly in the banking sector, does the cabinet secretary agree that it would be a good idea and would show leadership if the Government paid attention to some of the more generous rewards that are available to people at the top in public service in Scotland and to rein some of those rewards back?
That is precisely the focus of what the Government has been doing in relation to ministers, senior civil servants and higher paid individuals in the health service. We have made that clear. As I confirmed to Parliament yesterday, I am discussing with the Liberal Democrats the practicalities of a suggestion that they have made to restrict the pay of senior people.
Gavin Brown and Jeremy Purvis raised issues about the enterprise budget. The reason why the enterprise budget has a different profile now is that capital acceleration has been taken into account, business gateway costs and regeneration costs have been removed and the operating costs of Scottish Enterprise and Highlands and Islands Enterprise have been reduced because of the reduction in the headcount of those organisations. Mr Brownlee advanced the argument that the operating costs of Scottish Water should be squeezed and efficiencies should be established so that Scottish Water would require less financial support from the Government in this budget than it did in the past. That is a good argument, but it also applies to Scottish Enterprise, in relation to which we are trying to guarantee operational efficiency.
Operational efficiency is to be welcomed, but the budget shows that, although the costs for front-facing staff have gone down, the costs for backroom staff have gone up.
I will explore that point in detail, but I have set out the rationale for the enterprise budget.
Today has been an interesting debate, as it has given us a flavour of people's reflections on the thoughtful report of the Finance Committee. I made it clear at the outset that the Finance Committee has marshalled a compelling narrative about the financial challenges that we face, and the text of the report was agreed unanimously, although I accept that there were divisions on certain parts of it—I am not trying to mask that fact.
The report sets out a difficult financial perspective for the years ahead, but I have been faced with a list of demands. Jackie Baillie wants more money for health. Robert Brown and various others want more money for GARL. Robert Brown also wants more money for justice.
Will the member give way?
I am afraid that I am going through a list, and I will see it to the end.
Jeremy Purvis wants more money for enterprise. Malcolm Chisholm and Gavin Brown want more money for tourism. Malcolm Chisholm also wants more money for housing. James Kelly wants more money for concessionary travel and apprenticeships. Des McNulty wants more money for schools. Further, if he had been here, Michael McMahon would have courageously repeated his demand for £270 million of extra expenditure for local authorities, which he called for in the course of the preparations of the local government finance statement.
Will the member give way?
No. Mr Rumbles has not been here all day, so I will not take his intervention.
You missed me out. I want more money for the Aberdeen western peripheral route.
Mr Rumbles may add his demand to the long list.
During the two and a bit hours for which we have been debating, only one member has suggested any way of removing any money from one part of my budget to pay for increases elsewhere. That person was Dr McKee, who set out in a thoughtful and comprehensive fashion the issues around distinction awards for and the pay of consultants in the health service.
I cannot begin to put a price tag on the extra expenditure that I have been pressed to put in place, but every one of us must be aware that we operate within a fixed financial envelope, which means that, if we want to put projects in, we have to take projects out.
The Finance Committee's report says that GARL
"appears to be one comparatively small example of dealing with the expected reduction and one which will only have an effect on budgets for the immediate two or three years".
That is correct, but the report goes on to say:
"The Committee requests that the Scottish Government provides it with a broader explanation of the measures it is taking to ensure the sustainability of the capital budget in the medium term."
On the one hand, therefore, Mr Whitton and his colleagues come to the chamber and demand that I reinstate GARL but, on the other hand, in the secret annals of the Finance Committee—which are published on its website—they sign up to reports that say, "You are not going far enough. You are not doing enough to make the budget sustainable."
All that I say to colleagues is that we must have a rational understanding of the financial challenges that we face. I am sure that we will hear such understanding from Tom McCabe, because he regularly expresses in the chamber siren warnings about what lies ahead for public expenditure. We heard it from the Auditor General for Scotland, and Parliament has heard it from me a number of times. Tough decisions need to be faced, and the Government has addressed them.
I welcome the opportunity to summarise the debate on behalf of the Finance Committee. I offer my thanks, as other members have done, to all the professionals who supported the committee in compiling the report.
Naturally, I will pick up on some of the points that have been raised in this debate, but I will also comment on the points that the committee emphasises in its report. First, it is important to emphasise—as some members this morning have recognised—that, for the foreseeable future, our budget scrutiny will require increased rigour and a high degree of objectivity if we are to mitigate the worst budgetary pressures, which will impact on not only Scotland, but the entire United Kingdom.
I am compelled to say that objectivity has so far been somewhat elusive. For the record, I repeat what others have said: this budget is the largest sum of money that has ever been made available to Scotland and the Scottish ministers pre or post-devolution. It is not as large as was intended in 2007 when the results of the comprehensive spending review were announced, but it is an understatement of quite sizeable proportions to say that the world is a very different place today from the world that we knew in 2007.
As Jeremy Purvis rightly pointed out, the Government has now underpinned, or guaranteed, some £280 billion for the Royal Bank of Scotland alone. That was not the case in 2007, so it is hardly surprising that the budgets that we have to deal with in the Parliament are different from the ambitions that were held way back in 2007. We all have a duty to focus our efforts on protecting vital services and an obligation to spend less time apportioning blame.
The minister talks of a 2.7 per cent increase for health boards, which is correct, but health boards are now beginning to issue warnings about significant reductions in the services that they supply. That should focus the minds of everyone in the chamber. Although, at face value, vital services in our country are receiving not unreasonable sums of money, they are nonetheless beginning to express real concerns, which should concern every one of us.
I will turn to some of the specifics. One of the most concerning areas of the budget is that, even though it is explicitly recognised that the fiscal situation will be much tougher in years to come, there is little indication of any strategic preparations for the tougher years that lie ahead. Responsible governance and scrutiny place an obligation on all of us to spend, as I said earlier, less time posturing and more time preparing.
The Finance Committee has recognised that although the Scottish budget is allocated by the Scottish Government, a significant proportion is expended at the hands of others. In increasingly stringent financial times, it will be important to improve dramatically the tracking of that expenditure and to link it to the outcomes that we achieve. The committee convener rightly emphasised in his speech the pressing need for far greater clarity in relation to what we get for that money and how it is used to best effect by those health and local government agencies that spend such a significant proportion of the Scottish budget.
Before the Cabinet Secretary for Finance and Sustainable Growth took on his role, he was a strong advocate of transparency and independent verification of claimed efficiency savings. The committee is at one with him on that, and we are anxious for the day when he delivers transparency and independent verification.
In a similar vein, the committee recognises the cabinet secretary's ambition to align the budget with the Government's stated priorities. Unfortunately, there has been little explanation of how that has been achieved this year. A vital part of improving confidence in the Scottish budget will be a greater demonstration on the Government's part that it is prepared to take the decisions—sometimes very hard decisions—that will align budget allocations with its stated priorities.
The committee specifically requested a more detailed explanation of how the Government has prioritised between services and the drive to support economic growth. It is important that the Parliament understands which budgetary decisions have the greatest impact on growing Scotland's economy. The committee asked the Government to share any analysis that it has with the committee. It is important that the Government does so, even if that analysis points to some challenging decisions.
Mr Purvis stressed concern that a lack of priority is being given to stimulating and growing the Scottish economy. As the convener said when he opened the debate, the committee met a number of interested parties in Glasgow before it discussed the budget with the cabinet secretary. Whether it is palatable or not, there was a strong consensus that budgetary decisions should be taken that prioritise economic growth, however difficult those decisions are. As David Whitton said, strong disappointment was expressed at those meetings that the Glasgow airport rail link was cancelled. I hope that the cabinet secretary and indeed the Scottish Government will take cognisance of the fact that private businesses, individuals and the voluntary sector all found it difficult to see how cancelling that project could be aligned with a desire to stimulate growth in the Scottish economy.
I fully understand the cabinet secretary's point that, if people want to reinstate that programme, hard decisions might need to be taken in other areas. The committee recognised that, too. However, it is also worth saying that, although it is pointless simply to demand from the cabinet secretary extra cash for a variety of different areas, there is a case for putting more emphasis on certain areas that stimulate and grow our economy. The hard decisions that would be required as a consequence might therefore become more palatable.
In its report, the committee asks for a far more in-depth analysis of how the budget and future budgets will stimulate growth and protect vital services. We are keen to enter into that dialogue with the cabinet secretary. I sincerely hope that he is as keen as the committee is to discuss those issues and analyse the possibilities for the future, with the combined aims of growing our economy in Scotland but also protecting the sometimes hidden people who will suffer the most if vital services deteriorate as a result of our fiscal position.
We have finished a minute early, so I suspend the meeting until—
On a point of order, Presiding Officer. I am glad that, in making my point of order, I am not taking up anybody's time.
This morning, the cabinet secretary reconfirmed that, as ministers have been saying for some time, a decision about the most important infrastructure project in the north-east of Scotland—the Aberdeen western peripheral route—would be announced to Parliament before Christmas. Considering that we have less than six hours left before Parliament goes into recess and we do not reassemble until next year, could the Presiding Officers use their good offices to ensure that, as I am sure the cabinet secretary intends, an announcement on the western peripheral route is made some time today?
That is a matter for the minister, but he is here and I am sure that he will attend to it.
Meeting suspended.
On resuming—