Official Report 236KB pdf
Deputy First Minister Responsibilities, Economy and Gaelic
Non-domestic Rates (Business Confidence and Investment)
To ask the Scottish Government what assessment it has made of the impact on business confidence and investment of non-domestic rates thresholds having limited movement since 2020-21. (S6O-05648)
Annual decisions on non-domestic rates are made in the context of prevailing economic conditions and Government priorities at the time. Our budget supports businesses with a decrease in all three non-domestic property rates, delivering the lowest basic property rate since 2018-19, and a reliefs package that is estimated to be worth £870 million in 2026-27.
Thriving businesses are key to Scotland’s prosperity. Many factors, such as the United Kingdom Government’s increase in employer national insurance contributions, have had significant impacts, which have contributed to reduced business confidence in Scotland.
Engagement with business on non-domestic rates continues through the NDR consultative group.
The number of businesses in critical distress in Scotland is rising faster than anywhere else in the United Kingdom—it has gone up more than 80 per cent in a year. The Fraser of Allander Institute reports that each of its headline business confidence indicators has been negative for five consecutive quarters, and 15,000 fewer people are on Scottish business payrolls than was the case a year ago. When the minister stands to defend frozen rates thresholds that have barely moved in half a decade, does he not see that as part of a wider picture—a Scottish National Party Government that has squeezed businesses from every direction and is now watching them close?
As I indicated, many factors are impacting on the situation, not least the UK Government’s action on employer national insurance contributions.
I remind the member that Scotland continues to outperform the rest of the UK, having attracted for 10 years in a row the most inward investment of any part of the UK outside of London. That shows the confidence that businesses have in Scotland’s economy.
It is important to recognise that the amount of revenue that is raised through non-domestic rates is now 6 per cent lower than it was pre-Covid, despite the fact that there are more businesses in Scotland than there were then. That shows that we have reduced the NDR burden on businesses over recent years.
According to the Bank of Scotland and the “Business Barometer”, business confidence in Scotland is continuing its upward trend as firms embrace new tech and innovation opportunities. How is the Scottish Government working to ensure that that trend continues?
Bill Kidd has raised an important point about the fact that Scotland’s business confidence is continuing its upward trend on that measure. Although cost pressures remain, the fact that businesses plan to adjust shows a growing sense of confidence and a firmer footing for future investment.
Business confidence in Scotland is closely linked to firms’ ability to adopt new technologies and innovate, and the Scottish Government is actively working to ensure that that positive trend continues. A key part of that is the Techscaler programme—now in its fourth year—which provides a national platform that supports the creation, development and scaling of tech start-ups across Scotland.
We have also transformed the investment landscape in Scotland to make Scotland more attractive to investment, thus creating jobs in our communities.
High Streets and Town Centres (West Scotland)
To ask the Scottish Government what action it is taking to support high streets and town centres in the West Scotland region, in light of reported issues, including high vacancy rates. (S6O-05649)
I recognise that many of our towns face challenges with vacant buildings, which is why we are continuing our long-standing commitment to regeneration, with investment of up to £52 million in the next financial year.
Since 2014, we have provided almost £169 million of capital regeneration investment for local authorities in the West Scotland region. Some of that has supported town centre revitalisation through the transformation of empty properties and the enabling of community ownership.
There is also support for local authorities to address vacant retail spaces, through a non-domestic rates relief package. Two schemes in particular—the fresh start and business growth accelerator reliefs—support the reuse or repurposing of vacant properties.
I thank the Deputy First Minister for that answer, and in doing so, I acknowledge that this will be her last portfolio question time. I say to her: beannachd leat—farewell.
In towns and villages in communities such as Johnstone, scores of people have raised with me their sadness about the state of their high street, whether that is due to the lack of upkeep and investment, insufficient public transport to access the high street or reduced activity. In Renfrewshire, the town centre vacancy rate was 19 per cent in 2024-25, which means that almost one in five units sat empty.
Successive SNP ministers, including one who represents a town that is affected, have failed to grip the issue and to support our streets. High streets are going to be hammered again by inaction on business rates that, in many cases, are doubling or trebling. Has the Government done any analysis of the impact of those increases on business closures and vacancy rates, and what they will do to the streets? Should the Government not look again at pausing the process?
That is definitely an issue of concern to us. We have looked at a number of different options to try to resolve the issue of empty properties, which is largely driven by a change in trading conditions and the fact that people are increasingly choosing to shop online rather than locally.
Back in 2025, we consulted on permitted development rights and compulsory purchase reform—key issues that have an impact on town centre regeneration and, more importantly, the reuse of vacant and unused buildings. We are currently analysing the responses to inform next steps, and that analysis will be published in due course.
We can learn from examples where councils have taken alternative approaches. In Aberdeen, the council and the local business improvement district have led award-winning work to bring upper-floor premises on Union Street back into use.
I mentioned in my opening answer the different reliefs that we have available—the fresh start and business growth accelerator reliefs—which specifically give non-domestic rates relief for tenants or owners who are purchasing or moving into properties that were previously unused.
Businesses in my West Scotland region are under immense pressure thanks to increased employer national insurance contributions from the UK Labour Government, the failure of the Scottish National Party Government to fully pass down rates relief, and ever-increasing retail crime. It is little wonder that so many small businesses are being forced to shut down, which removes jobs and livelihoods. Does the Deputy First Minister agree that more taxes and regulations will only lead to more vacancies on our high streets and in our town centres?
That is why we have the most generous rates relief anywhere in the UK, including some of the most ambitious support, through the small business bonus scheme. The member will know that a lot of the properties on our town centre high streets are beneficiaries of the small business bonus scheme.
We have other initiatives in place to provide support to businesses, but, on an issue such as this, we need to understand what the key drivers are. Predominantly, those are changes in trading conditions and in behaviour, which means that more people are choosing to shop online rather than in person.
Venture Capital Funding
To ask the Scottish Government what action it is taking to expand the availability of venture capital funding to aid business growth. (S6O-05650)
That is an important question, because expanding access to private investment is a critical element in seeing Scotland grow. Scotland has a strong public sector investment ecosystem, with our enterprise agencies and the Scottish National Investment Bank focused on investing alongside private investment to achieve the best outcomes for Scottish businesses.
Since its launch in 2020, the SNIB has committed more than £1 billion in investment, which has, importantly, leveraged £1.7 billion in investment from the private sector. I have seen that, where there is a density of investable propositions, it attracts increasing levels of venture capital.
I suspect that this might be our last ever exchange in the chamber, so I wish the Deputy First Minister all the best for the future. I have enjoyed our constructive engagement over a number of years.
On that note, I wonder whether she would agree with me on what I am about to say. We see an issue with start-ups that are looking to grow and that struggle to get venture capital to move to the next stage. There is a lack of availability of venture capital in Scotland, and that is because there is a lack of venture capitalists in Scotland. We need to attract more venture capitalists to come to Scotland and invest.
Therefore, contrary to what is said by the Green Party—which I notice is boycotting this session on the economy, perhaps not surprisingly—we do not need to drive billionaires out of Scotland; we need to attract more billionaires into Scotland, with their investment, to support our economic growth. Does the Deputy First Minister agree?
I agree that attracting a varied and diverse range of investors who are able to meet the needs of companies across all projects and stages is vital. We have seen huge growth in start-ups, and now the focus needs to turn to scale-ups. A number of innovative private sector equity investors are active in Scotland, and they have sometimes been able to complete investment deals partly due to support from public bodies. We cannot completely exclude that from the equation, but the average VC fund size has increased significantly in recent years, particularly among US-based VC investors, meaning that the highest-publicity VC investors and deals are operating on a larger scale than the Scottish business investment market.
The point is that our focus is on scaling businesses. They will attract investment from a range of sources. The critical element is that they do not leave Scotland. If they cannot attract investment while being headquartered in Scotland, that becomes a risk.
As I said in my opening remarks, I have always thought that the right approach is to build up the density of investable businesses, which naturally attracts capital, rather than to focus on the capital initially in the hope that there are investment propositions as a result.
Alexander Dennis Ltd (Support)
To ask the Scottish Government what further support provisions will be available to Alexander Dennis following the expiration of the current £4 million support package this month. (S6O-05651)
We continue to work closely with Alexander Dennis Ltd following our award of a time-limited company furlough scheme that is designed to retain jobs in the firm’s manufacturing capacity in Scotland. The agreed terms and conditions of the grant require the business to provide the necessary evidence to access that support.
Yesterday, we accepted in principle a formal furlough extension request from the company, and we stand ready to discuss all possible options beyond that. I spoke with the company yesterday, and I reiterated the Government’s full commitment to continue to do everything that we possibly can to protect those skilled jobs and bus manufacturing in Scotland.
I thank the Deputy First Minister for the important update that she has just given. The order paper for today’s questions says that I have a registered interest in this area. I do not think that I do, so I think that it is a mistake. The registered interest that I definitely have and wish to register with everyone is in those highly skilled jobs in Larbert and Falkirk, which we should retain.
The Scottish zero emission bus challenge fund 3 programme is the real test of the Scottish Government’s claims on social value, because £45 million of public funding is about to be allocated. Will the Deputy First Minister confirm that not a single pound of taxpayers’ money will go towards Chinese-built buses and that that funding will support Scottish jobs and Scottish manufacturing?
It is important for me to say at the outset—because I have a declaration of interest to make—that my primary responsibility when answering these questions is to Alexander Dennis and that I have no role at all in ScotZEB 3, for very important proprietary reasons. ScotZEB 3 is led by the Cabinet Secretary for Transport, because Transport Scotland is the procuring authority, as it were. It has made the decision to extend the ScotZEB 2 programme. It will be for the transport secretary to announce the conclusions and outcomes of ScotZEB 3, which opened for applications on 5 December.
I appreciate the question, but that will be disappointing to Stephen Kerr, who wants something a bit more robust, but I hope that he appreciates that it is critical that I am kept at arm’s length from the ScotZEB 3 process.
I remind members of my voluntary register of trade union interests.
I pay tribute to Kate Forbes, who, in my view, has been a breath of fresh air as an active and interventionist cabinet secretary for the economy.
Yesterday, another vehicle manufacturer in central Scotland, Volvo Construction Equipment, announced plans to close its factory near Holytown. Will the Deputy First Minister respect the fact that there will now be a statutory redundancy consultation with trade unions to consider options for averting closure and avoiding redundancies altogether, and, in that spirit, will the Government urgently meet the GMB and the company to consider how these 120 highly skilled jobs can be saved?
I am very thankful for Richard Leonard’s kind words; I was almost dreading that there was a “but” coming afterwards, but I am grateful for those comments.
Richard Leonard raises a very serious issue. I had a call with the GMB this morning—the intention was to discuss another issue, but we spent some time at the end of the call talking about the Volvo situation; I also had a very helpful letter from the GMB about that this morning. In that call, I committed to the GMB to engage thoroughly and quickly on this very serious issue, because I understand what the consequences will be for that community.
I wish the Deputy First Minister well in her future journey. We actually crossed paths as children, apparently—the fact that we stayed in the same street gives weight to the idea that Scotland seems to be a bit of a village at times.
I want to ask the Deputy First Minister about the 10-year zero emission bus order pipeline that the United Kingdom Government announced this week, with 23,000 buses projected, and the potential deficiencies in the ScotZEB scheme. It is a limited subsidy scheme, so it cannot be directed to UK manufacturers. It might have been worthwhile for the Scottish Government to look at a direct purchasing and leasing model, which could allow for direct awards to Scottish manufacturers.
The member makes a very interesting point, and I thank him, too, for his kind comments. It is an interesting approach, and we have looked carefully at all the approaches that we could take through procurement and grants, for example to support domestic manufacturing at Alexander Dennis. The company was clear that it could not rely only on Scottish buses to get it through these difficult times—the approach had to be UK wide, so we welcome commitments to procure buses.
There has been a challenge arising from international bus manufacturing’s increased market share in those procurement processes, to which I think Stephen Kerr was alluding. We have not seen sufficient progress on some of that, as it is still putting at risk Scottish domestic manufacturing. However, we will look at all that and see whether we can learn lessons for our approach.
Energy Prices (Impact on Businesses of Middle East Conflict)
To ask the Scottish Government what support it is providing to businesses facing higher energy prices and other increased costs resulting from the conflict in the middle east. (S6O-05652)
Ministers are deeply concerned about the impact of the conflict in the middle east. Both the Cabinet Secretary for Climate Action and Energy and the Cabinet Secretary for Housing have made representations to the United Kingdom Government on energy costs.
We are hopeful that any de-escalation can reverse the higher energy prices and other increased costs that businesses face. We were disappointed that the financial support that the UK Government announced on Monday did not extend to businesses. We will, however, continue to work with companies to create better certainty and stability for business where we can. That includes an investment of £326 million for enterprise agencies in the budget and our package—which was referred to earlier—of non-domestic rates reliefs, which is worth an estimated £870 million.
While £10 million is going to support 71 businesses in Glasgow that have been impacted by the fire there, thousands of businesses across the Highlands and Islands will be seeing fuel costs double, with apparently no support coming to them. Will there be specific support for those businesses across the Highlands and Islands and across Scotland? I am thinking in particular of businesses in our rural areas, which rely on oil and already pay higher costs for it, and which are already massively impacted by the rise.
The member raises a serious issue that is impacting on businesses in Scotland, and we share his concerns. As I indicated earlier, issues relating to energy costs are largely reserved to the UK Government. We will continue to do all that we can to help; the member may be aware that we also fund Business Energy Scotland, for instance, to give advice to businesses. That initiative has, since we launched it, identified more than £200 million-worth of savings for businesses and has saved, on average, 24 per cent in the cost of energy bills for those businesses that have taken advantage of it. I encourage members to share information about that advisory service with businesses that are affected by high energy bills.
We will, of course, continue to do all that we can to support businesses, but energy policy is largely the UK Government’s responsibility. As it has given some—albeit very limited—support to households, it should extend that support to businesses.
Defence experts cited in a recent RenewableUK report have urged for there to be an acceleration of renewables development in order to shield against further geopolitical shocks. Does the minister agree that it is more important than ever for Scotland to develop renewables generation and storage capacity in order to enhance our energy security for businesses and households across Scotland?
Emma Roddick raises an important issue. It is ironic that, in energy-rich Scotland, we are facing rising energy bills. As the member has said, we do not have enough measures in place to shield Scotland and to ensure that we can take advantage of the massive energy resources, particularly renewable energy resources, which are on our doorstep. I agree that we have to accelerate the development of renewables. Grid connections and other projects that are waiting for the green light are in the hands of the UK Government. We have to ensure that they are expedited as much as possible, so that we can ensure that energy is available to Scotland for our business communities in the Highlands and Islands and the rest of the country.
I join other members in paying tribute to Kate Forbes as she leaves this Parliament. She was cheered on by Richard Leonard and the Conservatives, but there was silence from the Scottish National Party benches. I do not know whether that tells us anything.
We are paying the price of the folly of Donald Trump’s decision to bomb Iran, and that was also cheered on by the Conservative Party. My concern, which I hope that the minister will take on board, is about the fishing industry, which is facing significant increases in bills for running fishing boats. I hope that those representations are made strongly when the minister speaks to the UK Government, because the sector is already under quite a lot of strain.
I will ensure that I convey Willie Rennie’s comments to Mairi Gougeon, the Cabinet Secretary for Rural Affairs, Land Reform and Islands, who often discusses those issues with her UK counterparts. As a former fishing minister, I know very well how, over the years, the cost of fuel has fluctuated, which has caused particular challenges for Scotland’s fishing fleets. We continue to pay close attention to that.
I associate myself with members’ comments about my colleague the Deputy First Minister, Kate Forbes, given that this is her last question time session. I commend her contribution to public service and the Scottish Parliament. I will also be leaving the Parliament and will be joining her in post-politics life. I do not take any offence at Willie Rennie not mentioning that.
Dumfries Town Centre (Support)
To ask the Scottish Government what action it is taking to support Dumfries town centre. (S6O-05653)
As I outlined in a previous answer, we continue to deliver on our long-standing commitment to regeneration, with investment of up to £52 million next year. It has long been a commitment of mine to support local regeneration, which is why we have worked hard to safeguard capital investment, because it supports the revitalisation of our towns and town centres. That is one of the ways that we have supported Dumfries town centre, alongside other forms of support. Since 2014, Dumfries and Galloway Council has received nearly £21.5 million in regeneration capital funding, including £4.5 million for the award-winning Midsteeple Quarter, which has revitalised a previously vacant town centre building into a community event and enterprise space and seven homes.
I associate myself with comments from colleagues across the chamber about the Deputy First Minister.
I am concerned that the Scottish National Party-led Dumfries and Galloway Council is undoing all that hard work by continuing with its obsession with wasting £70 million of taxpayers’ money on the deeply unpopular Whitesands flood scheme, which will see vital town centre parking being removed and the setting of the River Nith diminished. Surely the money could be better spent on maintaining vital local services and improving the upkeep of the town centre?
I am aware of the Whitesands flood protection scheme. Its purpose is to combine major flood defences with significant public realm improvements. It is set to start this spring after receiving approval from Dumfries and Galloway Council. I am aware of the member’s concerns. However, there are issues to do with reducing flood risk and enhancing recreation and active travel opportunities. Ultimately, as I understand it, it is a decision that the local council has made. Therefore, the member’s comments should be directed to representatives of the local authority.
This is my last planned comment in the chamber before I leave my post as an MSP so, if I may, I will take a brief moment to thank, from the depths of my heart, everyone who has enabled me to serve our country and the communities of Skye, Lochaber and Badenoch over the past 10 years.
I thank the staff and officials of the Parliament and the Government, colleagues across the chamber who have become friends and everybody who has an interest in the decisions that we make.
I feel as though I have squeezed multiple lifetimes into the past 10 years—certainly, I barely recognise the young woman who was elected 10 years ago, aged 26, to represent the constituency of Skye, Lochaber and Badenoch.
Above all else, I have always enjoyed intelligent debate, good-natured disagreement and constructive engagement and, sometimes, I have even been able to make a difference. I leave with enormous respect for colleagues across the chamber, many of whom argue their case robustly but with respect and wisdom.
Our democracy relies on debate, and debate requires at least two people who disagree. Disagreement does not require bitterness, animosity or malice. I hope that the next Parliament can exemplify the joy of dispute and debate in the service of our constituents. [Applause.]
Thank you, Deputy First Minister.
I could squeeze in question 7 if the question and supplementary are brief.
Real Living Wage
To ask the Scottish Government for what reason, despite an increase in the number of businesses pledging to pay the real living wage, the percentage of people actually being paid the real living wage or more has been decreasing for three consecutive years. (S6O-05654)
While key powers over employment law remain reserved to the United Kingdom Government, including those on the minimum wage, we have made significant progress towards our ambitious goal of becoming a leading fair work nation. Around 88.7 per cent of Scottish employees over 18 years of age are paid the real living wage or above, which is the highest proportion in the UK countries. Although the share of Scottish employees paid the real living wage or above was slightly lower in 2025 than in 2023, that has also happened in other parts of the UK and reflects a range of national and international pressures and costs in recent years.
Nobody on the Conservative benches opposes fair pay for workers, but the minister must recognise that the gap between the number of accredited employers and the number of workers who actually receive the real living wage tells us a story. Businesses in Scotland are closing, relocating or simply not starting up because the Government has created a hostile environment for enterprise. Continually making feel-good announcements makes no difference. What action will the Scottish Government take to protect those businesses that are disappearing daily across our communities?
As discussed in previous answers, businesses in Scotland face a number of pressures, not least rising national insurance contributions and rising energy costs, both of which are the responsibility of the UK Government, not the Scottish Government. We are continuing to do all that we can to support businesses against that tough backdrop.
At the moment, 2.45 million people are payrolled in Scotland. That might be a slight decrease on the previous year, given some of the factors that I have discussed, but, compared with historical records, it is quite high. We should not forget the fact that unemployment rates in Scotland are lower than those in the rest of the UK, or our other successes in attracting inward investment to Scotland, which have created high-value jobs in our country.
The Scottish economy is resilient, but we are not immune to those pressures. Businesses are facing tough times and we will continue to do all that we can to help them.
Question 8 was not lodged.
That concludes portfolio questions on Deputy First Minister responsibilities, economy and Gaelic.
Finance and Local Government
Vaping Shops (Licensing)
To ask the Scottish Government whether it will introduce a licensing system for local authorities to address the growing number of vaping shops. (S6O-05656)
Scotland is the only country in the United Kingdom with a tobacco and vapes retail register. All businesses, regardless of size, need to be registered in order to be able to sell such products in Scotland. The register exists to support the enforcement of regulation on age-restricted products, given the public health harms of tobacco and vaping. Individual business owners are responsible for registering any business that sells tobacco and/or vapes, and failure to do so could result in a fine of up to £20,000 and/or possible imprisonment for a term not exceeding six months. It is the responsibility of local authorities to enforce compliance with the register in their local areas.
We remain committed to considering how the register could be improved, including by imposing possible further conditions on registration, in order to support our public health aim of reducing the use of tobacco and vapes.
I thank the minister for that answer, but the register is clearly not working. There is no mechanism to remove shops from the register, and The Ferret discovered that the shop that went on fire in Glasgow was not even on it. It is vital that we have a robust licensing system that is accompanied by sufficient funding for councils so that their trading standards departments have the resources to crack down on bad actors.
In the light of that, why does the minister believe that we do not need a licensing system at a national level, which would be similar to those that cover premises that sell alcohol? What funding can the Government give local authorities to ensure that the legislation has teeth?
As I indicated, there are significant sanctions for non-compliance with the requirement to register such businesses. There are fines of up to £20,000 and possible imprisonment for a period not exceeding six months. It is the responsibility of local authorities to take forward any enforcement measures in that regard.
As I indicated, we remain committed to considering how the process could be improved. I take on board the member’s point about a licensing scheme but, as I said, the enforcement powers and sanctions already exist in the current registration system.
I declare an interest as a former trading standards officer.
We are all devastated by the fire that took place on 8 March on Union Street in Glasgow, yet it turns out that the shop where the fire began was not listed on the mandatory register, as is required for a business to sell nicotine products, and was thus selling vapes illegally.
After years of cuts, there are only about 250 full-time equivalent trading standards officers in councils across Scotland, with the number having reduced by more than half since 2002. At the same time, 22 of Scotland’s 32 councils now operate with eight or fewer trading standards officers. That puts not only consumers but the general public at risk. Does the minister agree that it is impossible to have effective law on licensing if there are no trading standards officers to enforce the law?
As I indicated, it is the responsibility of local authorities to take forward enforcement measures, and it is also their responsibility to provide the resources to do that. The Scottish Government has provided a real-terms increase in funding to local government precisely to enable it to deal with its range of responsibilities, including enforcement in the area of registration that we are talking about.
In light of the fire in Glasgow, will the minister consider looking at the planning use classes in Scotland? They allowed the retail unit that went on fire to switch from being a bureau de change, after being empty for 10 years, to selling vapes, with no need for a change in planning consent. There seems to be an obvious opportunity to quickly tighten up the regulations so that consent would need to be sought for such use.
I do not know whether doing so quickly would be appropriate, because we would need to go through a proper process to understand any changes that we chose to make.
The member is right in that the class of use is fairly broad, covering as it does all retail, but to start to compartmentalise the class would potentially take us into a place where we were putting up unnecessary barriers for businesses. It would need to be considered in the round. However, the existing registration scheme requires businesses that sell such products to be registered, and a broad range of factors can be considered through that mechanism.
Demand for Local Authority Services (Budget 2026-27)
To ask the Scottish Government what assessment it has made of the impact of its budget 2026-27 on the ability of local authorities, including Perth and Kinross Council, to meet rising demand for services. (S6O-05657)
Presiding Officer, before I answer the question, I hope that you will indulge me just for a moment, as this is my last portfolio question time and my last opportunity to speak in the Parliament. I take this opportunity to thank my Government officials for all their support in my Government role. I thank all the Parliament staff for looking after us so well over the years, particularly for the very late sittings of late. I also thank my staff in my local office for supporting my constituency work. Last but by no means least, I thank my constituents in Dundee City East, whom I have had the honour to serve for nearly 27 years. It has been my absolute privilege to do so. I wish my colleagues who return to the Parliament well, and I wish those who are not returning the very best for whatever comes next.
In response to Roz McCall’s question, we appreciate the pressures that local authorities face. That is why we are providing record funding of £15.7 billion, including £250 million of unrestricted general revenue grant. There is also full flexibility on council tax.
The vast majority of the funding that is allocated by the Scottish Government is provided by means of a block grant. It is then for individual local authorities to allocate the total resources that are available to them on the basis of local needs and priorities.
I am glad that I got to ask the question, because it means that I am the first to wish the cabinet secretary all the best in her future endeavours.
In large rural local authorities such as Perth and Kinross Council, the cost of delivering services from social care to education and community provision is already significantly higher, and councils need to make increasingly difficult decisions about the services that they can sustain. This year, the Scottish National Party administration in Perth and Kinross has imposed an 8.9 per cent council tax increase, taking the average band D bill to £1,673 a year. That rise was justified locally on the basis of rising demand and what the SNP council described as an insufficient funding settlement from the Scottish Government.
The cabinet secretary pointed to a record local government settlement in the budget. However, if the amount of funding was truly sufficient, SNP-run councils such as Perth and Kinross Council would not be forced to raise council tax by nearly 9 per cent simply to stand still.
Does the cabinet secretary accept that the so-called record funding is not keeping pace with rising costs? Does she accept that the reality of the choices that were made in the budget is that there is a gap that is now being filled by higher council tax, which is leaving my constituents paying £130 a year more for less while still facing uncertainty about front-line services?
Thank you, Ms McCall—that question was quite lengthy.
Different council tax rates have been set across the 32 local authorities by administrations with different political colours.
I acknowledge that there have been rising costs across the whole public sector. They include the rising costs of employer national insurance contributions and VAT, while the global situation at the moment will put fuel costs up for local authorities and every other part of the public sector. We are well aware of the rising costs. We have given local government a record settlement, but that is against the backdrop of those rising costs. We expect local authorities to work to manage within those budgets in the same way that the rest of the public sector does.
The distribution formula, which I think is what Roz McCall was hinting at in relation to Perth and Kinross Council being a rural local authority, is a matter for the Convention of Scottish Local Authorities to decide on.
Roads in Lothian (Local Government Funding)
To ask the Scottish Government what assessment it has made of any impact of its local government funding settlement on the condition of roads across the Lothian region, in light of the City of Edinburgh Council, for example, facing an £86 million repair backlog. (S6O-05658)
The vast majority of the funding that is available to councils is provided by means of a block grant from the Scottish Government. It is then the responsibility of individual local authorities to manage their budgets and to allocate the financial resources that are available to them. That includes the maintenance of local roads on the basis of local needs and priorities, having first fulfilled statutory obligations and the jointly agreed set of national and local priorities.
Road condition figures that were published this week confirm what every driver in the Lothians already knows: our roads are getting worse, not better. The reason is straightforward: this Government has squeezed council budgets so hard that roads spending has been cannibalised by statutory obligations.
Audit Scotland has said that the roads funding shortfall will nearly double to £458 million by the end of the decade. Does the cabinet secretary accept that that is a direct consequence of a funding settlement that forces councils to meet Scottish National Party priorities over basic services such as road and pavement repairs?
Many of those joint priorities, whether on tackling child poverty or providing childcare, are important to the people of Scotland. Those are important priorities that local government shares with the Scottish Government.
As a consequence of the budget, Scottish local authorities have an additional £522.4 million of funding that would not have been available had the Budget (Scotland) (No 5) Bill not been agreed to by the Parliament. As I said earlier, it is for local authorities to decide how to spend that money, in addition to the council tax revenues that are raised locally. We are in discussions with the Convention of Scottish Local Authorities and are keen to work with local government to explore imaginative ways to increase investment—whether for local roads or other priorities—given the reduced capital that is available from the UK Government. Those discussions continue.
I had requests from two members to ask supplementary questions, but now I have one. I point out to Fergus Ewing that the question relates to the impact of funding on the condition of roads across the Lothian region.
Thank you very much indeed for that advice, Presiding Officer.
Whether in Lothian, where the backlog is £69 million, in Highland, where it is £233 million, or anywhere else, particularly in rural Scotland, roads and bridges are being closed because of safety issues. In my patch, Neil Gordon is a farmer who used to use the Balnaan bridge, but, because it is closed, he now has to take a detour of up to 100 miles after a day’s farming. How can it be fair that rural residents face their livelihoods ending at the same time as £226 million is being spent on building new cycle lanes in cities that no one uses?
I ask the cabinet secretary to respond on matters relating to the question at hand.
We have provided record resources to local government, whether in rural areas or urban areas, and it is up to local authorities to determine their priorities. We have struck a number of deals to ensure that the borrowing capacity of local authorities can be used alongside accelerator deals to provide additional investment in communities. We already have deals along those lines with many local authorities, and we are prepared to discuss such deals with other local authorities that are interested.
Third Sector Rent and Council Tax Arrears Services (Support)
To ask the Scottish Government, in light of Audit Scotland’s recent statement that local authorities will face a budget gap of nearly £1 billion by 2027, what action it is taking to provide additional support to third sector organisations that prevent and respond to rent and council tax arrears. (S6O-05659)
The Scottish Government’s council tax reduction scheme ensures that nobody should have to meet a council tax liability that they cannot afford, and we continue to promote take-up, including through working with Citizens Advice Scotland. Where arrears occur, councils have powers to write off those debts.
The budget has provided councils with record funding of £15.7 billion, including £253 million of unrestricted general revenue grant. Councils have full discretion to allocate that money as they see fit, including to support for third sector organisations, where appropriate.
I associate myself with Roz McCall’s comments and wish the cabinet secretary well in whatever comes next for her.
Public sector debt pushes people into and keeps them in poverty. All local authorities in the north-east region have announced council tax increases that are well above the rate of inflation. Financial and social pressures on many constituents make it difficult for them to pay their rent, and delays in receiving social security support compound that situation.
What action can the Scottish Government take to enhance community capacity and local third sector infrastructure to respond to that potential spiral of decline? Will we see reform of local government finance in the next session of Parliament?
Maggie Chapman will be aware of the joint Scottish Government and Convention of Scottish Local Authorities consultation on the future of local government finance, which has now closed. It will be for members in the next session of Parliament to consider the options. We have already set out a proposal for new council tax bands at the higher end, which will provide additional funding for local government.
I should say that council tax for an average band D property is significantly less in Scotland than in England—there is a difference of about £350. That is not to detract from some of the rises in council tax that have been mentioned, but it is an important comparison of the rates that people are paying across these islands.
Questions 5 and 7 are grouped together. We will therefore take any supplementaries after both of them have been answered.
Health and Social Care Services in South Scotland (Budget 2026-27)
To ask the Scottish Government what assessment it has made of how its budget 2026-27 delivers fair funding for health and social care services across the country, including in South Scotland. (S6O-05660)
The 2026-27 budget provides almost £22.5 billion of investment in health and social care services, which exceeds the consequentials. National health service boards, including those in the south of Scotland, will see an increase in their baseline funding, which will bring total investment to more than £17.6 billion. That is a real-terms uplift of 1.8 per cent to support services, fund pay and implement agenda for change reform.
We are also providing £32.8 million for NHS Scotland resource allocation committee—NRAC—parity, ensuring fairer funding and that all boards stay within 0.6 per cent of parity. The NRAC formula reflects demographic changes and excess costs.
The underfunding of health and social care is a systemic problem across Scotland. Local authorities face cuts year on year, services are being pulled and budget shortfalls have led to local communities’ care packages being cut. This year, East Ayrshire health and social care partnership, which is in my region, faced a financial overspend of more than £10 million, forcing the council to establish a health and social care emergency financial support fund, as a one-off to plug the funding gap. That is not sustainable. Does the cabinet secretary recognise the funding gaps and the direct impact that the cuts are having on communities right here, right now?
I certainly recognise the demand and pressures that are on all our public services, particularly given the demographic challenges that we have, which will increase over time. That is why we made the commitment to increase funding to social care by 25 per cent in this session of Parliament. We have exceeded that by more than £500 million in 2026-27, because the budget provides more than £2.3 billion for social care. That is not to say that there are no challenges, but it is a record settlement for social care. We need to ensure that the delivery systems at local level are working to deliver services to local people. I am sure that the Parliament will return to that issue in the next session.
Health and Social Care Partnerships (Budget 2026-27)
To ask the Scottish Government what steps it is taking to ensure that its budget 2026-27 adequately funds health and social care partnerships to deliver services, including social care. (S6O-05662)
I acknowledge the work that the health and social care partnerships have undertaken towards balancing their budgets in the difficult financial context that we collectively face and given the demographic challenges that I alluded to earlier. That is why we are providing record funding in 2026-27. The budget provides a real-terms increase in the local government settlement, taking it to more than £15.7 billion, and there is almost £22.5 billion for health and social care.
Despite opposition from service users, care workers and trade unions, North Ayrshire health and social care partnership has voted to make significant cuts to social care provision, with funded care set to be restricted to those who are assessed as being at critical risk. Those cuts are being made because the health and social care partnership faces a deficit of around £9 million. Will the Scottish Government intervene to ensure that there is the necessary additional funding to prevent those devastating cuts from coming into effect next month, given the impact that they will have?
We want to ensure that local services are retained, and that is of course the responsibility of local partnerships. I am sure that my colleague Neil Gray will be well aware of the issues that Katy Clark has raised.
To go back to the point that I made earlier, we have gone beyond the commitment to increase funding for social care by 25 per cent over the course of this session of Parliament—by £500 million. We must recognise the funding that is going into local services, in addition to the record funding to local government.
In my previous answer, I said that we needed to look at the local systems of delivery. I will go further than that: we perhaps need to revisit whether local health and social care partnerships are the right model for delivery of this critical service across Scotland.
I have a number of requests for supplementary questions. I am keen to accommodate them all, but I need succinct questions, and answers to match.
As we have heard, East Ayrshire faces a staggering £10 million health and social care budget gap next year. To mitigate that, the council will be forced into management actions, including reducing care home capacity and re-evaluating care packages to find £5.6 million in savings.
Although East Ayrshire currently boasts low community assessment waits, the average hospital discharge delay has doubled to 64 days. Given that NHS Ayrshire and Arran is now at stage 4 on the intervention framework, does the cabinet secretary truly believe that the budget is fair when it forces local authorities to choose between financial insolvency and cutting the very front-line care that prevents our local health boards from total collapse?
I have set out that the budget provides real-terms increases, with £15.7 billion for local government and almost £22.5 billion for health and social care. If members in the chamber think that that is inadequate, they need to tell us by how much and where the necessary money should come from. I did not hear that during the debates on the Budget Bill. It is easy to demand more money without saying where the money should come from.
There is a question whether the money in the system is working as effectively as it could. My suggestion and request to the Parliament in the next session is that it looks at whether local systems and their resources are working as intended.
With NHS Lothian and local social care services under real pressure from staff shortages and rising demands, can the cabinet secretary set out how the budget helps us to move towards properly resourced and publicly delivered care, rather than continually relying on overstretched staff and the private sector to fill the gaps?
The budget provides record funding for local government and for health. In fact, we have consistently gone beyond the health resource consequentials that we get from the United Kingdom Government and have consistently provided more money to the national health service. The budget also provides more than £2.3 billion for social care, which exceeds our commitment to increase funding by 25 per cent over this parliamentary session by more than £500 million.
Record resources are going into both systems. I reiterate that the Parliament in the next session could look at whether the resources in those systems are being spent in the most effective way through the delivery systems that we have in place.
As the former Deputy First Minister leaves the Parliament, I wish her well for the future and thank her for her public service over a couple of decades.
Yesterday, the chamber was divided on Liam McArthur’s Assisted Dying for Terminally Ill Adults (Scotland) Bill, but it was absolutely united on palliative care, and we need a step change in that area. What new information can the Cabinet Secretary for Finance and Local Government tell us today to show that the will of the Parliament is respected by this Government?
First, I thank Willie Rennie for his kind remarks, although his talking about a couple of decades made me feel rather old.
Willie Rennie raises a very important point, and there is clearly a need for us to look at the funding for palliative care, because the Parliament was of one voice last night. The First Minister has already indicated that it will be looked at. Many in the palliative care sector hold very deeply and powerfully to their independence when it comes to what they provide, so we need to bear that in mind when we look at the future funding of palliative care. I suspect that the issue will no doubt find its way into manifesto developments, but it will also be a key priority for the Parliament when it reconvenes in the next session.
The Scottish National Party’s budget provides welcome investment in Scotland’s primary care service. Can the cabinet secretary say any more about how the investment in new walk-in centres will address the 8 am rush and increase access to primary care? Does she agree that Labour members should welcome that ambitious move instead of opposing it for opposition’s sake?
I ask the cabinet secretary to respond on matters within her responsibilities.
I think that everyone should welcome the increased investment in primary care. We have provided general practice with a £531 million three-year funding deal to recruit more general practitioners and improve access, and, as Emma Roddick referred to, we have provided £36 million for new walk-in GP services in communities across Scotland. That can only help to ease pressure at peak times, including during the early morning surge for appointments, so I thought that that would have been welcomed across the chamber.
Child Poverty (Falkirk Council)
To ask the Scottish Government what steps it is taking to support local authorities, including Falkirk Council, to deliver vital services, including those aimed at reducing child poverty. (S6O-05661)
Local government has a key role to play in driving progress on reducing child poverty, including by delivering whole-family support that breaks the cycle of poverty. That is why the 2026-27 Scottish budget provides a further real-terms increase to the local government settlement. The measures include making £90 million available for devolved employability services next year, continuing to invest more than £1 billion in funded childcare and investing to make free school meals available to more than 350,000 pupils.
As others have done, I wish Shona Robison well as she departs the Parliament. It has been a real pleasure to serve in the Parliament with her over the past 27 years—I hope that that does not make her feel old—and she leaves with my very best wishes for the future.
Local authorities have an important role to play in supporting the Government’s national work to tackle child poverty. Falkirk Council recently expanded its family inclusion teams to support its tackling child poverty strategy. That has been enabled because of the flexibilities and undirected funding that this year’s budget has provided. What discussions are taking place with local government and the Convention of Scottish Local Authorities to consider how the flexibilities provided to local authorities through their budgets can support them in tackling issues such as child poverty?
I wish Michael Matheson well in the future after his many years in the Parliament, including his time in the Government.
The flexibility that Michael Matheson referred to is really important. Along with the additional money that is going to local government, additional flexibility is being provided through the baselining of funds and the removal of ring fencing. It is important to provide local government with that flexibility so that we can align our shared priorities, and tackling child poverty is one of the most critical priorities that we share with local government.
I am confident that Falkirk Council, through its family inclusion teams, is setting a direction of travel that will ensure that it can tackle poverty in that area.
I can squeeze in question 8, but I will need succinct questions and answers.
Council Tax Increases 2026-27
To ask the Scottish Government what its response is to council tax increases approved by local authorities across Scotland for 2026-27. (S6O-05663)
Council tax is a local tax that is set and administered by individual councils, which have had full flexibility in setting their rates for 2026-27. That was a key ask of the Convention of Scottish Local Authorities.
The Scottish Government has been clear on the importance of the record funding of almost £15.7 billion for the local government settlement. Compared with the previous budget settlement, the funding has increased by more than £650 million.
Earlier this month, the Scottish National Party-run Renfrewshire Council announced that it will increase council tax by 7.5 per cent. That comes after a record 9.5 per cent increase last year. The year before, when councils passed their budgets, the First Minister said that council tax rises of 3 per cent would be reasonable. The cabinet secretary has said that it is a local tax, but it is, of course, also the “unfair” council tax that the SNP promised to scrap in 2007. Since then, we have seen council tax bills going up, services getting cut and councils being underfunded. Does the cabinet secretary or her Government regret breaking their promise to scrap the unfair council tax in 2007?
Of course, we wanted to scrap the council tax, but we did not get a majority in the Scottish Parliament to do so. To put it bluntly, what we need is to reach some political consensus on what should replace the council tax. At the moment, such a political consensus does not exist. Even modest changes, such as the introduction of additional bands at the higher end, have been opposed by Labour members such as Daniel Johnson, for whatever reason, even though the Labour Government at Westminster has done exactly the same thing. That shows that there is a need to get beyond that dispute and to try to find political consensus.
I make the point again that there is a huge difference between council tax rates in Scotland and England. As of 2025-26, the average council tax bill in Scotland is £344 lower than the average bill in England. Despite all the talk of increases, council tax payers in Scotland will continue to pay less, on average, than they would south of the border.
That concludes portfolio questions on finance and local government. There will be a very short pause before we move on to the next item of business.