Draft Budget 2013-14
The first item of business this afternoon is a statement by John Swinney on the draft budget for 2013-14. The cabinet secretary will take questions at the end of his statement, so there should be no interventions or interruptions.
The draft budget for 2013-14 that I outline today maintains the course set out in the spending review 2011 and continues our track record of effective stewardship of Scotland’s public finances. I look forward to Parliament’s scrutiny of our budget proposals ahead of the budget bill in the new year, and I will work with other parties to build as much consensus as I can around the Government’s spending plans.
As Parliament is aware, Scotland continues to face significant challenges as a result of global economic conditions and the United Kingdom Government’s approach to the public finances. The settlement that we received in the UK spending review is the toughest since devolution. Over a four-year period between 2010-11 and 2014-15, the Scottish Government budget is being cut by more than 11 per cent in real terms and, within that, our capital budget is being reduced by a third.
The position in 2013-14 is particularly challenging, with a cash-terms decrease in the total departmental expenditure limit budget compared with the previous year. It represents the fourth consecutive year in which a real-terms reduction has been imposed on the Scottish Government’s DEL budget.
In June 2010, when the Office for Budget Responsibility set out its initial forecast for the UK economy, it predicted growth of 2.8 per cent in 2012. Members can contrast that with the International Monetary Fund’s most recent forecast for growth of just 0.2 per cent in 2012 and the latest Organisation for Economic Co-operation and Development forecast for a decline of 0.7 per cent.
UK gross domestic product has now contracted for three consecutive quarters, with a total decline of 1.2 per cent. The decline has been driven by a sharp fall in the construction sector, which has fallen by 8.7 per cent over that period. That data reinforces the case that the Scottish Government continues to make, which is that a different strategy is required from the UK Government.
When economic conditions remain fragile, shovel-ready capital investment can provide an immediate short-term stimulus—in particular to the construction sector—as well as providing a range of long-term benefits to the people of Scotland from better housing, schools and hospitals. That is why, yesterday, we and the other devolved Administrations called on the UK Government to consider again the case for a targeted fiscal stimulus that can support infrastructure investment and create the jobs that our country needs.
Global economic conditions continue to impact on economic confidence. Business investment remains considerably below pre-recession levels, while household incomes remain under pressure. We are therefore focused on enhancing confidence in order to encourage private sector investment and growth and to help households where we can.
While the UK Government refuses to change course, this Administration will continue to do all that we can within our powers to deliver growth and support jobs. Over the past 12 months, we have acted decisively to achieve that.
Last September, we published the Government’s economic strategy and a spending review that set out substantial investment in infrastructure and measures to tackle unemployment.
In the face of the cuts being made to our capital budgets, we are boosting conventional capital investment through the £2.5 billion pipeline of infrastructure projects that will be delivered through the non-profit-distributing model; switching more than £700 million from resource budgets to support capital spending; and supporting a range of innovative finance initiatives, such as the national housing trust.
Overall, our major investment programmes support thousands of jobs across Scotland. From many examples, here are two compelling cases that reinforce the strength of this Administration’s approach. First, 95 per cent of our annual transport budget of nearly £2 billion was last year invested back into the private sector, supporting more than 25 per cent of civil engineering contracts in Scotland and more than 12,000 jobs. Secondly, it is estimated that our housing investment budget of more than £750 million over three years will generate around £3 billion of economic activity and support up to 8,000 jobs each year.
The spending review also provided significant investment in skills and education for post-16-year-olds, including through our opportunities for all initiative, which guarantees a training opportunity to any young person between 16 and 19 who is not in education, employment or training. It provided for a record 25,000 modern apprenticeships opportunities, all linked to real jobs. Completion rates have increased to a record 75 per cent and nearly 55 per cent of our 16 to 24-year-olds are now employed, compared with a UK average of 51 per cent. In total, from 2007 until the end of this spending review period, we will have invested almost £5 billion in colleges. That is 45 per cent more in cash terms than the investment made under the two terms of the previous Administration.
The spending review confirmed decisive support for business, including boosting international activity with great success in food and drink exports, the use of the Scottish Investment Bank, the establishment of enterprise areas and the most generous package of business rates relief in the UK valued at more than £2 billion over five years, with the small business bonus scheme providing support to more than 85,000 business properties.
At a time when household budgets and public services are under pressure, the spending review also provided funding to deliver key commitments we have made to the people of Scotland: working with our local government partners to uphold the council tax freeze; supporting Scottish students into higher education through our policy of no tuition fees; free prescriptions; support for concessionary bus travel; ensuring a Scottish living wage for employees covered by our pay policy; protection for the NHS budget; improving the quality of our schools through curriculum for excellence; maintaining teacher numbers in line with pupil numbers; and provision for 1,000 additional police officers. I confirm to Parliament today that our draft budget will ensure the delivery of all those commitments in 2013-14. This is a Government that delivers on its promises.
The spending review also put public service reform at the heart of this Government’s approach to the public finances and the economy. Our programme of reform is helping to ensure that public resources are used to best effect in meeting the needs of the people of Scotland. In particular, we made it clear that a decisive shift to preventative spending is essential to improving outcomes and ensuring the long-term financial sustainability of our public services. In partnership with local government, we have made more than £500 million available to three change funds to support early years and adult social care and to tackle reoffending. The draft budget announced today provides an update on those funds, illustrating the progress that can be made in driving change across mainstream service delivery.
Looking forward, I confirm today that single outcome agreements will incorporate a long-term prevention plan that makes a commitment to increase the resource invested and reinvested over time in preventative interventions. This budget also confirms that we are on track to deliver our ambitious programme of police and fire reform, and it reflects agreement with local authority partners about the transfer of funding for those services.
We set out in the spending review an approach that supports economic recovery. We continue to believe that approach is right for Scotland, but we must remain vigilant to changing economic conditions and respond decisively.
In developing the draft budget for 2013-14, I have scrutinised in detail what scope exists to create additional financial flexibility across the Government’s responsibilities in order to provide further stimulus. I have reached the following conclusions.
Scottish Water has delivered significant improvements to services over the past 10 years. With an annual turnover in excess of £1.1 billion, it employs some 3,500 staff and sustains 20 per cent of the Scottish civil construction industry. Following four years of water charges being frozen in Scotland, average household charges are now £52 lower than the average in England and Wales and a significant capital investment programme has been sustained to improve the quality of water services in Scotland.
Against that background of high performance and efficiency, I have reconsidered Scottish Water’s financial position and have agreed with the enterprise that we can reduce our lending by £45 million in 2013-14, with no detriment to either services or its investment programme. Furthermore, Business Stream has confirmed that it will be in a position to repay the loan made to it in 2008, thus allowing me to redeploy resources of £28 million over the next two years. These steps demonstrate beyond doubt the value of retaining Scottish Water in public ownership
I have reviewed the benefits of our robust approach to the management of major infrastructure projects, such as the Forth replacement crossing. Because of the good progress that has been made, I can release budget contingency of £20 million on that project this year.
I have taken into account the efficiencies that the Scottish Futures Trust is helping us to deliver in our overall capital programme. Over the past three years, the SFT has delivered a total of £371 million in savings and benefits to the people of Scotland, and we expect further efficiencies in the future, including efficiencies in the school building programme.
Furthermore, as a result of general efficiencies in our spending last year, I can carry forward more than was originally planned through the budget exchange mechanism, which will free up nearly £40 million of additional resources to be deployed in 2012-13. Specific programme expenditure is also available to the Scottish Government through the green deal and housing loans. That amounts to about £31 million for deployment this year and next year.
With support from all Government portfolios, I have considered the scope for redirecting resources in existing budgets, within the tight financial parameters that apply. I have also considered our position on non-domestic rates. The Government has introduced several proportionate measures that will generate valuable income, including the public health supplement.
We continue to keep under review the income projections in the draft budget for 2013-14. In last year’s spending review, we put in place a package of measures to help to regenerate town centres and encourage empty properties to be brought back into use. As part of that, the changes that we are making to empty property relief have a key role to play.
In listening to business, I recognise that we can do more. To incentivise further the bringing of empty properties back into use, the Minister for Local Government and Planning lodged yesterday an amendment to the Local Government Finance (Unoccupied Properties etc) (Scotland) Bill that will, if agreed to by Parliament, allow those who bring premises back into use to be rewarded with discounts on their rates bills.
I confirm to Parliament that we are progressing the implementation of the additional powers that are set out in the Scotland Act 2012. An additional £3.5 million has been allocated in the budget to meeting implementation costs in 2013-14.
By exploring all avenues, I have taken steps that enable me to make a number of further spending announcements today that will support our immediate priorities of boosting capital investment; taking direct action to tackle unemployment, particularly among young people; and continuing to enhance economic confidence by encouraging private sector investment.
In February, we announced a package of £380 million of capital spending over the period to 2014-15, with a focus on transport, housing, digital and maintenance projects. In June, we announced a package of investment in shovel-ready projects valued at £105 million in 2012-13, which is targeted towards renewables, housing and transport. The second year of that package will include substantial further investment in renewables, road improvement, regeneration, culture and tourism projects.
I confirm today that we will provide an immediate stimulus to the construction industry, with further capital investment in affordable housing of more than £40 million over this autumn and next year. [Applause.]
I would be grateful if members saved their applause until the end of the cabinet secretary’s statement.
The provision of substantial capital investment in housing and the delivery of more homes more efficiently than was ever achieved under the previous Administration mean that 6,882 new affordable homes were delivered last year. That demonstrates that the Government is on track to build the homes that our people require.
To boost further the construction industry, we can expand the number of schools that are being built through Scotland’s schools for the future programme. We will increase the number of schools that are being built from 55 to 67 and we will build them sooner.
The Cabinet Secretary for Education and Lifelong Learning will confirm the detail of the plans shortly, but I can tell Parliament that I have authorised the financing of more rapid delivery of the programme by bringing forward £80 million of planned investment from future years into this spending review period, through the NPD model. That will further increase the total number of schools that the Administration is delivering. In the past four financial years, 358 schools have already been built or refurbished. That is more than the previous Administration delivered in eight years, and we have halved the number of children who are in crumbling schools.
More generally, our partnership with Scotland’s local authorities remains central to the Government’s delivery programme. Local government’s capital investment programme has a key role to play. I know that Parliament will welcome the joint commitment that the First Minister and the president of the Convention of Scottish Local Authorities have made today to work together whenever possible to increase or accelerate capital investment to support economic recovery.
This Government has long argued that investment in the green economy can deliver multiple economic and environmental benefits. In today’s budget, I am announcing a total of £30 million of funding over this year and next for a programme of energy efficiency measures that will tackle fuel poverty, contribute to meeting our climate change targets and provide opportunities for small and medium-sized construction firms. The package will focus on supporting domestic households to improve home insulation, along with measures to increase energy efficiency in the public sector. We are continuing our course of additional investment in sustainable and active travel by providing further funding of £2.5 million next year for hybrid buses.
Despite the economic challenges that we face, the Government remains focused on opportunities for growth and on encouraging the development of Scotland’s growth sectors. For example, there has been recent success in tourism—a sector that contributed £2.9 billion to gross value added in 2010—with a 5 per cent increase in visitor numbers over the year to March 2012. With that in mind, I announce fresh investment of £1.5 million in high-yield marketing to be carried out by VisitScotland in this financial year.
Our cultural assets are also a huge strength. That is epitomised by the wonderful success of the national museum of Scotland, which has attracted more than 2 million visitors since it reopened. I am therefore pleased to announce additional investment next year of £1 million in the maintenance of historic buildings throughout Scotland.
The forthcoming Commonwealth games present a vital opportunity to strengthen our global profile while bringing health and other benefits closer to home through the potential impact on participation in sport and the wellbeing of our people. Building on the momentum that has been provided by the Olympics, the Paralympics and the promise of the Commonwealth games, and recognising the impact that sporting success can have, I have allocated an additional £1 million next year to support Scotland’s elite athletes in the run-up to the games.
We are committing an additional £6 million across this year and next to deliver further improvements to Scotland’s cycling infrastructure, which will focus on our community links initiative. As well as supporting our health and wellbeing agenda, our investment in cycling adds further strength to our efforts to tackle climate change, which will also be enhanced by new funds for peatland restoration. I am pleased to publish alongside the budget the latest carbon assessment of our spending plans.
I am also publishing today the Government’s equality budget statement, which highlights the negative impact of the UK Government’s welfare reform agenda—an approach that runs contrary to our determination to create a fairer Scotland. We are responding as best we can, with our local authority partners and within our legislative competence, to mitigate those threats.
This budget confirms additional resources of £23 million next year to mitigate the cut to council tax benefit from the UK Government. We will continue to engage with the Department for Work and Pensions about the successor arrangements for the social fund.
Nowhere is the case for independence made more clearly than in the contrasting approaches and ideologies of this Government and its counterparts in Westminster in the area of welfare reform. Scotland is a country that more than pays its way in the world, and we will continue to take a distinctive course that prizes effective use of public money but also reflects our core value that we must support the most vulnerable in our society.
Over the past three years, our policy of pay restraint has helped to support thousands of public sector jobs, while the Scottish living wage and our pay awards have protected the incomes of those who earn the least. By continuing to implement core economic and social commitments through our social wage—commitments that include the abolition of prescription charges, free higher education and personal care, and the freeze in the council tax—we have sought to help households throughout Scotland.
I am publishing today, alongside the budget, our pay policy for 2013-14. Last year I said that I would seek to ease pay restraint and, following a two-year freeze in basic pay, I am able to announce a modest increase for most employees.
The pay policy caps increases in total costs of basic pay awards at 1 per cent in 2013-14, but with priority for those earning less than £21,000 to ensure that they receive increases of more than that, and with the retention of the freeze in basic award for those who are earning more than £80,000 a year.
Our policy includes a commitment to continue to implement the Scottish living wage not just in 2013-14, but over the remainder of the current session of Parliament. We renew today our commitment to a no compulsory redundancies policy to provide certainty for public sector staff. Those measures will help to enhance economic confidence, provide security to thousands of workers, and support jobs and activity across the economy.
A vital part of our efforts to create a fairer society must be the support that we provide to our young people, particularly in the current economic climate. Although the latest figures show a welcome rise of 1 percentage point in Scotland’s youth employment rate, the rate of youth unemployment remains far too high at 24.3 per cent. In developing today’s budget, I have been determined to do more to support those who are looking and training for work.
First, to maintain our commitments to keep student numbers at 2011-12 levels and to provide the necessary student support, I announce today further funding of £17 million for college education. Secondly, I will allocate resources to establish an energy skills academy to support the development of skills for a diverse Scottish energy economy in oil and gas, renewables, thermal generation and carbon capture and storage industries.
Thirdly, although we have taken a number of steps to support young people, we must create more opportunities for them to secure jobs. One of the key groups who require assistance are 18 to 24-year-olds who have been unemployed for three to nine months. We will put in place an initiative supported by £15 million of Government funds and matched by European structural funds and employer contributions. The initiative will work across Scotland and will be focused on the small and medium-sized enterprises in the private sector. As a consequence of that co-operative approach, the Government will assist in the creation of up to 10,000 jobs for young people in the private sector. Those measures confirm our absolute determination to do all that we can to support the young people of Scotland.
The Government has today published a draft budget that honours the commitments that it has made to the people of Scotland and that, within tight parameters, provides for additional measures to support economic recovery. I have today announced investment in infrastructure, the green economy, skills and employability of around £0.25 billion. In this budget, I confirm that the Government will do all that it can to focus its resources on driving forward Scotland’s economy. I commend the budget to Parliament. [Applause.]
Order. The cabinet secretary will now take questions on the issues raised in his statement. I intend to allow around 40 minutes for questions.
Last year, the cabinet secretary stood up in the Parliament and announced what he described as a budget for jobs and growth. He said that he planned to steer Scotland “a distinct course”. One year on, the rate of unemployment in Scotland is higher than the UK average and our country has sunk back into recession for the second time under his stewardship. That is certainly “distinct”.
In fact, the decisions taken by this Scottish National Party finance minister and this SNP Administration have cost 30,000 public sector jobs over the past year alone, yet he stands before us today with no hint of humility and no hint of an apology. The worrying truth is that this finance minister seems content to pass the buck—either to blame Westminster for all our woes or to pass responsibility for all his cuts to our local authorities.
In his statement, Mr Swinney talked of partnership with our councils. He did not mention that they will have to bear the brunt of his cuts—he did not even have the courage to mention that. He has transferred across the police and fire budget. I ask him to clarify what the real-terms cut to our local authorities is. How many care workers, nursery assistants and bin men are going to lose their jobs? How many older people are going to struggle for support? How many kids’ schools will suffer? How do his decisions in any way ameliorate or mitigate the welfare cuts that are being inflicted by the UK Government?
The cabinet secretary is right to say that Scotland’s young people are being harshly affected by his recession, so why did he slam the college door shut in their faces with last year’s cuts to further education? The £17 million that has been announced this year does not come close to putting that right. Was the finance minister right then and is he wrong now, or is he right now and was he wrong then? He cannot be both.
One of the few scraps of good news in the budget is some help for the housing sector. However, given last year’s cuts, the cabinet secretary is not even undoing the damage that he has wrought on the industry. Last year, 12,000 builders lost their jobs due to his decisions. Will he take a leaf out of the Welsh Assembly Government’s book and use Government revenue to pay off interest on housing association and council debt, thereby freeing up capital?
Yet again, we have heard from the finance minister the droopy mantra, “It wisnae me.” The Scottish people know better: it is him. When will he stop passing the buck, take responsibility for his actions and get Scotland working again?
Mr Macintosh asked about local authority funding. Under my stewardship as finance minister, local government commands a larger share of the budget than I inherited from all of his Labour predecessors in Scotland. That is the first myth debunked.
Secondly, let us consider housing. Between 2007 and 2011, the Government invested £2.3 billion in housing in Scotland. Between April 2003 and March 2007, the previous Labour Government invested £1.6 billion. In its last year, the Labour Government built 4,832 houses; in 2011-12, we built 6,882 homes. I will take no lectures about housing from a Labour Party that was so inefficient in house construction that it could not build houses. It needed the SNP to come into office and build houses for the people of our country.
On welfare cuts, I remind Mr Macintosh that he is joined at the hip to the people who are cutting welfare in Scotland. Every one of the Tories and Liberals over to my right is joined at the hip with Mr Macintosh, handing out leaflets together with him in Eastwood. They are cutting welfare and he is allowing them to get away with it.
What are we doing about it? As a result of partnership working with local government, we are putting money in to make up for the cut in council tax benefit. Local government has contributed to that. We are finding solutions for the people of Scotland, not posturing with the Tories like Ken Macintosh. [Applause.]
Order, order.
I will not take a scrap of a lesson from Ken Macintosh about facing up to my responsibilities. I have set a balanced budget in the Parliament since 2007, and his lot has voted against every decent measure that has ever been brought forward. We will face up to our responsibilities and deliver for the people of Scotland. [Applause.]
Order.
I thank the cabinet secretary for an advance copy of his statement and the draft budget. I was particularly grateful for an advance copy of the draft budget because I found out on page 158 that the total Scottish Government budget is slightly more than £34 billion. The budget that Mr Swinney inherited in his first full year of office was £31.9 billion, so he has more than £2 billion more at his disposal than when he came to office, but he complains about savage cuts.
At best, the draft budget could be described as an artful budget. Let us consider the central theme of the economy.
On housing, for example, Mr Swinney takes out £100 million—that was not a manifesto promise—and thinks that the construction sector should be grateful because, today, he is giving it £40 million back at a time when it is struggling.
At a time of high youth unemployment, he takes £50 million out of the college sector but thinks that that sector should be grateful because, today, it is getting £70 million back.
There are reductions over the course of the spending review for the enterprise agencies and innovation; there is an enormous hit for rail infrastructure investment; and there are business taxes that were not promised in his manifesto in the form of the retail levy and the proposals on empty property rates.
If we add those things together, how on earth does the cabinet secretary justify his pre-budget statements about putting every single penny that he can into the economy and being on an unrelenting pursuit of economic growth? The press release and the narrative simply do not match.
I will start with the numbers—Mr Brown and I always love to start with the numbers. If Mr Brown looks at page 2 of the budget document—not away at page 158—he will see all the details set out right up there. I have charted out information about the UK Government’s spending review settlement and set out honestly and openly the consequentials that we have had from the UK Government. It is shown that the total DEL budget in 2012-13 was £28.6 billion and it is now £28.44 billion, which is a reduction—a cut—in cash terms.
Mr Brown talked about what I have done with the housing budget. If he would care to look at all the numbers in detail—I am sure that he will do so—he will recognise that I have had to deal with the fact that the UK Conservative Government has reduced our budget for capital purposes by 33 per cent, or a third. That is the irresponsible act that we have had to deal with. There has been a 33 per cent reduction in the Scottish Government’s capital budget in the teeth of an economic recession.
If Mr Brown listens carefully to the arguments that I marshal on this whole issue and the arguments that we marshal to the UK Government, he will realise that we marshal an argument that is about capital investment in the long-term future of the economy. That is a responsible thing to do, and I would have thought that the Conservative Government would have been attracted to it in recognising the severity of the economic circumstances. Mr Brown must acknowledge that, when his Government came to power, the forecast for the current growth in the economy was 2.8 per cent and that now, the forecasts range between -0.7 per cent and 0.2 per cent. That is the rationale for investing in capital projects in this country.
Mr Brown asked what I have done to support the economy. Some £2.5 billion of NPD capital expenditure has been brought forward. We have just announced more schools—Mr Russell will comment on that in the next few days—and there is an immediate stimulus for the housing sector. There is an initiative to support the employment of young people in the private sector, and there are all the modern apprenticeships. If my memory serves me right, the Conservatives voted against those. In an act of folly last year, they also voted against the small business bonus scheme.
Come on!
Mr Brown says, “Come on!”, but I am afraid that those are the facts. Last year, the Conservatives voted against the budget and against the small business bonus scheme.
Bring back Annabel Goldie!
The First Minister says, “Bring back Annabel Goldie!” It must have been a sensible leadership that took the decisions in the previous session. The Conservatives have lost their way in this session.
I hope that, in examining the detail of the budget, Mr Brown will acknowledge that I am doing exactly what he demands of me. I am using every lever at my disposal to invest in the economy. That is exactly what I have done this afternoon.
I thank the finance secretary for the advance copy of his statement and for the offer of talks yesterday. He knows that, last year, the Liberal Democrats worked constructively to deliver changes to the budget and that we secured extra funds for colleges, social housing and early intervention. I hope that we can work together again this year to protect those gains.
As Gavin Brown said, the budget is £34 billion. It has increased in cash terms, no matter what the finance secretary says about DEL budgets.
Mr Swinney said this morning that he wanted a
“relentless pursuit of economic growth”,
but the budget is a timid one, which has been proposed by a Government that is focused more on independence than on economic growth. If he was really committed to doing all that he can, he would make the necessary reforms to release £1.5 billion that is locked-up in the accounts of Scottish Water to invest in creating 100,000 new jobs in broadband, science, early intervention and energy efficiency. That is the kind of change that prioritises the economy. Will he make those reforms to release the money to create the jobs, or will he just be timid?
I will of course, as my letter to Mr Rennie, Mr Brown, Mr Mackintosh, Mr Harvie and Ms MacDonald yesterday confirmed, engage in dialogue with all the parties now that the Government has set out its proposals, and I will happily take forward those discussions. I would have thought that Mr Rennie might welcome the steps that I have taken to generate maximum impact from Scottish Water, which leverage out resources to be used in support of the economy that previously we did not think we would be able to bring into the budget. I would have thought that Mr Rennie would welcome that.
Mr Rennie again goes through the routine of asking me to privatise Scottish Water, but I have told him on countless occasions that I will not privatise Scottish Water—not in any circumstances will I do that. Interestingly, when Mr Rennie’s idea was put forward by the Liberal Democrats before the parliamentary election in 2011, The Scotsman put the proposal to the decision maker on the question, the Chief Secretary to the Treasury, Danny Alexander. The Scotsman reported that he
“failed to promise that the £1.5 billion the party—”
that is, the Liberal Democrats—
“claims would be freed up by the sell-off would not be clawed back by the Treasury from the UK government’s block grant”.
It is a strange situation where you sell the family silver and do not even get to keep the proceeds. If Mr Rennie will forgive me, I will not take that approach. I will carefully ensure that the public finances of Scotland are marshalled in an effective way to support economic growth. I look forward to any suggestions that he may have as to how that may be enhanced in the weeks to come.
Many members have asked to question the cabinet secretary, so I ask that questions be as brief as possible. In that way, I hope to get everybody in.
I warmly welcome the cabinet secretary’s statement. Once again he has produced a measured, innovative and positive budget for Scotland in challenging economic circumstances. He mentioned the need to focus capital investment on shovel-ready projects. Can he elaborate on how he will accelerate capital projects and what they will deliver for Scotland in employment, improved connectivity and growth? Will he tell members how much more he could achieve for Scotland and its people if this Parliament had the economic powers of an independent sovereign nation?
I set out in my statement the steps that I have taken—in the spending review last September, in January, in June and now today—to support projects that have been taken forward in all the areas to which Mr Gibson refers. Clearly, the impact of capital spending is felt acutely in the economy and it boosts the construction sector. I was interested very much in the comments of Ken Gillespie of Morrison Construction, who said the other day that
“construction feels that we have a stronger market in Scotland than we have elsewhere in the UK.”
That demonstrates that this Government has attached the priority necessary for capital expenditure and is creating jobs as a consequence.
On Mr Gibson’s final point, I am constrained to operate within the resources that are set for me by the UK Treasury. I hope that I have demonstrated this afternoon that the Government is inventive about how we can release more resources to impact on the economy in Scotland. However, if we had the full powers of an independent country, we could achieve a great deal more for the people of our country.
The cabinet secretary talked of the importance of switching £700 million from revenue to capital. Where then is the logic in the Scottish Government’s decision to cut £350 million of investment from a vital rail infrastructure project—the Edinburgh to Glasgow improvement programme? That is investment from Network Rail’s borrowing capability that trade unions and business organisations have made clear would also have boosted jobs and the economy. That was a shovel-ready project, so why is that one not going?
Mr Baker’s search for any negative line of argument to put forward is somewhat familiar. He and his colleagues are ignoring the significant investment that Mr Brown talked about in Parliament yesterday, when he said that £650 million is being deployed in the Edinburgh to Glasgow improvement programme. Where is the welcome from the Labour Party for that shovel-ready project?
I welcome the resources that have been allocated to the energy skills academy, which will benefit all learning institutions in the north-east and beyond. Will the cabinet secretary give details of the overall funding package to colleges in the light of his commitments today?
The Government’s commitments on college numbers will be fulfilled. We have increased resources for student support, which will be taken forward as part of the overall agenda on ensuring that every young person between 16 and 19 has access to an education or training opportunity if they cannot find employment for themselves.
The approach provides a secure foundation for the long-term future of the college sector in Scotland, and is in addition to the significant investment that the Government has made in the higher education sector, which gives the sector a certainty on funding that is not enjoyed by higher education institutions south of the border.
I, too, welcome the energy skills academy, which I hope will build on the good success rate of North Highland College and Nigg Skills Academy. However, the cabinet secretary will be aware that there is a shortage of graduate engineers. Will he remove the cap on university places for engineers?
I thought that Rhoda Grant was getting into territory that was slightly more positive about what has been said, but there must always be a negative. The Government’s commitment to the energy skills academy is just one more illustration of how we are drawing together the work of all higher and further education institutions around the country, in a combined effort to ensure that Scotland can reap the rewards of the renewable energy opportunities that are coming to Scotland as well as the significant opportunities in the oil and gas sector. By working with the energy skills academy and ensuring that there is co-operation between all higher and further education institutions, we can deliver the skills that are required for those key sectors. The resources that I announced today will fulfil that commitment to the people of Scotland.
Given the comments of Morrison Construction’s Ken Gillespie about the stronger construction market in Scotland, to which the cabinet secretary referred, does the cabinet secretary think that his announcement today will reinforce such views and encourage the UK Government to follow the Scottish Government’s plan of action, which is designed to meet the needs of the Scottish economy and the Scottish people?
Mr Crawford will be familiar with the Government’s relentless pursuit of capital investment in the economy. In 2011, as we prepared the spending review, we faced a choice: we could follow the Conservatives’ argument and accept a 33 per cent reduction in our capital budget; or we could create mechanisms and initiatives through the non-profit-distributing model. Doing the latter has enabled us to maintain the capital programme—for example, Mr Neil announced yesterday works at the Edinburgh sick kids hospital—as well as enabling other developments under the auspices of the SFT.
That is why we have a stronger market in Scotland for construction projects. We have provided the marketplace with continuity, but the Conservatives have damaged opportunities and the Labour Party has opposed us every step of the way as we have tried to build the capital programme.
As the First Minister said at the joint ministerial committee in London yesterday, the UK Government should change course and provide the necessary investment to support a capital programme that can encourage the development of the Scottish economy and create the marketplace that Mr Gillespie talked about yesterday in his interview.
Economic growth depends on a healthy and skilled workforce. Will the finance secretary ensure that more of the preventative spend measures are allocated to mental health services, given the current waiting times of 40, 50 or 60 weeks for therapy and psychological support for children and adults?
Mary Scanlon makes a fair point about the importance of mental health, which is an issue that she has championed in the Parliament since 1999. The Cabinet Secretary for Health and Wellbeing will have heard her point and I am sure that he will reflect carefully on it in relation to the direction that is given to health boards and other elements of the health budget. I point out that the Government has, of course, fulfilled its commitment to pass on to the health service the Barnett consequentials that we said we would pass on in the 2011 election.
I am sure that Mr Neil will be happy to discuss with Mary Scanlon the point that she has raised.
Does the cabinet secretary intend to continue the living wage arrangements for the duration of the spending review? Will he uprate it in line with the living wage campaign’s recommendations?
I confirm to Mr Beattie that the Government will maintain its commitment to the living wage and that we will uprate it when the appropriate detail is to hand. I expect that to be in November, and I will, of course, report to Parliament at that time.
Labour has long called for a job creation scheme for young people, so I welcome today’s commitment to create 10,000 jobs for young people. Will the cabinet secretary clarify the match-funding arrangements? Will they lead to £30 million of investment in 2013 or 2014? The point was not clear. Will he define what he means by “a job”? Are we talking about full-time, permanent posts?
I welcome Kezia Dugdale’s remarks; it would have been nice if her approach had been reflected by members on Labour’s front bench—I leave that for them to reflect on.
On match funding, there will be £15 million of Government money, which I expect to be matched by European structural fund money. I expect the total pot available for the initiative to be about £40 million to £50 million.
On how I define “a job”, this is about creating private sector employment in the country’s SMEs, and we will work with the business community and other providers to ensure that we fulfil those commitments.
Will the cabinet secretary explain how the savings from Scottish Water will be made without any detriment to the capital investment programme?
We have given substantial capital funding to Scottish Water in recent years, and the agreed investment programme remains absolutely intact.
In recent years, Scottish Water has become increasingly efficient as an organisation, as I recounted in my statement, and in the procurement of its capital programme. Needless to say, in a time of economic constraint, it is possible to receive more competitive prices for particular contracts. As a consequence, it is possible for Scottish Water to achieve more with less money. Therefore, the investment programme can be delivered without the need for Government investment. The greater priority is to deploy resources in other areas of public expenditure.
That is the approach that I take throughout the annual budget monitoring process, so that I can guarantee that the money that we have allocated has been allocated in the most appropriate and effective way to secure the most effective outcome for the people of Scotland.
The Government has consistently refused to raise revenue and instead simply hands on the UK Government’s cuts. The cabinet secretary is now handing on a 1 per cent pay cap, which is exactly the position that George Osborne is taking south of the border. How much negotiation did the cabinet secretary undertake with the public sector unions in Scotland before making the decision on that 1 per cent cap? Will the unions agree it? Are they comfortable with his position of taking money from revenue and putting it into capital—money that could be used to support the lowest-paid public sector workers in Scotland?
I looked at Mr Brown as I listened to Mr Harvie say that the Government refuses to raise revenue. Mr Brown complains frequently when the Government tries to raise revenue—for example, through the public health supplement or the changes to empty property tax relief. It is just not the case that the Government is not prepared to raise revenue.
On Mr Harvie’s point about public sector remuneration, I accept—as I have done consistently—the difficulties that a period of pay restraint causes for members of the public sector workforce. The Government has attached the greatest priority to the preservation of public sector employment at a time when public spending is under pressure. I have discussed that issue with the public sector trade unions on countless occasions. I saw them before I formulated and agreed the pay policy with the Cabinet, and I see them regularly during the year.
It would be wrong of me to say what the public sector trade unions’ opinion is about the shift from revenue to capital—that is for them to say. I have a duty to find ways in which we can deliver the economic opportunities that the people of our country require, and I think that it is a sensible decision to shift resources from revenue to capital to create such opportunities. I am happy to discuss that point with the public sector trade unions. We discuss these and many other issues regularly.
The £40 million of additional investment in housing is welcome, but the affordable housing supply budget fell by £86 million between last year and this year. The table on page 116 of the draft budget shows that spending on housing and regeneration is reducing in real terms, and the official housing statistics for Scotland show that the rented social housing figure fell from 6,099 in 2010-11 to 2,948 in 2011-12. How much of the £40 million will be made available for social rented housing? Will the Scottish Government rethink the level of housing association grant subsidy that is made available to councils and registered social landlords?
Dr Murray’s last point is the most revealing one, because it gets to the heart of the point that I made to Mr Macintosh earlier. In the final year of the Labour Government, £562 million was spent and only 4,832 houses were completed. In 2011-12, £352 million was spent by this Government—I readily concede that that is a much smaller sum of money—but it built 6,882 houses. [Interruption.] Mr Neil points out that they were higher-quality houses.
My point is this: what our constituents are interested in is whether the Government can create the incentives and mechanisms that are necessary to build the houses that people need. The Labour Party must move on and realise that we need to deliver effective value in our public expenditure. I think that this Government is delivering exactly what the people expected. We said that we would deliver 30,000 affordable homes during the parliamentary session, and we are on course to deliver that commitment to the people of Scotland. The prediction was that it would require £610 million of expenditure to fulfil that Government commitment. We have allocated £760 million over a three-year period, so the Labour Party should just accept that what the Government is delivering in its housing programme represents greater and more effective value in constructing the houses that the people of Scotland need.
The cabinet secretary has outlined new funding for youth employment, which I am sure will be welcomed by young people and SMEs in my constituency and across the country. What will all that funding deliver? What is the cumulative spending on providing opportunities for our young people?
The sum of money that will be involved in all the opportunities that are being created for young people in Scotland will be in excess of £1.4 billion. That includes a combination of our spending on higher and further education and some of the programme spending that I have announced. We are taking forward a multiplicity of interventions, whether through the provision of 25,000 modern apprenticeships—that was exceeded this year—the college places that we have put in place or the new employer recruitment initiative that we have set out. Mr Stewart can be assured that the Government attaches the highest priority to creating opportunities for young people in Scotland, and we will continue to do so.
By reinstating some of the cash crudely hacked out of the colleges budget, the cabinet secretary has admitted that the policy direction has been wrong. When will he overrule the Cabinet Secretary for Education and Lifelong Learning, reinstate the rest and give hope to the 10,000 young people on college waiting lists?
The education secretary and I work very co-operatively on trying to find the best way forward for the college sector in Scotland. Mr Findlay has to accept, as the colleges of Scotland have all accepted, the need for reform in the way in which colleges operate. We need to focus more on the needs of the individuals who are going through the learning experience so that we are able to provide opportunities for the people who are available and able to go to college.
On opportunities for young people, under this Government, for the first time ever, young people between the ages of 16 and 19 have a guarantee that they will have an education or training opportunity if they cannot find one of their own free will. I would have thought that Mr Findlay might have accepted and acknowledged that as a step forward for the young people of Scotland.
On the key issue of the health service, can the cabinet secretary confirm how the Government has managed to continue its policy of protecting front-line NHS budgets?
As I confirmed to members earlier, the passing on of Barnett consequentials to the health service is set out in the health budget arrangements. Within that budget, greater priority has been given to the funding available to the territorial health boards in Scotland. As a consequence, there is a strong funding settlement in the budget to support the delivery of activities by Scotland’s health boards in every community of our country.
The Royal College of Nursing says that nursing levels are at their lowest point since 2005, with almost 2,500 nurses having been cut and patient care suffering. Today, the First Minister pledged his support for nurses. Will the cabinet secretary tell me how the real-terms reduction in the health budget that is set out in table 3.02 is consistent with the First Minister’s view? How many more nurses and other NHS staff will lose their jobs as a result?
As the First Minister pointed out during First Minister’s question time, Scotland has more nurses per head of population than any other part of the United Kingdom.
After Jackie Baillie’s contribution to last year’s finance debates, when she managed totally and utterly to contort—to a quite ridiculous extent—the proportion of our budget that was going into preventative expenditure, I will take no lessons from her about numbers.
I thank the cabinet secretary for prior sight of the statement and his billet-doux of yesterday. I will be at him later, though, to suggest some spending for very good community sports projects.
I want to ask about the inflation rate in the NHS, which has been consistently two to three times more than that in the retail prices index and the consumer prices index, thus eating deep into NHS cash. Is it not time that the Government told private finance initiative groups that we can no longer afford to keep paying them the extortionate rates that they are extracting from the cabinet secretary’s budget. I suggest calling them all in and telling them—especially the banks among them—that we are all in this together and that they will have their payments reduced, as workers and benefit claimants are having their incomes reduced.
Margo MacDonald has put forward a pretty good idea. If she would care to join me for the encounter, she would be very welcome.
In all seriousness, as I think Margo MacDonald knows, I have explored very carefully the nature of the contractual commitments that have been made under PFI schemes. If I could unpick any of those schemes I would, but they were so appallingly badly negotiated by my predecessors that in many cases the owners of those PFI contracts have the exclusive right to determine whether there is even a negotiation—I cannot insist on a negotiation in some cases. Even if there was a negotiation and a change of financial arrangements, my predecessors negotiated the right for the owners of PFI contracts to retain some of the proceeds. I do not think that my predecessors did a very good job of negotiating PFI contracts.
If the SNP is so concerned about accelerating capital spend, why did none of the cabinet secretary’s SNP MP colleagues attend Monday’s debate on the Infrastructure (Financial Assistance) Bill in the House of Commons?
The cabinet secretary also mentioned early years and children. Given the £4 million cut to the Scottish Government’s children and families budget set out on page 58 of the budget document—not to mention the budget pressures on local authorities, which provide children’s services—can he explain in more detail how he thinks this budget is good for Scotland’s children?
The budget is good for Scotland’s children because it draws together essential work on supporting children, particularly in the early years—as I set out last year in introducing the early years change fund—undertaken by local authorities, health boards and other key partners in the process to ensure that children in their early years get the most effective and joined-up support that they can obtain in our country. The Government has created a framework that brings together all the key partners to deliver the best options and solutions for our country’s children.
That ends questions on the budget statement. We move—
On a point of order, Presiding Officer. I want to raise a point of order under rule 5.8 of our standing orders, which sets out that
“the Parliamentary Bureau shall ensure that sufficient time is set aside ... for consideration of draft budgets”.
As a member who is not represented on the bureau, I seek your assurance as to how that will be interpreted.
In last year’s Finance Committee report on the budget, it was agreed that there was a need “to improve the presentation” of the climate change aspects of the budget and that, in particular, there was a need for a “read-across between relevant documents”—in other words, between the Government’s report on proposals and policies under the Climate Change (Scotland) Act 2009 and the draft budget. Indeed, I see from one of the budget documents that were provided to members just an hour ago that the Government agrees. It says:
“this assessment needs to be read alongside the analysis contained in the Report on Proposals and Policies”.
Committees are being told to expect the RPP issued under the 2009 act some time in November. Will you ensure that when the Parliamentary Bureau sets aside “sufficient time” to consider the draft budget, that is understood as setting aside sufficient time to consider both documents together, as the Finance Committee and the Government have agreed is necessary?
I thank Patrick Harvie for giving me notice of his point of order, which has enabled me to give the matter careful consideration.
Scrutiny of the Scottish Government’s budget is a very important part of the Parliament’s work. The process for considering the draft budget is set out in standing orders and business managers will in due course consider the timetable for its consideration under rule 5.8. The requirement on the Scottish Government to lay a report in Parliament on climate change policies and proposals is set out in the Climate Change (Scotland) Act 2009; there is no requirement in the act for the report to be published alongside the draft budget, although I accept that the member is entitled to make a case for that to happen and that he cites the Finance Committee’s views on the matter. I suggest that the member raises his point with the conveners of the two relevant committees and any other relevant subject committee that might wish to make a case to the Scottish Government before the bureau considers timetabling matters.