Strategic Spending Review
The next item of business is a debate on the strategic spending review.
14:35
I thank the cabinet secretary for the advance copy of his statement.
This year, the budget process will lack the drama of budgets in the previous parliamentary session. No knife-edge votes or brinkmanship will take place, and Mr Swinney will not need to turn to the Conservative group, on which he could always rely, in his hour of need. The Government has a majority and can pass the budget that it wants. However, even if the process has no drama, all of us in the Parliament are keenly aware that the budget and the spending review are critical. The budget must be for economic growth, because the challenge that faces our economy is huge.
The most recent gross domestic product figures show that the Scottish economy is on the cusp of contracting again. Growth was only 0.1 per cent, which was lower than the rate in the rest of the United Kingdom. The unemployment rate fell in the most recent figures, but youth unemployment increased again to levels that have not been seen in our country since the early 1990s and John Major’s Government.
The Scottish Government often complains about the powers that it does not have, but now must be the time to focus on the significant powers that it does have to strengthen our economy. Even with the cut in the Scottish Government’s budget, its control of spending—which is still not far off £30 billion—is a powerful weapon in meeting the economic challenges that we face.
The Scottish Government tells us that this is a budget for growth and that it is, in difficult times, delivering investment that will stimulate high-growth industries such as renewables. It says that it will reform the public sector, tackle problems such as youth unemployment and invest in prevention and not only in cures. Of course we can agree with the sentiment behind all that, but we must question whether the budget will deliver what it sets out to deliver. Aspects of the budget will have damaging impacts—not only socially, but economically. That is why we will make the case that the budget needs to change.
That is not to say that we do not acknowledge that Mr Swinney has had a difficult job to do in producing the budget. He is dealing with a budget that is £1 billion lower than that in 2010 as a result of the Westminster coalition Government’s spending plans. Labour members do not disagree with the Scottish Government that the cuts are too fast and too deep and that they threaten the recovery.
However, the rub for the Scottish National Party is that it has known for more than a year exactly how much its budget would be. We said that the SNP should have published a full spending review last year, as the Welsh Government did, and we have argued that the delay in publishing the spending review has caused further damaging uncertainty, particularly in the public sector.
While the rest of us did not have the detailed figures for the spending review period, the SNP did. It made commitments at the election in the full knowledge of what its budget would be, so the budget is its responsibility. The Scottish Government cannot pass the buck for the decisions that it has made. The budget might meet the SNP’s political priorities, but let us be clear: Mr Swinney has pulled no rabbit out of the hat. The budget holds a great deal of pain for key parts of our economy and many people in our society.
We have fundamental concerns about the budget plans that have been set out for local authorities. The fact that the overall budgets for councils are not being cut in cash terms tells only part of the story. Major real-terms cuts in council spending will be made. UK inflation is higher than was expected a year ago and, by 2015, prices are predicted to have increased by 13.3 per cent on their 2010 levels. It is clear that, far from protecting councils from cuts, the Scottish Government is passing on the pain. A crucial part of that is that it seeks once again to pass on to local authorities the responsibility for its pledges, too—the five-year council tax freeze, and the pledges on police numbers, teacher numbers and more. That is all taking place when the Christie commission tells us that the gap between revenue and demand for local authorities will be some £3 billion by 2016.
If councils are to meet the costs of the SNP’s pledges, more council workers will have to lose their jobs and further service cuts will have to be made. The evidence from the previous parliamentary session is that education and social work budgets will be particularly badly hit.
More public sector jobs will go—with all the consequences of that to our economy—some of the most vulnerable people in our communities will be denied the services that they depend on, and local education budgets, which are crucial to our young people, will be hit. The Scottish Government might think that that is a good political trick, but the cuts will not be council cuts; rather, they will be the Scottish Government’s cuts because of decisions that it has taken, and I have no doubt that they will be strongly resisted in communities throughout Scotland.
We know that there is great concern among our local authority leaders—at least among those who are allowed to be concerned—about the settlement. That is clear from the fact that there is no agreement—I understand that this is the case—with local authority leaders that the settlement is adequate in a number of key areas. On maintaining police numbers at the current level, all that has been agreed is that there will be flat cash settlements for police boards. There is no commitment that that will be enough to maintain police numbers. We have already voiced concerns about the loss of hundreds of police staff posts.
Despite the many statements that were made in advance of the election on the Scottish Government’s policy of no compulsory redundancies, no such agreement has been reached with local authorities, and there is, of course, great concern among councils about Mr Swinney’s plans to cut their capital spending by £120 million and £100 million in the next two years in the expectation that they will borrow to fill that gap over that period. I am a supporter of the Scottish Government having borrowing powers at a higher level and at a faster rate than those that are proposed in the Scotland Bill, but in asking local authorities to do its borrowing for it, Mr Swinney has received no commitment that that will happen. Given the financial pressures that local authorities are already under, that cannot be surprising, especially because he has apparently not said whether he will reimburse councils for the substantial interest payments that will accrue on those loans.
We can only hope that that move will not mean that planned local infrastructure investment will be stalled or cancelled. We do not believe that it is a fiscal stimulus; rather, it is sleight of hand. The matter is crucial, because one issue on which we and the Scottish Government agree in principle is the need to maximise spending on infrastructure in order to stimulate economic growth. Therefore, we welcome the other action to reduce the impact of the cut to the capital budgets from the UK Government, but it is now vital that more be done to deliver key infrastructure projects more quickly.
In the previous session, we made it clear that we did not believe that sufficient progress was being made on school building programmes, and we opposed the decision to axe the Glasgow airport rail link project. We believe that it will be important for the Scottish Government to set clear timescales in this session for progress on its key infrastructure projects, particularly as we have heard only this week of the prospect of delays in the Borders rail project. I know that key projects in my region are delayed, and there are several projects to which the Scottish Government has said that it is committed that are either delayed or for which there is no clear timescale. The cabinet secretary has said that £2.5 billion will be available through the Scottish Futures Trust.
In response to our proposal for a Scottish infrastructure bank, he said that the Scottish Government is already levering in high levels of private investment. Members should therefore be able to expect that those projects will now proceed without delay. Delay in them represents failure to take the action that is required to stimulate growth. The Scottish Government has for too long talked about projects rather than getting on with the business of delivering them; that needs to change.
We are also particularly concerned about what the budget will mean for spending on education. We will take time to scrutinise the implications for higher education and for our universities’ ability to bridge the funding gap with their English counterparts. We have already said that we are concerned about local education budgets, and it is clear that further education is also a major loser in the budget. Further education should be a focus for investment when we still have skills gaps in our economy and rising youth unemployment. Year-on-year cuts will mean teaching staff going and cuts in course provision. It is hard to square that with the Scottish Government’s stated goals of guaranteeing places in full-time training or education for all 16 to 19-year olds and tackling youth unemployment. That budget decision undermines that work and comes at the cost of opportunities for our young people.
The Scottish Government has said that it will protect the health budget, but today we hear from nurses that efficiencies are becoming cuts to the front line. We have already seen 1,700 nurses’ jobs go since 2009. The budget has consequences for teachers, nurses, patients and pupils.
I wholly accept the right of the member to articulate different priorities. Perhaps, in the spirit of constructive opposition, he will outline to the Parliament how he would fund those different priorities from within a fixed budget.
I will be outlining our different priorities in this speech. I am pleased that Mark McDonald made that point, as I am about to come to them. Obviously, I would have liked to have been in a position to set the budget, but it has been set by the Scottish Government, and it is for it to account for the decisions that it has made. We are being asked to take part in this budget process. This is the start of that process. We will do all that we can to improve the budget, because there is no doubt that the budget very much needs to be improved.
Earlier, I said that the Government has a majority and will pass the budget that it wants. However, I acknowledge that the cabinet secretary has said that he will seek consensus and will continue to speak to other parties during the budget process. I have made it clear today that we have grave concerns about important aspects of the budget, but we will, of course, engage in any opportunities that we are given for discussion of the changes that might be made to the budget as it is debated in Parliament. We welcome such an approach. We will continue to press for proposals that we have brought forward and which we believe will help to contribute to the stated aim of the budget, which is to promote growth.
We want to see broader initiatives to promote higher levels of employment, which is why we will continue to call for an expansion of the future jobs fund. We welcome the fact that the initiative has started in the voluntary sector, but we believe that it should be extended to the private sector. We support the goal of creating a low-carbon economy and growing the renewables sector, for which investment and infrastructure will be crucial. We will continue to make the case for our green new deal policy, which would make 10,000 homes energy efficient, and would tackle fuel poverty and create 1,000 jobs and apprenticeships. We will also continue to make the case for a living wage for all public sector workers and for public sector contracts to make provisions for a living wage, too. In these times of pay freezes and higher inflation, it is all the more important that we protect the most poorly paid people in our society.
We agree with the cabinet secretary’s analysis of the UK Government’s pensions policy. We hope that he will engage with trade unions on those issues, although he has limited room for manoeuvre. We believe that he is right not to force changes in the local government scheme.
This is the start of a process around determining the spending review. Winning the vote in this Parliament will be the easy part for the Scottish Government. I believe that it will be far harder for it to win beyond this chamber the argument that this is indeed a budget for growth and the protection of public services, because key decisions that have been made in this budget by this Government will mean cuts to services and opportunities missed to invest in growth.
I hope that the Scottish Government will take seriously the case that we will make for this budget to change, because it will need to change if it is to attract our support and, I believe, the support of many others in this country.
14:42
I also begin by thanking the cabinet secretary for advance copies of his statement and the strategic spending review. I was particularly glad to get the latter, because I took the time—such that I had—to read the details in the spending review before I read or heard the statement. The two tell slightly different stories. I am pleased also to see that the document spends more time talking about the Scottish Government than it spends simply whining about the UK Government. This is a Scottish strategic spending review, and the focus ought to be entirely on Scotland.
I want to pick up on a couple of the points that the cabinet secretary made in his statement. On local government, the cabinet secretary said—I have it here in black and white—that
“Local Government will be offered a settlement that maintains their 2011-12 level of revenue funding.”
I see that Mr Swinney is going straight to his papers to check what he actually said. Mr Swinney said that that level of funding will be maintained for local government. However, if one looks in the Scottish Government’s draft budget document, it says that it will not be maintained at all. In the current financial year, local government gets £8.3 billion in resource funding. Next year, the amount will go down to £8.1 billion. The year after, it will go down to £7.7 billion. In 2014-15, it will go down to £7.3 billion, which is a reduction in real terms of £1 billion over the course of the spending review. However, the cabinet secretary stands up in front of us today and says that the Government will maintain spending.
Whenever the Government talks about budgets being handed down from the United Kingdom Government, it is always in real terms. It never wants to talk about cash terms, particularly if budgets are going up; it only wants to talk about real terms. However, when it talks about the money that it is passing down the way to local government, it suddenly does not want to talk about real terms; it only wants to talk about cash terms. What a disgrace! What a complete shambles!
Mr Brown should marshal his arguments for the apology that he should issue to me for what he has just said in Parliament. If Mr Brown looks, he will see that I said that the funding available to local government is constant at 2011-12 levels in cash terms on revenue and business rates combined. That is what I said to Parliament a few moments ago, so Mr Brown should withdraw the rubbish that he has just communicated. [Interruption.]
Quiet.
The Greek chorus behind Mr Swinney is getting very excited. The cabinet secretary gave the impression that local government was doing fine, but its budget is cut in real terms by £1 billion—[Interruption.]
Order.
I am just getting started.
What about some of the other corkers from Mr Swinney? Let us look at teacher numbers. Four years ago, Mr Swinney stood up in this Parliament and said, “We are going to increase teacher numbers.” A couple of years later, he said, “We are going to maintain teacher numbers.” Today—it was fantastic—he said, “We are going to maintain teacher numbers in line with pupil numbers.” What a commitment that is.
Mr Swinney stood up and said that the Government has closed the higher education funding gap “in full”, as higher education funding drops. Not even Mr Russell believed Mr Swinney when he said that the Government had closed that gap.
Let us judge the Government on the one point on which it did want to be judged. This is a Government that has said that it wants to be judged on the economy. It is a Government that said that economic growth is the biggest priority of all. So, let us have a bit of a look at what it has done on the economy. There is some good stuff in the budget document, such as the small business bonus and the idea of using public procurement to try to help deliver training and apprentices. All of that is good.
There is also some completely unsubstantiated stuff in the document, such as the statement that the Government is going to grow exports by 50 per cent within six years, while at the same time it will cut the budgets to the enterprise agencies. The enterprise, energy and tourism line will go down next year to £410 million. It will drop to £392 million the year after that and to £375 million the year after that. The economy is the Government’s priority, but the enterprise agencies will get continual cuts—indeed, they have been on a long-term trajectory of continual cuts.
The third sector, on which the Government is so keen, gets hit too. Its budget will be cut to £27 million, which is down from £35 million in the previous year. The budget will then go down to £24 million next year, the year after and the year after that. There will be cuts to the third sector.
I know that there is a lot of detail in the document and that it is perhaps unfair of me to make these points to Mr Brown, but the First Minister is encouraging me to go on. The reason why the third sector budget is different is because the Scottish investment fund was a three-year commitment that the Government gave in 2007. It does not appear in the budget because that commitment has expired. We actually extended the term of that commitment from three years to four years. I would have thought that Mr Brown might have welcomed that.
Perhaps it is unfair of me to have expected the cabinet secretary to have read the entire document in full. It says quite clearly in the document that there will be a cut to the third sector from this financial year to next financial year and the one after that. If the third sector is a priority—which the Government says it is—one would not expect it to be getting the kicking that it is getting.
Will the member take an intervention?
I will not at this point.
We heard last week in the debate on the Government economic strategy how critical innovation is in helping to drive forward Scotland’s economy. The budget line for innovation and industries was £17 million; it is now down to £5.8 million. The budget has been slashed, yet innovation is something that we deem to be crucial.
We could go on and on about areas of the budget that touch the economy. Skills are so important to this Government, yet Skills Development Scotland also gets a healthy cut. Higher and further education gets a cut, both in revenue spending and, particularly, in capital costs. [Interruption.] Mr Neil should not be quite so bold. The housing and regeneration budget goes from £389 million—[Interruption.] If Mr Neil listens, he will hear the figures—the amount will be down to £252 million by 2014-15.
This Government ought to be judged by what it does as opposed to what it says. Let us consider what is actually in the budget document as opposed to the gloss and spin that we consistently hear. The SNP Government has said that the economy is the most important thing, but the rhetoric and the reality do not match, because it knew exactly how much money would be available.
Much less.
I am happy to take an intervention from the First Minister at any time in the remainder of my speech. It is interesting that the First Minister said, “Much less”, because the last page of his document shows that in 2008-09, the first full year of the SNP Administration, total managed expenditure—the total Scottish Government budget—was £31.9 billion. This year, the figure is £33.6 billion, which is £1.6 billion higher. Next year, with the deepest and most “savage” cuts that Mr Swinney talks about, the figure will go up from £33.6 billion to £33.8 billion. The year after, following more “savage” cuts, the figure will go up to £34.4 billion, and the year after that—the final year of his spending review—it will go up to £35.2 billion, which will be the highest ever total Scottish Government budget. It will be higher than the high-water mark of 2010-11—the total Scottish Government budget will be £700 million higher.
Let us see the reality match the rhetoric for once. Let us see the SNP Government actually put the economy centre stage.
I point out to members who speak in the open debate that speeches are to be of six minutes, but the Presiding Officers will be a bit generous if you decide to take interventions.
14:58
I direct Gavin Brown to page 5 of the document, which indicates that in real terms between 2010-11 and 2014-15 there will be a reduction of 12.3 per cent in the Scottish budget.
I want to be positive, so I will not start attacking the other political parties. Members might say that that is me changing the habit of a lifetime, but let us move along.
During these undoubtedly challenging times, the achievements of the SNP Government have been nothing short of remarkable: 3,300 council houses were built, 1,000 additional police officers were put on the streets, crime fell to a 35-year low, university education became free again, educational attainment went up, class sizes fell, hospital waiting lists went down, and the small business bonus was introduced. More recently, Scotland became the only part of the UK with rising employment and falling unemployment.
Despite our achievements, we appreciate that there is still much to do and much that can be done. Tough choices will have to be made. However, with our strong track record of economic competence and our determination to do what is best for the people of Scotland, I am sure that we can continue along the path of recovery to become a more prosperous country.
Our deliberations on how best to play the poor hand that we have been dealt should focus on creating jobs and opportunities for Scots and protecting front-line services.
As householders across the country know, when times are tight we must do all that we can to make our money go further. We must get the best value out of the public pound in order to continue to deliver the services that we all expect and rely upon. An effective way of achieving value is through preventative spending, so I am pleased by the commitment that the cabinet secretary gave today. In essence, the idea is to spend now to save later. The concept is painfully simple: address the root of a problem and prevent it from escalating or even from emerging in the first place. In most cases, we would not only prevent a potentially adverse outcome, but would save time and resources that could be better spent.
Perhaps the most striking example of that is in the field of healthcare. We are all acutely aware of our personal wellbeing. Despite the fact that fewer of us than would wish it adhere to a healthy regime, we understand that a healthy diet and regular exercise can help to prevent serious illness somewhere down the line. That idea can be extended to the health of the nation at large.
Minimum pricing for alcohol and effective tobacco-control legislation will help to address Scotland’s unhealthy relationship with cigarettes and alcohol, but they will also ease the huge burden that is placed on NHS resources and staff every year from alcohol and tobacco related health issues, which will allow resources to be directed towards treatment of illnesses and conditions that we cannot prevent. I am delighted about the additional tax on large retailers of tobacco and alcohol.
Similarly, adult mental health issues cost the UK Government £10 billion every year in benefit payments alone, yet only £2 million is spent on prevention and alleviation, including promotion of self-esteem and coping skills. The Scottish Government, by refocusing funding, will not only save a huge amount of money, but will greatly improve the quality of life of thousands of adults who are coping with mental illness. In my constituency, the Garnock Valley Allotment Association, which was set up for a modest sum, enables mainly older people—who in many cases are partly disabled or have long-term illnesses—to get involved in a healthy, social and productive outdoor pursuit, rather than sit at home watching the telly and, in some instances, taking antidepressants.
Preventative spending can also be applied to crime. In 2003, a quarter of prisoners in Scotland’s prisons came from just 50 of our 1,222 council wards. It is surely common sense to target spending on education and employment opportunities in those areas, where one in 29 of all 23-year-old men is in prison. That would not only benefit people in deprived communities, because the financial savings could be huge. A young person in the criminal justice system costs on average £200,000 by the time they reach 16, yet each person who is given support to stay out of the system costs the taxpayer less than £50,000. Violent crime is estimated to cost Scotland £3 billion annually. It is no coincidence that the introduction of 1,000 extra police officers, which is a perfect example of preventative action, has helped to reduce crime so much in recent years.
Does the member agree that the reductions in police support staff numbers will undermine that preventative intervention?
The issue is about ensuring that we spend our money as effectively as possible. The Scottish Government’s approach is all about directing resources to where we get the best value for the public pound.
Our move away from short prison sentences, which have been shown merely to create reoffenders, will help to improve the life chances of those in deprived communities, reduce expenditure on criminal justice and cut crime rates.
Experts make it clear that the most effective form of preventative spending is, without doubt, spending on the early years. We have sound evidence for that. It is an established fact that a child’s brain develops at a phenomenal rate in infancy and that it is important to stimulate children’s minds and properly educate them during that period to produce well-rounded teenagers and adults. Economic analyses by James Heckman, Alan Sinclair and others show that, for every £1 that is invested in a child between the year of birth and three years old, somewhere between £3 and £14 is saved later on. Those savings often come in reduced costs of prison and mental illness, as well as through enhanced academic achievement and in other domains.
I am confident that targeted preventative spending in the early years through the Government’s £50 million sure start fund will help to tackle a great number of social ills, including inequality and poor health, as well as issues of employability and academic attainment. There is a massive benefit to the children and families in question and new research that has been published by the Scottish Government has found that the public purse could save £131 million a year in the medium term through effective intervention in the early years. In the most severe cases, in which a child has complex needs, £37,400 could be saved each year for each child.
Faced with diminished budgets while demand for services continues to rise, we must squeeze as much value as possible out of every penny. Preventative spending can help not only to reduce negative spending, but to deliver a better standard of living and a better quality of life for everyone in Scotland.
15:04
I thank the finance secretary for the advance copy of his statement and for the extensive number of books that he provided. I cannot say that we have read them all yet, but we will do so in the coming weeks. I am sure that there will be more debates on the substance. Often, the presentation in such statements is not the reality that we go on to discover, and I hope that we will return to the issues in more detail.
Perhaps Mr Swinney should have looked at the budget at an earlier stage. The delay of a year in making such difficult decisions has prolonged the agony. Whatever we think about the UK’s budget decisions—and some members in the chamber today will not approve of them—we cannot say that the UK Government has taken a short-term approach. It is looking to the long term and making long-term decisions to get public services into sustainable shape for the future.
It is unfortunate that the SNP Government has sought to dodge and delay endlessly over the last period. Even today, we do not know all the detail of the budget’s impact. At the end of the day, we are talking about vulnerable people being affected if services are not made sustainable and if the framework that we need to tackle the big challenges for the future is not created.
For the Liberal Democrats, the economy is one of the big issues. I have three points to make. The first is on the council tax freeze. Our pledge was for a two-year freeze, whereas the SNP promised a five-year freeze. Those who have the biggest incomes and live in the biggest houses will make the biggest gains from a council tax freeze, and I am not sure that this difficult time is the right time for the freeze. I urge Mr Swinney to reflect on that decision. I am not sure that giving someone such as Sir Fred Goodwin a £2,900 council tax break should be our priority when we face such challenging economic times in Scotland.
Will the member give way?
No; I will not take interventions yet. I might come back to the member.
The second issue is the bridge that has not yet been built across the Forth. Mr Swinney has cut £250 million from the transport budget, but he said that he has made savings. Instead of investing that money in other capital infrastructure projects that would generate jobs and growth, he has decided to spend the money on other priorities. He criticises the UK Government for the reductions in capital spend, yet he cuts £250 million from the transport capital infrastructure budget. A bit more consistency from Mr Swinney on that front would be helpful.
Thirdly, Mr Swinney did not include in his statement our plan for Scottish Water, and I would like him to look at it again. As a result of our plan, considerable sums could be invested in science, warm homes, young people and business. Some of the priorities that are in Mr Swinney’s documents are also our priorities, and our Scottish Water plan would have been a mechanism for delivering those things, but he has turned his face against it.
Mr Swinney also had the cheek—
Members: Oh!
—to mention the Christie commission in the same section of his speech in which he mentioned the reform of police and fire services. The Christie commission explicitly stated that it was against top-down, silo-mentality, big-bang changes and the centralisation of power, but that is exactly what the reform of police and fire services is. I do not know how Mr Swinney was able to mention those two things in the same section of his speech.
Will the member give way?
No.
The SNP should reflect. If it is going to take on these commissions and get great men such as Campbell Christie to look at proposals, it should have the decency to follow through on some of their priorities, such as those that the Christie commission mentioned.
It was raining earlier. The coalition is always responsible for the rain; the SNP is responsible only for sunshine. However, people realise that there is a bit more of a partnership. In his spending statement today, Mr Swinney painted a situation in which the UK does only bad things and the Scottish Government does only good things. There were some job losses today at Highland Toffee, which is a really bad thing. That happened in Scotland. In the same country, Amazon jobs have been created over in Fife, and I give Mr Swinney credit for the work that he did on that. However, I want a bit of recognition that the UK Government impacts on Scotland’s economy and contributes to the stability and conditions that created those jobs.
Will the member give way?
No.
There is a partnership between the two Governments, and it demeans Mr Swinney and his office for him to present the situation in black-and-white terms and to say that the UK is responsible only for the bad things and Scotland is responsible only for the good things.
The big disappointment in all of this is that Mr Swinney is continuing to duck responsibility. He takes credit for the increase in spending for the national health service but passes the responsibility for dealing with local government cuts on to local authorities. We understand that difficult decisions have to be made but the cabinet secretary should at least step up and accept some of the responsibilities of office and the fact that we have to work together in partnership to achieve change.
I call Jamie Hepburn. There will be some latitude for those who take interventions.
15:10
I will bear that in mind, Presiding Officer, although I note that Willie Rennie did not take any interventions.
I welcome the cabinet secretary’s statement. In a previous debate on the programme for government, I said that the debate was set firmly in the context of the difficult financial settlement that the UK Government had given Scotland. The spending review is set in the same context. Over the next three years, the Scottish budget will be cut—in real terms, I remind Mr Brown—by a substantial £3.3 billion, or 11 per cent below the 2010-11 level. That and the substantial reduction in the capital budget represent a major challenge to the Scottish Government’s efforts to support public services and investment and provide a stark and severe illustration of the problems that it faces.
John Swinney said that the spending review falls at a defining moment not only because of those Westminster cuts but because of the fragility of the UK and global economies. Indeed, the downgrading of Italy’s financial status has provided another reminder of that fragility. Closer to home, though, problems have been identified in the UK’s economic outlook. Last summer, the Organisation for Economic Co-operation and Development forecast a 2.5 per cent growth in UK gross domestic product in 2011, but this summer, it downgraded that figure to 1.4 per cent—a move that has been reflected in downward revisions by others. Westminster’s decision to cut the deficit too deeply and too fast is simply not stimulating the economy and only bears out the warnings made by Paul Krugman, Joseph Stiglitz and others that such an approach would not work. In that regard, I thought it ill advised for Willie Rennie to speak as a Tory champion—although I note that he is not listening at the moment.
The Scottish Government needs to take strong action to protect Scotland, and we heard a lot about that in today’s statement. I welcome the announcement of investment in capital spending, even though, given the severe cuts to capital budgets, such a move cannot be easy for the Government. With the announced investment in affordable housing, the Forth replacement crossing, the school building programme and the Edinburgh and Glasgow improvements programme, the Government is not only supporting economic recovery in the short term with the employment of people to construct those projects, but opening up longer-term economic opportunities and ensuring that Scotland has an infrastructure fit for the 21st century.
I welcome John Swinney’s comment that he hoped that this would be the last year of a public sector pay freeze. He took that measure not with any great relish but as a consequence of London’s cuts agenda; nevertheless, he will appreciate how difficult it has been for workers.
As someone who supports the Scottish Trades Union Congress’s there is a better way campaign and is a signatory to the people’s charter, Jamie Hepburn surely cannot support the Government’s decision to have another public sector pay freeze or the lack of any move to extend the living wage across the public sector. I hope that he will make representations to the cabinet secretary in that respect.
If Mr Findlay had listened to what I said, he would have heard me welcome the cabinet secretary’s hope that the pay freeze will end next year. I hope that Mr Findlay, too, welcomes that. Indeed, I remind him that his party’s former Chancellor of the Exchequer said that under Labour the cuts would have been more severe than those made by Margaret Thatcher. Moreover, we should not forget the role that Mr Findlay’s party played in leading us into the situation that we face today.
I accept—and Neil Findlay will agree with me—that things have been difficult for workers and their families. I welcome Mr Swinney’s hope that the pay freeze will end.
We have seen an uplift in the Scottish living wage. I keep hearing from the Labour Party that it is campaigning for the Scottish living wage, but the Government is taking it forward. The Labour Party wants it to be implemented across the entirety of the public sector, but there are clear limitations on the Government’s ability to do that. It cannot dictate to local authorities what their pay policy should be, but I would, of course, welcome local government following the Government’s strong lead in implementing the living wage. There is also a commitment to continue the policy of no compulsory redundancies—the Government has given a clear commitment to those who work for it in that regard.
I regret the announcement that pension contributions are likely to be increased as a consequence of Westminster holding a proverbial gun to the head of the Scottish Government and, by extension, Scottish public sector workers. In that regard, it is highly understandable that Gavin Brown pleaded with us not to focus on the record of his Government. If my party’s Government had such a record, I would be trying to divert attention away from it.
If that sounds like Tory bashing, let me turn to the Chief Secretary to the Treasury, who recently wrote to John Swinney, following John Swinney’s request for an extension to the implementation date for the increase in pension contributions. Danny Alexander wrote:
“In the event of any time overrun ... I would have to reduce the Scottish Government’s budget by £8.4 million for every month’s delay ... I cannot agree to your request to extend the implementation date beyond April 2012.”
I think that that is an absolutely scandalous—
Will the member give way?
I was just about to invite Mr Rennie to defend his colleague.
Does the member not realise that money does not grow on trees? [Laughter.] If you don’t get the money in, you can’t spend it. It is a simple formula. I advise the member to go back and look at that again.
I can confirm to Mr Rennie that I am well aware that money does not grow on trees. Is he aware—I would have thought that he would be—of the Liberal Democrat principle of subsidiarity, which is about decisions being taking at the most appropriate level? I thought that he was a confirmed devolutionist, yet his party and his Government are dictating to the Scottish Government what its policy should be on pensions by demanding that it should follow their lead and bribing it to do so.
Willie Rennie rose—
Do I have time to give way again, Presiding Officer?
You must close shortly.
If I did not have to close shortly, I would have been delighted to give way to Mr Rennie, even though he showed a remarkable reluctance to give way to anyone.
I had hoped to focus on preventative spend, which was an extremely important aspect of the cabinet secretary’s statement, and which Kenny Gibson spoke well about. I welcome the announcements that have been made today. The emphasis on preventative spend is just one of many reasons why all sides of the chamber should welcome John Swinney’s statement.
15:17
I begin by sympathising with Mr Swinney for having to make a spending review statement in the economic circumstances that he faces. I do not envy his task, but I do not support the game plan that he has set out for playing the hand that he was dealt.
As with much of what has gone before in relation to the Government’s financial plans for local government in particular, the devil will be in the detail. There is as much interest in what was not in the statement and in what the cabinet secretary has kept hidden from us—or has just not dealt with.
However, one thing that is clear is that the historic concordat is now consigned to history. No longer do we have the pretence of a respect agenda and agreed objectives dressed up as a deal, which was not worth the paper that it was written on.
Now we have the historic diktat, and COSLA can be in no doubt that Mr Swinney holds sway and that he will make councils pay. Contrary to what he said in his statement, there is no agreement with COSLA on the substantive issues in the budget.
If we need an example of the new relationship with COSLA, we need look no further than the wheeze that Mr Swinney has come up with to reprofile local government capital allocations. Asking our councils to raise money through prudential borrowing to fill the gap that he is causing by pushing back the capital budget to 2015-16 may have a superficially adroit air but, in reality, it is a bit like Mr Swinney booking his summer holiday, nipping next door to get his neighbour’s credit card to pay for it and giving them a verbal IOU to ease their fears about whether he will pay them back. It might have his mates down the pub—or in sections of the Scottish media, which is much the same thing—toasting his audacity, and it might give the Scottish Government some short-term breathing space on certain infrastructure commitments, but not all councils may be in a position to deploy the borrowing that Mr Swinney hopes for. He should know, because he has been told by COSLA, that some local authorities’ capital borrowing credit cards are maxed out. Where that will leave the cunning plan is anyone’s guess—and surely that is the problem. We should not leave key financial tools to that kind of fiscal juggling act.
Unfortunately, Mr Swinney’s statement was short on an answer to what he will do if local authorities cannot come up with the prudential borrowing that he expects. He may not care that local authorities do not deliver on their capital programmes as long as his national priorities are met, and he appears not to have given COSLA any commitment on whether the sum he finally pays back will include the outlay costs and interest payments incurred by councils in obtaining the borrowing that he needs for his plan to work. His plan is therefore one of conjecture; it does not give the financial certainty that the economy needs at this time.
Only last week we heard the First Minister, with no hint of irony at all, accuse the Westminster Government of sending a threatening letter on pension fund changes. We heard about it again this afternoon. The SNP can hardly complain about financial intimidation when it has been using the same approach to deal with local government for the past four years. Financial coercion will also be used to deliver the increasingly unsustainable council tax freeze for the next five years, so let us hope that we hear less about the bully-boy tactics of the Westminster goose when they have been good enough for the SNP gander.
The member referred to the “unsustainable council tax freeze”. Will he remind us what the Labour Party’s policy on the council tax was at the election?
I am happy to clarify that any time that Mr Hepburn wants. It was to accept the reality: the council tax freeze was already in place for the current financial year, and we accepted that. [Interruption.] If Linda Fabiani wants an explanation, why does she not listen to it?
We also accepted that Mr Swinney had put in place the indicators for the second year, but we said that we would increase the council tax subsidy by another £10 million. It was not a great deal, but at least it addressed the fact that we cannot continue to freeze the figure at £70 million for nine years and expect services to remain at the same level. That is the fiscal reality that SNP members will not confront but which we faced up to. [Interruption.] They do not like the answer, but they cannot shout me down.
Mr Swinney has also failed to give any signal of the provision that he has factored in to cope with the pressures that will follow the impact of Westminster’s Welfare Reform Bill. It is widely accepted that many services that councils deliver will be adversely affected and that many people in vulnerable groups will be forced to look to councils for support when their benefits are changed, cut or removed. It is par for the course for Mr Swinney to put off today what he can blame Westminster for tomorrow, but when individuals and susceptible groups can foresee the impending catastrophic impact of the welfare reforms it would be utterly inexcusable for him to play politics with the issue.
The gap identified by the Christie commission between existing service demand and delivery is going to grow. Far too many vulnerable groups will find the services that they need further reduced, and the charges that they have to pay due to chronic underfunding of the council tax freeze will undoubtedly increase further.
Quite frankly, as far as local government is concerned, if this is the long-awaited plan MacB, the B evidently stands for baloney.
15:23
During the previous session of Parliament, the Scottish Government faced the challenges of coping with the recession and cuts in the budget imposed by spending decisions made at Westminster. Those challenges are much the same today, with the Scottish budget again falling in real terms. At least we can see how the decisions that John Swinney made in previous budgets have played out. Scotland has experienced a shorter and shallower recession than the UK as a whole, and the latest set of figures shows that Scotland is the only part of the UK where unemployment is falling and employment is rising.
The Scottish Government put protecting jobs and returning to growth at the heart of its economic recovery plan, and it is no coincidence that the statistics are now painting a starkly different picture from that in the rest of the UK, where the focus has been on making cuts too swiftly and too steeply for the economy to handle. The Scottish Government has consistently put growing the Scottish economy at the heart of its activity, particularly during these difficult times. The spending plans only underline that fact.
Danny Alexander claimed that the SNP is the enemy of growth in his bizarre conference speech earlier this week, but all he did was show how out of touch with reality he and his colleagues in the UK Government really are.
This is the same Danny Alexander who seemed to take a perverse pride in launching a punitive tax raid on the North Sea oil industry, undermining plans for future investment in an industry that has yet again poured billions of pounds of revenue into the Treasury’s coffers. The industry is expected to generate £13.4 billion in tax revenue this year, yet the approach of the UK Government was to squeeze the industry and to smother its growth. People in Scotland know the real enemy of growth and it is certainly not the SNP Government
That failure to encourage growth has been the hallmark of the UK Government’s response to the crisis and has put us on the brink of a return to recession. Rather than change course, as is so clearly needed, George Osborne seems incapable of saying that he was wrong and of doing what is clearly necessary to boost economic growth. We have heard that many people south of the border would like Alex Salmond to be their leader—perhaps they would like to have John Swinney instead of George Osborne.
Capital investment is always at the heart of any successful attempt to grow an economy, yet Westminster is cutting the Scottish capital budget by 36 per cent between 2011 and 2015. When the Scottish Government accelerated capital funding into housing, the result was an 11.6 per cent increase in construction jobs compared with a 0.2 per cent fall across the UK. The chancellor may have tried to blame lower than expected construction figures for the need to downgrade growth forecasts but the Scottish Government has already demonstrated to him how to address that problem.
The Scottish Government’s leadership in prioritising spending to drive economic recovery and growth should be commended as an example that the Treasury would do well to heed. It is right that the Scottish Government is doing all that it can to prioritise capital investment, using innovative sources of finance where appropriate to compensate for its reduced capital funding.
Does Maureen Watt agree that, although the finance minister has done a good job in attempting to grow the economy, he should be making it clearer to Scots that he could grow it much more if he had control of all economic levers?
I could not agree with Margo MacDonald more.
In particular, the non-profit-distributing model has a major role to play in financing £2.5 billion-worth of investment in the coming years, including in essential projects such as the Aberdeen western peripheral route. I know that people across the north-east will find that reassuring.
A second wave of the national housing trust initiative will also go a long way towards helping Scotland’s construction industry continue to outperform the rest of the UK.
These remain difficult times and the Scottish Government has had to make difficult decisions as a result, yet its focus on using capital investment as a spur to economic growth is demonstrably the right one. Whether it is called a plan B, a plan MacB or a plan SNP, this spending review shows that the Scottish Government is continuing to demonstrate the course of action that the UK Government should be following. George Osborne would do well to take heed, swallow his pride and follow suit before he drags the UK economy down into a second recession.
15:29
My constituency is not the most well off in the whole country but the people in it, and those in other constituencies, are realistic about the fact that we face tough times. People know that it is not their fault and that it is not the fault of this Government. They accept that we will go through difficult times and that the pain must be shared around. Over the next few years, a lot of the fight will be on defending our current services, as much as it will be on expanding them as we would like to do.
It is easy, as we have heard this afternoon, for Opposition parties just to stand there and criticise some of the cuts, but we have not heard much from them in the way of alternative proposals.
One of the main questions for me—certainly today—is how John Swinney’s proposals will affect those who are less well off. I want to be enthusiastic and congratulate John Swinney on the concept of a social wage and some of the factors within that.
The first such factor is certainly the council tax freeze, which is tremendous and is extremely popular among my constituents and, I believe, many others. The starting point is that the council tax is a bad tax that we want to get rid of. As Willie Rennie suggested, of course some people could pay a bit more, but the reality is that it is a regressive tax that hits the poorest hardest. Many ordinary people, including pensioners, with a small bit of extra income get hit if we put up council tax. The continuing freeze is therefore a welcome help to many ordinary families.
Will Mr Mason tell us how many ordinary families will be hit by the local income tax that he hopes to introduce, given that the Government has tried to hide those figures for so long?
A local income tax would help poorer people even more. For example, those who do not pay income tax at all would therefore pay no local income tax. In comparison, a couple of pensioners with limited means have to pay the same council tax as the four adults who live next door, in exactly the same kind of house, who all earn good salaries. That is the whole point. We still wait for Labour to give us some alternative to the present unfair council tax system.
If the member is so enthusiastic about the local income tax, can he explain why his party, which is in government, is not doing anything about it?
It is impossible for us to do anything about it at this time because we are considering the Scotland Bill. We cannot have both the Scotland Bill and new income tax powers coming in. The reality is that, however much we all want it, HM Revenue and Customs has a veto.
The second major factor that I welcome within the broad social wage concept is the idea of no compulsory redundancies, which is very positive. Clearly, a pay freeze is difficult for people when we have inflation of 4 or 5 per cent. However, for many of my constituents, if the choice is frozen pay or no pay, most would prefer the former. I welcome the £250 increase for those with an income of under £21,000 and the concept of a living wage that is going up to £7.20 an hour.
Does the member share my disappointment that some Labour councils, such as North Ayrshire Council, are not passing on the £250 saving to low-paid workers and are not paying them that sum?
Yes. I was not aware of that, but it is extremely disappointing. I know that Kenny Gibson is always right with his facts.
If I picked up the Labour Opposition members correctly, they suggest imposing the living wage on all local authorities and on other parts of the public sector. That brings up a fundamental point that that is a centralising approach, which I thought Labour had grown out of. I seem to remember being in Labour—being in labour? I don’t think so. [Laughter.]
Perhaps I am much mistaken about this, but does the member recall that his own First Minister promised to do exactly that during the election campaign, when he promised to introduce the living wage to every local authority? Perhaps it is the member’s memory that is a bit hazy.
The question that I have, which I was just coming on to and which I think Neil Findlay touched on earlier, is that there seems to be a certain inconsistency in Labour’s position. It says that we should impose a living wage on the public sector and just let the private sector go scot free. However, when I was down at Westminster, the Labour Government refused again and again to introduce a proper minimum wage. If we had a proper minimum wage, we would not need to have this discussion about the living wage going to only certain parts of society, which disadvantages the public sector. [Interruption.] I thank Kenny Gibson for another helpful intervention.
We also welcome the small business bonus scheme. Some people might think that the scheme just helps big business in some way, but in fact it helps very small-scale shopkeepers. Some shopkeepers in my constituency are struggling against the huge supermarkets that are just down the road. The scheme gives welcome and much appreciated support—tied in, of course, with the business rates supplement that is coming up.
Time is going to beat me soon. I welcome—
Given that you took so many interventions, you can continue for a little longer.
Thank you.
I welcome the policies on free prescriptions, free personal care, concessionary bus travel and higher education. The argument keeps being made that some people could pay for those benefits. People say, “Surely better-off people have to pay.” However, as soon as we start introducing charges the people on the margins get caught out. Pensioners who have just a little extra income have to start paying. I support the Government’s intention to continue to provide those benefits for free.
I congratulate John Swinney on presenting such a positive review at such a difficult time.
15:35
I welcome the opportunity to debate the Government’s spending review proposals.
There has been a recurrent theme in the debate: times are tough, there is a tight financial settlement and the money that is coming from the UK Government has been cut or at best flatlined. As ever, the Government is shaping up to play the blame game. That is something at which it is extremely proficient, but politics is about choice and the Scottish Government cannot shirk the responsibility for the choices that it makes.
As members would expect, I pay extremely close attention to the outpourings of the First Minister and his deputy. I remember clearly the promises to protect the NHS budget, which they shouted from the rooftops. However, I invite members to look a little closer. During the debate, the Scottish Parliament information centre has been doing some number crunching for me. Over the period 2011-12 to 2014-15, the overall health budget falls in real terms—the SNP is keen to talk about real terms—from £11,652 million to £11,325 million. That is a real-terms cut. It is not an increase; it is a cut of £327 million.
Will the member give way?
Health service inflation runs at more than 4 per cent, so there is real pressure on staff and services throughout the NHS. Perhaps Kenny Gibson does not believe me, so here is what the British Medical Association said:
“The NHS faces an unprecedented real terms reduction in its budgets for the first time since devolution and, because the Scottish Government delayed the first round of cuts last year, this year will prove to be the most challenging as the service faces a double whammy of cuts. It would be naive to expect that this will not have an impact on patient care and access to healthcare services.”
I will be delighted to let Kenny Gibson in to tell me why the BMA is wrong.
First, I find it interesting that Jackie Baillie and Michael McMahon both want increased money for local government and the NHS but will not say where the additional money will come from. Can she tell us why—
The member should sit down. I asked him a specific question, which he failed to answer. Clearly, the BMA is right.
The SNP might choose to lay all the blame at the door of the coalition, but I remind members that in the previous parliamentary session the SNP failed to pass on the 6.7 per cent average year-on-year increase for health spending that was applied to the NHS in England. Instead, it chose to divert 3 per cent elsewhere, leaving the NHS in Scotland less able to weather the current financial storm.
It beggars belief if the SNP thinks that we believe that the NHS is being protected, when it is slashing thousands of front-line staff from hospitals across Scotland. The two positions are entirely contradictory and no amount of conjuring on the part of the SNP can hide that. Last year, 4,000 staff were to be cut from the NHS. The figure included 1,500 nurses. This year, a further 1,000 nurses will be lost. In total, 2,500 nurses will have gone, leaving their colleagues to pick up the pieces and cope with the increasing workload.
Members will remember that the Cabinet Secretary for Health, Wellbeing and Cities Strategy is fond of telling us that there are more nurses in the NHS than was the case when Labour was last in office. She has repeated that mantra time and time again. Her boss, the one and only Alex Salmond—who was keen to get in on the act—said in the chamber on the day before recess began:
“The protection of the health budget has meant that, even in these difficult times, health employment in every single category—through medical consultants, general practitioners, dentists and nurses to allied health professionals—is substantially up today on the level that we inherited in 2007.”—[Official Report, 30 June 2011; c 1270.]
That is simply not the case. The First Minister and his Government are coming to believe their own propaganda. It is complete fantasy and has no basis in fact.
The Government’s statistics on workforce numbers demonstrate that one has to go back to 2005 to find fewer nurses and midwives in our hospital wards and communities. The SNP has taken us back six years, and there are even more cuts in nurse numbers yet to come.
Will the member give way?
The Government needs to be honest with people, and if that is how John Swinney protects the health budget, heaven help us.
I am very interested in Jackie Baillie’s argument. She argued a moment ago for more money for the health service for more staff, but she has just criticised the Government for not reducing the budget earlier in line with the BMA’s aspirations. What position is she setting out in her ridiculously muddled argument?
I am sorry to make the cabinet secretary so uncomfortable. The argument is not muddled. He promised to protect the health budget and that there would be no compulsory redundancies, but there is a real-terms cut in the health budget and thousands of staff are being shown the door. Those are real cuts that are happening to the health service right now on John Swinney’s watch, and there is no escaping that.
The SNP was elected on a promise that it would keep services local, but early evidence, such as the proposed closure of Lightburn hospital, suggests otherwise. Health boards have been clear that, in saying how they would cope with the cuts in their budgets, they would need to consider substantial service redesign, which would include the closure and downgrading of many facilities throughout Scotland. Who is right? Will the SNP keep its promise and keep services local? I think not.
I am conscious of time, so in the last few moments that are left to me I will touch on welfare reform. We are facing the most seismic changes to the welfare state in my lifetime, and there are substantial implications for devolved services, from the changes to housing benefit and council tax benefit, to the implications for passported benefits such as free school meals and clothing grants, and the payment for social care and concessionary travel. Where in the 250-page budget document is there any mention of that?
The SNP is sleepwalking into this. It is not clear about the implications, and it appears that there has been little dialogue between the Scottish and UK Governments, and certainly little—if any—dialogue with local government.
We know that the SNP wants control of benefits in the new and shiny independent Scotland, but when it has been given control, as it has been with the devolution of community care grants and crisis loans to Scotland, it cannot even answer simple questions on what it wants to do or how the funds would operate. On the basis of current evidence, the SNP appears to prefer constitutional change to sorting out how our poorest people put bread on the table.
The member should close now.
I suspect that the SNP is simply waiting in order to blame it all on someone else. In that regard, it is disappointingly consistent.
15:43
I will change tack slightly, because there are many things in the statement. I congratulate John Mason on discussing the impacts on those in our society who are less well off; I would have liked to do the same, but I will not repeat what he said.
I will address the issue of capital expenditure, which is the other side of the coin from preventative spending. We build a house because it is a great deal more comfortable than living in a tent, and it improves health and a good number of other things. If we build our house decently, we do not have to buy another tent, or deal with the consequences of what blows in through the door.
Capital expenditure is actually spending to save on a grand scale and for the very long term. We have been doing it for centuries, and it is the right thing to do. What are the benefits of having a constant—or at least fairly consistent—capital budget for a Government? The main benefit is for those whom we want to do the work. We cannot just rustle up a company that can build us a road, a harbour or a hospital. Those are professional businesses of considerable size and stature. If we are to maintain those businesses over time, develop the skills of the engineers and others, and provide the training that is required in order to develop and maintain those skills, we need consistency of work.
The major point that Governments ought to know—including the Scottish Government and the UK Government—is that we need pretty level capital expenditure. If it is going to rise, it should rise gently. If it is going to fall, it should fall gently.
The Scottish Government plainly understands that. What we have before us is an attempt to maintain capital expenditure when the UK Government has savagely cut it—a 36 per cent cut is savage in anyone’s currency. We should be resisting that. The main purpose of what I am about to say is to remind the UK Government that it does not have to be like that. We have before us a Scotland Bill—as a member of the Scotland Bill Committee, I am well aware that the bill is seriously defective. Indeed, the proposals in the bill for capital borrowing—which is what we should be doing—are quite counterintuitive. The larger our budget in any year, the more we may borrow. However, when our budget is high we do not want to borrow. The time when we should be able to borrow is when our budget is low. Not only is the ambition in the Scotland Bill defective, but the mechanism is defective.
Why will the UK Government not let the Scottish Government borrow? I am struggling to work that out. The week before last, in the Scotland Bill Committee, the Secretary of State for Scotland, Michael Moore, let go the figure of £155,000 million as the deficit budget in the current year. He acknowledged that that was rather a big number—it was much bigger than he wanted. I absolutely agree with him. However, in that context, how would a few million spent by the Scottish Government servicing the debt to borrow a few tens or hundreds of millions for capital investment really matter? The answer, quite frankly, is that it would not matter. If the money was coming out of our budget, how could that possibly be a problem to the UK Government? Apparently it is. We simply cannot borrow, because the UK Government says that we cannot borrow. That could and should be addressed and, with the greatest respect, it needs to be addressed very quickly.
What are the benefits? There are several. I shall pick out one or two. If we build homes, we improve the life chances of those who live in those better homes. We also have the opportunity to reduce energy costs and our carbon footprint. What are the benefits of improved transport? We would spend less time and probably less energy travelling, and travel would almost always be safer. That is the lesson of infrastructure investment.
We all have experience of the benefits of spending more money on information technology. I suspect that most people listening and reading know those benefits, too. It improves the efficiency and commercial opportunity of our people. If we spend money on schools, how could that be anything other than good for our youngsters? How can it do anything other than improve our outcomes?
As the ministers are well aware, I have a local interest in the issue of money being spent on improvements to roads where there are safety issues. Such investment clearly improves safety and the wellbeing of people who travel on such roads, and it reduces the costs of those public services that have to deal with the consequences of accidents on our roads.
It is staggeringly simple. I have not told Parliament anything that it did not know. Surely I have not told the UK Government anything that it does not know. It is up to the UK Government to sort it. It is not that difficult. We need borrowing powers.
15:49
Richard Baker began by suggesting that the budget is unlikely to involve much drama or any knife-edge votes. I am more relieved than most members about that—for my blood pressure’s sake, if nothing else. However, the budget could and should produce drama of another kind.
As the Government has a majority, Mr Swinney has the power to set a radically new direction for Scotland. He has just returned to the chamber, so I am embarrassed that he will hear me say that he has always demonstrated competence in his role—I have often acknowledged that. This year, he must fulfil that role against the backdrop of savage cuts.
Gavin Brown warned us not to whine about the cuts—the attack on public services that is coming from the UK Government. I would have zero confidence in any Scottish Government that did not challenge in the strongest terms cuts that will worsen every one of the five giant evils in our society that the Beveridge report identified and which the NHS and the welfare state were created to fight.
As for the frankly bizarre speech from Willie Rennie, who has chosen not to stay for the rest of the debate, he still seems utterly confused about whether the Liberal Democrats in Scotland back the UK Government’s programme of cuts. The Liberal Democrats need to clarify that position as soon as possible.
Why does Patrick Harvie say that the Liberal Democrats seem confused? I thought that it was clear that they support the agenda that emanates from Westminster.
It is clear that the Liberal Democrats support that agenda one day and do not support it the next. That is part of the problem.
Mr Baker said that John Swinney had not pulled a rabbit out of a hat in the budget. If only it was that easy—if only a magic hat, from which Mr Swinney could pull a rabbit, existed. That is not the case. However, he can make serious choices, which are for us all to make.
I support the important choice that has been made to keep access to higher education free and to commit to a minimum student income. However, we should not feel satisfied about a figure of £7,000 a year, which is barely half the income of somebody who earns the living wage, which many of us aspire to allowing all people to expect. Let us be clear that living on £7,000 a year is living in poverty—we should not be satisfied about that.
There are choices to make about revenue raising. Mr Swinney said that options for revenue raising had been examined but—to be honest—little detail was given about the substantive choices that could be made. I welcome the measures on empty properties, for which I have called, and I look forward to seeing the detail. Those measures must be extended to cover vacant and derelict urban land, because speculation in some such areas has been the most damaging to the fabric of our urban communities.
Tax increment finance was mentioned. Perhaps it has a role in some circumstances, but again I express concern about the proposal in Glasgow that would in effect involve publicly underwriting the private risk of expanding a shopping centre. That would be an inappropriate use of tax increment finance.
A choice has been made to shift £750 million from revenue to capital. That choice is on a whopping scale. I agree that investment is an important aspect not just of meeting our on-going needs but of recovery, but what investment is important to choose? We should not choose to shift £750 million from revenue to capital to fund an ever-growing roads budget while public sector pay remains frozen.
Mr Swinney talked about the future transport fund. I welcome much under that heading, but it is utterly contradicted by today’s transport spending.
Another choice that has been made is to push for local government borrowing powers for investment. That opportunity could be phenomenally powerful, but in what do we ask local government to invest borrowed resources? A massive investment programme in publicly owned renewables would generate revenue for the future, as well as clean energy. It could leave us with a legacy whereby every local authority had its own local energy company that contributed to the economy, as well as the environment. If we simply ask local government to invest in initiatives to which the Scottish Government previously contributed, we will be no better off.
Similarly, investment in quality, energy-efficient housing is a real priority. Mr Swinney spoke about working with energy companies to increase their investment in energy efficiency. That is all well and good, and such work will get wide support, but for years there has been a pretty much unanimous call that that task will need public investment on a dramatically higher scale than we have ever seen before. It is not a matter of working with the energy companies or public investment: we need both.
Finally, the position on public sector pay and pensions represents a real and meaningful choice that will impact severely on individuals throughout Scotland. Public sector workers will be rightly angry at seeing their pay and conditions undermined for the purpose of raiding revenue to pay for a road building programme. I sincerely hope that Mr Swinney has had proper discussions with public sector unions about those issues, as they may be left with no choice but to take action to defend public sector workers and the services that they deliver in Scotland.
15:56
I am glad to agree with Patrick Harvie that the spending review smacks of competence. Like the recent economic performance, it emphasises the gulf between the Scottish Government’s boldness and competence, and the London Government’s timidity and inexperience.
When Danny Alexander was heckled at the beginning of his conference speech at the weekend by one of his own, who shouted “Rubbish!” it was clear that the heckler had either had foresight of the speech or was making an early comment on Danny Alexander’s performance in handling the economy. Only days—indeed, hours—after Danny Alexander gave his rather upbeat speech on the economy, the International Monetary Fund reduced its UK growth forecast by nearly 30 per cent. That upbeat speech should be contrasted with that by Vince Cable only two days later. That shows the mess that the London Government is in. Even with my passing interest in astrology, it is difficult for me to foretell what the London Government’s economic performance might be even in the near future. We have competence; London has Danny Alexander.
I believe that, on being appointed as Chief Secretary to the Treasury, Danny Alexander was given an economics book, but he has not filled or coloured it in yet. He should have been given a history book instead of that economics book. He would then have read that, in the 1950s, for example, in a period of stagnation and rising unemployment, a Tory Government under Harold Macmillan embarked on a major capital investment programme. Some 125,000 homes were to be built and there were other capital programmes to stimulate a slowing and sluggish economy. The same approach was taken in the United States in the 1930s. Harold Macmillan said at the time:
“You’ve never had it so good.”
If we had to leave things much longer to Danny Alexander and George Osborne, we would never have had it so bad.
Nigel Don made the point that making capital investment is right, as is the balance in the rest of the strategy. The approach sits alongside the facilities and opportunities for training and education, particularly for the young unemployed and our apprentices; it runs in parallel with further efficiencies through spend-to-save programmes in the public sector; and it will create incentives to better our environment. The spending review is wedded, bonded and welded to our recent economic performance.
It is absolutely right to maintain the social wage and consumption, but prioritise investment. The asset management strategy to dispose of underutilised assets and shift to the optimum utilisation of good and needed assets to boost the economy is absolutely right. The London Government’s slash-and-burn economic thinking and the cutting of our capital budget by 36 per cent over the next four years—again, Nigel Don referred to that—represent the economics of the madhouse. Osborne and Alexander are doing for the UK economy what the Boston strangler did for the door-to-door salesman. Investing capital in the major projects that the cabinet secretary has announced while securing public service delivery is no mean feat in the current financial imposition.
The point has been made that the investment of capital in housing and energy to combat fuel poverty, avoid health degradation and, in the process, reduce costs to business is welcome. Welcome, too, is the investment of capital in the improvement of our infrastructure, which will enable us to capitalise on economic growth, and in our export industries such as food and drink. All that contributes to the generation of increased national income in the future.
Last week, I said that the economic position—even the international economic position—presents us with a real challenge. However, it also provides us with real opportunities to create a more level playing field in the future in terms of income; to invest in efficiency; to invest in our young, so that they can meet their aspirations; to restructure and create a public service environment that is fit for the 21st century; and to invest in measures to ensure fairness for our people and communities.
This aspirational spending review is for the benefit of the people and by working together with the people of Scotland we will make our nation leaner, fitter, fairer and more ready to settle our own destiny.
16:01
The situation that Mr Swinney is in when he presents his spending review is that of a man running away from the incoming tide as it rushes up the shore. He is under the twin pressures of the cutbacks from the UK Government and the promises on which his party fought the election. The SNP promised more than it could deliver with the finances that it has.
I hear the member’s analogy about King Canute. A previous chancellor, one Gordon Brown, was a man who ignored what was up ahead. What does Mr Kelly say about that?
I was absolutely delighted that Gordon Brown was able to intervene in the banking crisis with a rescue package of £37 billion, which is more than the Scottish budget, and was able to save the jobs and mortgages of Scottish householders, while those on the SNP benches remained silent.
There is no issue that shows up the difference between the SNP’s rhetoric and the reality of its promises more than that of the justice budget. The SNP talks often of its promise to maintain the 1,000 extra police officers, but the police grant was set at £480.3 million and frozen over the three years of the spending review. That is a real-terms cut, so the money that the Government is passing to local authorities in order to enable them to maintain those police numbers is not effective.
Will the member give way?
I will let the member in in a minute, if he will let me develop my point.
In addition to that, police authorities have already had challenges to their budgets and have had to reduce backroom staff by hundreds, which has meant that the extra front-line officers—which were welcome—have, in effect, been drawn back to the police stations to do the jobs that used to be done by the backroom staff. It is all very well preaching about front-line policing, but the effect of taking officers away from the front line and placing them at desks in police stations undermines the Government’s pledge and public safety. Does Mr Doris agree with that?
I do not doubt Mr Kelly’s sincerity in pushing for more cash for justice, but we have also just heard Jackie Baillie making an impassioned speech asking for more money for health. I am the deputy convener of the Health and Sport Committee. It would help me with regard to our budget scrutiny if Mr Kelly could tell us whether Labour wants more money for health, for justice or for both, and where that money will come from. As I scrutinise the budget, I want to be sure that I am not hearing empty rhetoric from Labour members and that they have something meaningful to say.
I will meet Mr Doris’s challenge head on. The recent Audit Scotland report, “An overview of Scotland’s criminal justice system” showed that processing offenders through that system cost £857 million. There are a number of aspects where money could be saved, but I will give Mr Doris two specific examples. Having trials collapse late in the day cost £30 million. Surely if we can improve that process we can get more money to protect Scotland’s communities.
So, you do not want more money—
You asked me for ideas, Mr Doris, so do not complain. You asked me for ideas on how to save money and I am giving you them.
Could you speak through the chair, please?
Sure.
Will the member give way?
No. I am not going to take your intervention—
Do you want more money for justice?
Sit down, Mr Doris.
Mr Doris, the member is not taking an intervention. Thanks.
I will set out another idea about how to save money in the justice system. The Audit Scotland report also found that there are a number of areas in the justice system where the information technology systems do not communicate with each other. I find it shocking and unacceptable that in 2011 our IT infrastructure is not good enough. Surely if we make the investments and get the IT systems speaking to each other, we will be able to save money.
I am grateful to Mr Kelly for giving way, because he touches on a ground of real substance in the budget. I have required public sector bodies to follow the approach of the McLelland information and communication technology review to tackle exactly the issue that Mr Kelly is talking about. The budget numbers in the document are predicated on organisations getting on with addressing the issues that he raised.
I welcome Mr Swinney’s words, but we need to see that followed through. When Audit Scotland does its follow-up report, it will be interesting to see whether the IT systems are beginning to communicate with each other properly.
Another point highlighted in the report is that there are 825,000 victims of crime in Scotland. We need to give more priority to them. The budget submission from Scottish Women’s Aid tells us that 84 per cent of the groups that do a lot to support victims of crime are operating on either a standstill or a reduced budget. More has to be done to stand up for the victims of crime.
Budgets are about not just numbers in a document, but the effect on communities. Labour will study the budget over the coming weeks and months. We will study the justice budget in detail to ensure that there are the numbers and priorities in it to protect Scotland’s communities.
16:08
The debate has been interesting. Last week I said that the debate was mature, but it has not been at quite that level this week—I feel that the Opposition parties have let themselves down.
Jackie Baillie said that she and the Labour Party were consistent. The debate has not shown that at all; there have been inconsistencies all over it. My colleague Bob Doris asked what exactly Labour’s economic ideas are and what it will offer, but all we got was the equivalent of a five-year-old’s letter to Santa. I advise Mr Simpson to get his letter in now, because Santa gets busy in December. Now is a good chance to move things forward there.
Mr Baker said that the budget is damaging; that it needs to be changed; that it is a difficult budget; and that cuts are being made too fast and too deep and are hampering future growth. He cannot have it all ways. He has to make a decision. I say to Mr Simpson that it is about responsibility—we have to do something with the powers that we have from Westminster. I heard Mr Baker say that there are no rabbits being pulled out of hats. I say to him, “It’s called an election. You have a manifesto; you have the election; you win the election; and then you have the spending review. If you do it all openly and above board, everyone knows what you are going to offer and do.”
Mr Baker acknowledges Westminster’s cuts, yet at the same time says that Labour wants to do something different. I remind Mr Baker that it was a Labour chancellor who said that the cuts that the Government would have to make would be deeper and tougher than those made by Thatcher.
Talking about deeper and tougher than Thatcher, Willie Rennie had the audacity to say that he was thinking about vulnerable people, while the Liberal Democrats are in a coalition Government that is attacking people on the disability living allowance. Those vulnerable people in our communities have no idea how their families will continue. Mr McMahon and I heard only a couple of weeks ago at a cross-party group meeting about some of the results that will come from that.
Mr Gavin Brown told us to stop whining about Westminster and to take our handout from it. That is part of the problem, Mr Brown. As the cabinet secretary said, the further powers of independence are needed.
We have been told that Westminster is at war with the economy. The only war that it is bringing to the people of Scotland who work in the public sector is increasing employee pension contributions and it is threatening the public sector and Scotland with an £8.4 million per month bill and £102 million per year invoice for the good of it.
While Westminster wages war, the Scottish Government has offered £826 million of Barnett consequentials. At a time of real-terms cuts from Westminster, the Scottish Government has offered £2 billion to the likes of Greater Glasgow and Clyde NHS Board to help front-line services and people in our communities.
The Christie commission is very important for public sector reform. Willie Rennie said that the reform of the police and the fire and rescue services was not a good example. I argue that it is a good example, because it shows that we have the ability to look at the plan and have a centralised force that at the same time will be accountable to local people in all 32 local authorities. It is entirely up to the grouping of local authorities whether they wish to have it in any other shape or form. For me, that is a perfect example.
If the cabinet secretary is looking at public sector reform, I ask him to look at the Strathclyde partnership for transport. It gets £40 million per year from a partner organisation, it has corporate costs of nearly £10 million per annum and it has loan recharges of £8.9 million per annum, but nobody knows what that sum is paying for or what it has built. I ask that we look at the SPT, as there are better ways of delivering transport in our areas.
On regeneration, I am pleased that the small business bonus will continue. In places such as Paisley, it is much appreciated. Empty property relief is a fantastic idea, which will help Paisley High Street and other high streets across Scotland ensure that they are full of retailers, rather than empty shops.
On the four enterprise areas, I ask the cabinet secretary if he could look at Renfrewshire Council’s plan for Glasgow airport enterprise area. If we are to look at matters such as renewables, we have steel engineering on our doorstep in Doosan Babcock, along with William Tracey and WH Malcolm, which are already working in the industry. It might be a good idea to look at Glasgow airport.
In closing—I am well ahead of schedule for a change, Presiding Officer—I will say that we live in very difficult economic times and it is important that we work to represent and provide for all the people of Scotland. The cabinet secretary has been bold and radical during these uncertain times and it is time for sobriety of thought from politicians, not the heckles that we have had from the sidelines.
That is a bit rich coming from an SNP backbencher.
The heckles have started again.
During May’s election, the SNP fought a visionary, positive campaign that has resulted in this comprehensive spending review. There is hope and vision for our future. All that has been delivered under the constraints of Westminster. We need further powers and we need independence.
Thank you, Mr Adam. I am grateful that you have come in on time this week.
16:13
Today is a significant day in the parliamentary calendar. It is a day that will, in many ways, define the SNP as a majority Government. We have had the detail of the budget for only a few hours and the Parliament will take time to scrutinise fully the budget for the coming year and the longer-term spending review. Today, however, we can lay out our initial concerns about the budget and the challenges for the years ahead that the Government must deliver on if we are to make Scotland healthier, wealthier and smarter.
We all recognise the difficult economic environment that the Government is working in. We, along with other members, have been critical of the economic decisions that have been taken by the coalition Government, which is pushing ahead with cuts that not only are damaging to economic growth but impact on everyone’s day-to-day life as the cost of living increases but wages stay static.
In that context, the Scottish Government still has a significant budget and powers with which to shape Scotland’s recovery and growth. Although we are seeing positive investment in Scotland—today, we had confirmation of the extent of Amazon’s investment in Fife—the positive news often masks hidden unemployment problems, such as the high numbers of women who are unemployed or who are working on low wages and in part-time employment. There are real challenges for those who are on the margins of the unemployment market; challenges that are heightened by the on-going review of Remploy. If Remploy closes, many vulnerable people in my region will be alienated. There are also high rates of youth unemployment, particularly long-term youth unemployment.
I know that the Government shares our understanding of how damaging youth unemployment can be in the immediate and long term, and we have worked with the Government to increase the number of apprenticeship places, but the issue remains a significant challenge for the Government. We should all recognise the role that colleges play in addressing that very real problem. They have been quick to react and have worked hard to ensure that no one is turned away. They have moved to provide options for school leavers and those who face redundancy.
Last year, the colleges accepted a one-year deal involving a 10 per cent cut, while promising to maintain places. In many cases, colleges have increased the number of places in response to the local unemployment challenges that our communities face. However, make no mistake, the cut was difficult to absorb. There have been course cuts, reductions in contact time—a full-time course was recently reduced from 25 to only 16 hours a week—and cuts to student guidance and counselling services, which are the very services on which many of our more vulnerable students rely. There are also the redundancies, with more than 1,000 jobs cut in the past year in the college sector. That is a 7 per cent decline, which is more than in any other area of the public sector.
Given the current inflation figures, a flat-cash deal was the best that colleges could hope for, but with what looks like a 12 per cent cut over the period of the spending review, that must surely threaten the colleges’ ability to deliver the Scottish Government’s places pledge or risk affecting the quality, depth and range of education that they deliver. Colleges do not have the universities’ comfort of the First Minister’s guarantee on comparable funding, but they have been facing substantial pressures and, with the budget and spending review, they will continue to face pressures, which will increasingly impact on their ability to deliver. The Education and Culture Committee will carefully scrutinise the issue in the coming weeks and we will hold the Government to account on the figures.
The first priority for the college sector is to provide opportunities, but we must ensure that it can do so from a strong position that benefits students. The merger proposal that was announced in last week’s post-16 reform statement has raised serious concerns about the ability to do more with less. The period of the spending review will reveal how sustainable that is.
I respect the way in which the member is putting across her point, because she is doing it in a mature and sensible manner—and I mean that. However, we have had requests for money for local government, police, justice, health, and now for colleges. I understand from an audience perspective why individual spokespersons might do that, but can Labour please tell us where the additional resources will come from to support such a wide variety of choices?
The college sector has shown, in the deal that it did last year, that it recognises the economic problems that the Government faces. It is important for the Government to work with the college sector. There are concerns about the way in which the merger proposal was announced and colleges feel a bit blindsided by it. The sector appreciates the difficulties that we all face and it has gone the extra mile in trying to address them, but it faces a substantial cut in the next three years in the Scottish Government budget.
The sector appears to have been blindsided by the merger proposals. There was no mention of that direction of travel in the SNP manifesto but, less than a week after the statement, the University of Abertay Dundee has received a clear indication that it is under review by the Scottish Further and Higher Education Funding Council. The Government must be clearer about its intentions on the issue and about the extent to which it supports college and university mergers. It must make clear whether it will guarantee that educational grounds will always be the determining factor.
In addition, universities are facing their own challenges. They have a guarantee that the Government will fill any funding gap, but there are still many unanswered questions for the institutions. Some are taking full advantage of the opportunity to charge rest-of-UK students the highest fees in the UK—a situation that the Government must get a grip of—but there are no details of an equalisation mechanism to ensure that no universities are disadvantaged. Although the Government has announced plans for a minimum student income, that will apply only to the poorest students, leaving many students continuing to rely on commercial debt and on working long hours to supplement their income, with many dropping out because of financial pressures. The measures in the budget are welcome as far as they go, but there is much more to do on creating a fairer student support system.
I will close with a comment on schools. At yesterday’s Education and Culture Committee, we had a wide-ranging debate on the McCormac report. Based on the evidence that we received, that report holds many challenges for Michael Russell. However, Drew Morrice, the assistant secretary of the Educational Institute of Scotland, said that the crucial issue for all the reviews that are being undertaken in education is the spending review. While promises on probationary employment are to be welcomed, the flat-cash deal that has been given to local authorities will be passed on to schools that have already seen devolved budgets being cut, vacancies not being filled and the number of support staff being reduced. Within that context, the schools are being asked to implement fully the curriculum for excellence, which presents particular challenges around examinations, and to undertake potentially significant changes to teachers’ conditions. Education budgets will continue to be squeezed, risking the teaching profession and, ultimately, our children’s education.
Universities were often a thorn in the side of the Scottish Government. The spending review might be putting that battle to bed for now, but the Government cannot cut the college sector so deeply that, four years from now, we will have to try to rebuild it.
16:21
I thank the minister for prior sight of his statement but, before I address it, I must say how much I appreciated James Kelly’s contribution. I am sorry that he has chosen to leave the chamber at this moment; he should hear what I am going to say.
I also appreciated what Michael McMahon and Jackie Baillie had to say. They attempted to analyse and offer alternatives from their particular perspectives and portfolios, which is what the debate was meant to be about.
Having said that, I should say that my first impression of the minister’s statement was of an honest attempt to squeeze the maximum out of the system, considering the circumstances, which I hope we can all agree to change during the current parliamentary session. Party loyalties aside, is there anyone who still believes that we benefit unconditionally from being the fag end of the United Kingdom economy? Only yesterday, the IMF reminded us that the British economy is teetering on the edge. If we look at the resources that we would be able to tap into, there is no way that such a verdict would have been given on us if we were a self-standing economy that co-operates with the other parts of the British Isles.
However, Mr Swinney has the duty to make the best of a bad job and there are many things in his statement that I commend. There are others that I do not. The gap in his exposition about how we will fund further and higher education must be attended to because it is the future. More time could have been spent on that, but I think that I understand the reasons why it was not. I also share some of the reservations about the commitment to freeze council tax for as long as promised.
I cannot criticise the realisation of the importance of preventative spending, particularly in light of the comments that the IMF made yesterday. We were reminded that there is to be a decade of austerity. The situation will not get better quickly. It therefore seems that preventative spending is essential in the first instance to reduce the harsh effects of the current spending cuts and, in the longer term, to perhaps recalibrate the expectations of our fellow citizens about how much the country can do for them and what they can do for their country and community.
For example, I think that it was Mr Hepburn who spoke about substituting exercise for pills as a preventative spending measure. I have been urging the Government for quite some time to follow up the proposal that exercise should be on prescription. It should have been worked on much more than it has been; some people have tried, but there has not been an all-out effort to make it normal for a doctor to prescribe exercise.
There appears to be an omission in the package on preventative spending in the Government statement. There was no direct reference to helping people who fall into debt. That is the most debilitating factor in any family’s or individual’s life.
I have written to the cabinet secretary, asking whether he will consider setting up a very modest fund to kick-start the expansion of credit unions. After speaking to credit unions in West Lothian and elsewhere, Neil Findlay and I have started work on this project and we hope that we will find support from members in all sections of the Parliament, regardless of party. After all, this really has nothing to do with parties.
As the chamber might know, I had hoped to introduce a bill to outlaw excessive interest rates for loans; however, I have been assured that such a proposal is ultra vires. Once again, this is something that we cannot do in Scotland. It is another source of frustration. I hate to say it but, being smaller and more manoeuvrable, we could have tackled the issue quicker. It needs to be tackled quickly, given that we are facing 10 years of austerity. Like, I hope, other members, I will do what I can to support Stella Creasy’s bill in the House of Commons, but I do not give much for her chances of getting it through. I have gone with Neil Findlay to the other side of the equation and will try to prevent people from falling into debt.
I am sorry that we have not been able to give the cabinet secretary more notice of this, but it has happened just in the past week. We believe that a modest start-up fund to enable the expansion of credit unions would be excellent. I have spoken—informally at the moment—to Pat Watters and have suggested that he encourage local authorities to make available to credit unions property that is lying empty. If they could get into town centres, they would do much better. We have a number of plans and will be delighted to discuss them with the cabinet secretary if he wants to hear them.
We should also recognise the work that is being done to help those who are already in debt. We might focus on the grand scale, but the people who have lost their jobs or are working fewer hours will have thinner pay packets and an awful lot of people are falling into debt. In 2008, citizens advice bureaux in Scotland were able to help almost 20,000 people more than they would have had they not received a small grant from the Scottish Government. That was money well spent; it represents good practice as far as preventative spending is concerned; and I urge the cabinet secretary to listen to me asking—as usual—for a little bit more.
On the whole, I commend the cabinet secretary for his statement.
16:27
Scotland is a creative nation, rich in heritage. It contributes to the world; it is preparing to be an independent nation; and indeed its creative industries, which sustain 60,000 jobs and contribute £5 billion to our economy, are vital. In partnership with Creative Scotland, the Scottish Government has proved its commitment to attracting, developing and retaining Scotland’s talent and we are committed to helping individuals and companies to reach their full economic potential.
I am very glad that Skills Development Scotland will be able to contribute to these industries. The Scottish Government’s commitment to providing 25,000 modern apprenticeships includes, this year, at least an additional 30 apprenticeships in traditional building skills. Such a move will ensure that those skills exist to maintain our heritage in future. I am also glad that SDS is also making apprenticeships available in the museum, gallery and heritage framework and that it will continue its get ready for work programme with projects such as Swamp creative media centre in Pollok, which offers young people the opportunity to acquire skills in music, digital technology and the arts.
Tourism is also important, providing 200,000 jobs and generating visitor spend of more than £4 billion a year. Of course, cultural tourism is key to all that. Not least in that respect are Scotland’s festivals. This year, the Edinburgh festivals had their most successful year ever, contributing an estimated £261 million to Scotland’s economy. In August, the number of visitors at Edinburgh castle was the highest in recorded history and represented an 8 per cent increase on the figure for August 2010. That is why I am delighted that the Government has committed to continue funding the Edinburgh festivals expo fund, which showcases our talent, throughout the spending review period. I am glad, too, about the boost that has been given to the national museum of Scotland which, earlier this month, recorded its 500,000th visitor since it reopened earlier this year.
There is no doubt that Historic Scotland is key to delivering our cultural heritage. Visitor numbers have increased across the country—in July, for example, the number of visitors to Linlithgow palace was up. That is why I am delighted that the spending review commits the Government to providing continued support for Historic Scotland’s Bannockburn visitor centre.
There is much to be welcomed in the area of culture in the spending review, not least of which is the commitment to support the development of the V&A museum in Dundee. The V&A project will deliver a new iconic building for Scotland, will help with the regeneration of the waterfront in Dundee that was started at Discovery Point and will give a boost to the city’s existing cultural icons, such as Dundee Rep. I would just like to say how much I enjoyed the BBC proms broadcast from the Caird hall earlier this week. This year, the repertoire included traditional music.
I welcome, too, the Government’s commitment to the new generation of broadband and its roll-out to our communities by 2020. That is not just about ensuring that businesses have the most up-to-date broadband. It is about inclusion and ensuring that every individual has an opportunity to get involved in digital media. It is vital that we get an uptake of broadband in our poorest areas that will support the education and learning of the children in those areas.
In addition, I am very grateful to the Government for announcing the young Scot fund, which is a new initiative that will help to support emerging talent.
Our culture is world class. We have world-class national performing companies and national museums and galleries. I am delighted that, in 2014, when the Commonwealth games comes to Glasgow, the Government’s support for the redevelopment of the Theatre Royal in Glasgow and the Glasgow royal concert hall as cultural centres during the games will have been delivered. The year of creative Scotland in 2012 and our contribution to the cultural Olympiad are now being backed by real commitment to culture in Scotland. I commend the cabinet secretary for his support in that area in the spending review.
That brings us to the closing speeches.
16:33
It is traditional when summing up to say what a good debate it has been, but I am tempted not to do that because I think that we saw something else happening today. I enjoy consensus politics as much as the next man or woman, but perhaps we have a bit too much consensus here sometimes. What I saw today—for the first time this session, I believe—was a build-up of passion in some quarters. I will go on to name some of the members concerned and give them credit for what they achieved.
This is the first stage of considering the budget. It is difficult to have an informed debate when many of us saw the paperwork only minutes before the debate started. There has been a degree of passion but, at the outset, we heard from the minister who, as usual, told us how good a job he was doing in dealing with the difficult financial settlement that he had been given.
The situation that we are in is much broader than what happens here in this Parliament. We have played the blame game today. The Government has blamed the Conservatives because we are the Government south of the border; the Conservatives have blamed the Labour Party because it used to be the Government south of the border; and, I am glad to say, everybody blamed the Liberal Democrats, not because it is really their fault but because it is fun. [Laughter.] I hope that they enjoyed that opportunity.
We have had a situation in which decisions that are made in London are having an impact on the money that is spent in Edinburgh. For those who consider the international position, the reason for that should be clear. Many countries made decisions about borrowing and expenditure that were far more generous, let us say, than the decisions that George Osborne made when he became Chancellor of the Exchequer. While Britain teeters on the edge, we have a degree of stability, whereas countries such as Ireland, Greece, Italy and, most recently, the United States have had to review their policy and make further cuts to their expenditure to achieve the objectives that have been achieved more gently and carefully by the current Government in the south.
I have said in the past that John Swinney is lucky in that he has acquired a reputation for being a responsible finance minister largely as a result of the financial constraints that the Westminster Government has placed on him. As we have seen time and again, the impression is clearly given that, if the money was available, he would spend more of it—and he does not tell us exactly how much he would spend.
My first question is for John Swinney and for Richard Baker on the Labour front bench, as both made the same comment that the cuts are too far and too fast. I have heard that before, but the question that I ask today—I would like an answer if possible—is this: if the cuts are too far and too fast, how far and fast should they be? If we had chosen to do some of the things that our international colleagues have done, we might have found ourselves in a much more difficult situation than the one that we are in today.
Will the member take an intervention?
If it is to give an answer, I am delighted to let the member in.
It is an answer: Ed Balls has set out a different approach, which is to make the cuts over a longer timescale. In fact, has George Osborne’s approach not been shown to be the wrong one? Growth is shrinking in our economy. Only yesterday, the IMF revised down the forecast for growth in the UK economy. It is clear that the chancellor’s plan is simply not working.
The figures are certainly not good, but if we look at what is happening in other European countries, including the most buoyant economies such as Germany, we will find that they are no better off. The reality is that we are surviving the situation as well as anyone, and that is something for which we must thank the Government south of the border.
Let us move on to what we heard from the Scottish Government today. A number of policies were set out, and I need to deal with one or two specifically. We heard a guarantee about university funding, with the minister saying that he would close the gap with England in full. I do not believe that we got the commitment that that would not be achieved at the expense of the further education colleges. We heard the promise that there would be rate relief on empty shops to assist in encouraging businesses to fill the empty shops in our town centres. However, if that is at the expense of those who are struggling to find investment in the shops that they own, it may be a short-lived opportunity for our town centres.
What we heard today, at length, was the way in which the Scottish Government will achieve the objective of implementing the budget on the basis of the money that has been available to it, but what we need is action on the Beveridge report and Christie report. We need public service reform in the long term, and we need leadership from this minister and this Government to achieve the objective.
We need a promise that we will find a way to ensure that the efficiencies that we make are implemented for the long term and that that objective results in genuine improvement in the delivery and efficiency of public services in the longer term.
16:39
I have enjoyed listening to the debate and I agree with many people who have stated that this settlement is wrong. We need to invest to grow our economy. Yesterday, following some of the mood music coming out of Westminster, it seemed that that had been recognised and, hopefully, we will benefit from a plan B. However, the SNP Government knew what the settlement was when it wrote its manifesto and it is our job, as the Opposition, to hold it to that. A huge number of issues have been touched on today and I want to touch on a couple that have not been covered before turning to the debate.
The first is the next-generation digital fund, for which there is no new money. I have been asking for a figure for the fund for a number of months. The figure of £50 million was mentioned in the manifesto and I would have expected that to be used to lever in EU funding. I see nothing new today, which is disappointing, because we need to invest in our digital infrastructure. In the Highlands and Islands alone, it will cost £300 million to bring superfast broadband to all our communities. By delivering superfast broadband to our communities, we also deliver savings because services can be delivered through it. It is a spend-to-save commitment and I hope the cabinet secretary will force other public bodies to look at how they use their infrastructure to deliver that.
Another pet project of mine is the land fund. During the election campaign, Richard Lochhead made a commitment to re-establish the Scottish land fund, but I cannot find any mention of it in this document. I have not read it line by line, so it may be there; if it is, I would welcome that commitment being brought forward in the minister’s winding-up speech.
We also need clarification on public sector pensions. In his opening speech, the cabinet secretary said that, if he is forced to, he will increase employee pension contributions where required by the Westminster Government. He mentioned the teachers pensions scheme in that regard, but my understanding is that increasing contributions for that scheme is a matter for COSLA to implement. It is also my understanding that COSLA is not willing to do that. How will the cabinet secretary force it to do that—will he legislate or instruct it to carry out those changes?
Funding for Scottish Water has been reduced, with worrying consequences, as the document admits. That will have an impact on infrastructure and the economy. The Government said previously that it was looking to allow Scottish Water to raise funds through the development of renewables. However, I cannot find anything in the document on this matter and information would be helpful. We read today that 12,000 houses in Glasgow were affected by high aluminium levels in water and that 17 recommendations have been made to prevent that from happening again. How can they be implemented if there are cuts of £120 million?
Clarification is needed on the Tesco tax, which has been reintroduced in this budget. The cabinet secretary talked about £500 million being invested in a preventative spending initiative. It is not clear if all that money will be raised by the tax, nor is it clear how it will be shared between local authorities, NHS boards and the third sector. Will the money be ring fenced for preventative measures? When this proposal was made in the previous session, we realised that the devil was in the detail. Has the Government consulted properly and is it clear that it is in a position to bring forward such a policy? It would be interesting to hear the detail of that.
Once again, there has been a cut in housing and regeneration funding. I understand that Shelter has described it as a “devastating” blow. The manifesto promised 30,000 social rented houses over the next session, but it is difficult to see how that can be delivered with funding being cut by almost £100 million over the next year alone, and falling further. Housing is important not just for those seeking it but for the economy. The construction industry is totally dependent on house building, as are those who live in fuel poverty and those who are homeless. It is difficult to see how the Government can meet its commitments and manifesto promises with such a cut in the budget.
Another promise was that there would be no compulsory redundancies, but it is difficult to see how the Government can deliver on that. I am certainly aware that, instead of people being made redundant, their hours are being cut. For example, many home carers are low-paid women who work part-time, but they have had their hours cut. Providing home carers is preventative spending. If home care fails in the community, the cost falls on acute care in the NHS, which is much more expensive. The Government needs to oversee the impact of cuts to ensure that that does not happen, because it would mean an increased cost in real terms. The Government has pledged to protect front-line services, but it must ensure that it does so in reality.
I turn to issues that were raised in the debate. Obviously, health is hugely important. Jackie Baillie pointed out that we lost 1,500 nurses last year and will lose another 1,000 this year. The Government promised that health spending and health budgets would be protected through consequentials. Again, though, I believe that it will be difficult for the Government to keep that promise. We proposed a single care service, which would have built in savings and efficiencies. I recommend that the Government revisit that proposal.
On local authorities—and this impacts on job losses in front-line services—will the council tax freeze be fully funded? What will happen to the additional costs of borrowing that will fall on councils? I agree that we should raise capital spending as much as possible to create jobs and develop infrastructure, but we cannot let the cost of that fall on councils, which are then forced to fund front-line services.
John Mason touched on the living wage and I was slightly bemused by that, because I understood that it was Government policy to provide a living wage in the public sector and possibly introduce a procurement bill that would provide it in the private sector for those who contract with the Government. However, that appears to be missing from the spending review document.
Will the member give way?
I am in my last minute.
Another significant piece missing from the spending review is the funding for the independence referendum. I may have missed it, although I went through the document in some detail and could not find it. I would have thought that it would have been up there in lights, but it does not appear to be. It is maybe buried in the detail. Maybe the Government has seen sense and decided to ditch it.
It is difficult to complain about spending levels when advocating further cuts in spending through lowering corporation tax, so the Government must be careful about how it deals with that. The SNP knew what the bottom line was when it wrote its manifesto. Those were not fantasy figures and we must hold the SNP to its promises to the Scottish people, because they delivered the SNP a majority to deliver on the promises. We will hold the Government to account while it does that.
I call John Swinney to wind up the debate. Cabinet secretary, you have until 5 o’clock.
16:48
Thank you, Presiding Officer. In his speech, Gavin Brown suggested that I was not terribly straightforward with the numbers. I am not sure that his charge stood up to much scrutiny after the interventions at the beginning of the debate.
When I looked in more detail at some of what Mr Brown was trying to do regarding the total funding that is available to the Scottish Government, I noted that he was using table 5 in annex E of the spending review document, which of course sets out the position in cash terms over a number of years. When we look at the situation in real terms, of course—which I think is the material point that applies to that particular table—it shows clearly that the Scottish budget in 2010-11 was at £35.534 billion and that by 2014 it will be at £32.548 billion. That is a fall in excess of £3 billion over the period. Mr Brown’s accusation was a little ill-founded, given that throughout the spending review document, where information is shown in cash terms and where it is shown in real terms are clearly advertised. It does not do the Conservative position in the debate much good to conflate the two and to suggest something that is different from the numbers that are before us.
The other important point about how we examine the numbers is that the numbers are clearly set out in a way with which Parliament is familiar. Members should be able to understand the detail, which is why Jackie Baillie’s comments were rather surprising. On any reading that I have done, it is clear that the Government’s commitment to pass on the Barnett consequentials of health spending increases south of the border in resource to the health service in Scotland has been fully and unreservedly met in the settlement that the Government has put together. I would have thought that that would have been worthy of comment by Jackie Baillie.
For the purposes of clarity, I will repeat the statistics that SPICe provided. The cabinet secretary claimed a real-terms increase, but he did so only very narrowly, in the context of territorial health boards. The wider health budget includes, for example, early detection of cancer, which matters to people in Scotland. SPICe told me that there is a £327 million cut in real terms in the health budget. If the cabinet secretary is simply blaming Westminster for that, so be it—but he should not say that a cut is an increase.
There we had from Jackie Baillie the delving down into the depths of distortion to which we have become accustomed. I have the SPICe analysis in front of me. Jackie Baillie luxuriates in trying to make up on people’s behalf things that they did not say. I have listened to her doing it for 12 years of my life and have never for a moment luxuriated in it. The SPICe figures show—on the point that I made about funding for health boards—that there is a real-terms increase. The Government made a commitment that we would pass on the Barnett consequentials to the health service; that is precisely what we have done, and we have fulfilled that commitment unreservedly and without question. We will not put up with Jackie Baillie going round the country spreading distortion after distortion, as we are all accustomed to her doing. We have fully honoured the commitments that we made to the people of this country.
That brings me to a general point about the nature of a commitment. All that we can do, when we give a commitment to pass on the Barnett consequentials in relation to health, is pass on the Barnett consequentials in relation to health. We cannot pass on other money that we have not been allocated.
I have listened to what Labour Party members have said throughout the debate. We heard heartfelt speeches from Mr McMahon, Mr Kelly and Jackie Baillie, all of whom want more money for health, local government and justice, which account for about 60 per cent of the Government’s budget—oh, and I think Claire Baker asked for more money for colleges, into the bargain.
I have listened to members of the Conservative Party encouraging me to face up to the realities of what is before me. That is precisely what I have done in the spending review. I have faced up to the numbers that are in front of me and I have addressed them. We took £1.3 billion out of public expenditure last year—we had the courage to face the realities and to do that before an election—and we have set out the forward spending plans. We have fulfilled our obligation in Government by doing that; it is now incumbent on the Labour Party to set out exactly what changes it wants to the budget that the Government has presented to Parliament. That is not a particularly onerous commitment to place on the Labour Party, but it must live up to the obligation.
One thing that surprised me during today’s debate was the dearth of Opposition commentary on preventative spending—the importance of which I have been lectured on for a long time. In an incredibly tight fiscal environment, the Government has put in place arrangements to enable us to make a decisive shift in favour of preventative spending. It is part of our budget approach in elderly care, in giving our young people the best future, in the early years programmes for our youngest citizens and in meeting the challenge of reducing reoffending. I would have thought that we could all agree that such an approach will greatly benefit Scotland’s future and equip our country for what lies ahead. Members on the Government side of the chamber have accepted that, and it should be reflected in the Opposition commentary. Margo MacDonald was the only member to discuss the importance of preventative spending, and I welcome what she said. I will write to her about the support that is available for credit unions from the Government’s existing programmes so that she and Neil Findlay can share that information with credit unions in West Lothian and raise awareness on the issue.
A major and sensitive issue in the Government programme—which I understand causes concern among members on all sides of the chamber—is public sector pay. I do not take the approach on public sector pay, nor that on pensions, with any enthusiasm whatsoever. However, John Mason clearly and bluntly made the point that many of his constituents would rather accept frozen pay than no pay. Ultimately, that is the challenge that we must meet in such a tight spending environment. The Government’s priority is to maximise public sector employment as part of our support for developing employment in Scotland and in our approach in general.
At the heart of the spending review is the Government’s attempt to set Scotland on a sustainable course in its public finances, to recognise the challenge of the economic circumstances that we face, and to take steps that are as significant as possible, in the context of those constrained resources, in building initiatives for the future. The entire focus of the Government’s capital expenditure programme is designed to create opportunities such as have to date worked so successfully to strengthen the labour market in Scotland, to bring us to a position in which employment is rising and unemployment is falling, and to open up opportunities for people in our society. That will be the focus of all the work that we do.
Many sectoral interests will emerge during our discussions, and the Government will engage with them all. There are many issues that we must resolve with regard to the public sector reform agenda in order to ensure that there is sufficient impetus behind the points of principle that we have set out today. I assure James Kelly, who made the point about investment in ICT, that we will drive the initiatives forward as part of the Government’s efficiency and public sector reform programme. That also addresses the point that Alex Johnstone made in summing up.
The spending review involves many challenges for the Government and for Parliament. However, members must bear in mind the key consideration: if we are to pass a budget that is based on an honest and open debate about the choices that are before us, they must be prepared to say where they want to spend less money instead of where they want to spend more. The Government has faced that challenge. It is now up to the rest of Parliament to address it, too.