Budget (Scotland) (No 3) Bill: Stage 1
The next item of business is a debate on motion S4M-08794, in the name of John Swinney, on the Budget (Scotland) (No 3) Bill.
14:40
Last week, I introduced the Budget (Scotland) (No 3) Bill for 2014-15, which will give effect to the draft budget that I set out in September last year and the subsequent provisions that we have made in the intervening period.
I express my thanks to all those who have contributed to the budget process so far, particularly members of the Finance Committee, whose report I have responded to today, and the subject committees for their comprehensive scrutiny of the Government’s spending plans.
As I have looked to do in each and every year, I am committed to working constructively with all parties in the Parliament to build agreement on the bill’s contents. I have met all parties and am aware of the issues that they raised in those discussions. I commit to working over the next two weeks to try to address those issues. I am willing to consider alternative spending proposals from all parties provided that they identify the source from which the necessary resources would be drawn to afford any changes to the Government’s fully-funded plans that are before us for consideration.
The spending plans that this Government has set out will support Scotland’s economy, help some of the most vulnerable in our society and deliver the high-quality public services that people in Scotland have a right to expect. Our plans meet the challenges of the times. We need: strong support for economic recovery; to deal with the impact of Westminster austerity and cuts in welfare support; and to protect public services in Scotland. That must all be achieved within the legal and financial limits placed on us as a devolved Administration.
As a result of Westminster’s approach to public finances, the Scottish Government’s fiscal departmental expenditure limit budget is being cut by 11.1 per cent in real terms between 2010-11 and 2015-16. That has reduced our discretionary spending power by £3.4 billion in real terms.
In cash terms, has total Scottish Government spend ever been higher?
We have been through such questions before with Mr Brown. He fails to take into account the fact that there is natural inflation in all the costs that we wrestle with as a Government. In terms of giving a like-for-like comparison of the resources under the control of the Scottish Government—the things that we can control and decide on to afford the priorities of the people of Scotland—the fiscal DEL budget has been cut, in real terms, by 11.1 per cent between 2010-11 and 2015-16. That is the reality of the financial situation that the Scottish Government faces.
We are seeing real-terms cuts of 2.3 per cent a year from March 2011 to March 2016 and we now know that the chancellor plans a further £25 billion of cuts to come from 2016 onwards. That assumption by the chancellor was greeted by the Deputy Prime Minister as a strategy founded on a “monumental mistake”. That is what the coalition partners think of Gavin Brown and his colleagues’ direction of travel. That approach compounds the macroeconomic failures of the coalition. United Kingdom Government borrowing between 2011-12 and 2015-16 is expected to be £197 billion more than originally forecast in June 2010.
As welcome as the £300 million of Barnett consequentials allocated in the chancellor’s autumn statement are, not all of them enhance the Scottish Government’s spending power and they account for a mere fraction of the amount that Scotland’s budget has been reduced by since 2010.
No one in the chamber should be in any doubt about two points: first, that significantly less money, in real terms, has been allocated to Scotland than at any point since devolution; and, secondly, that in those circumstances we are ensuring that the maximum impact is generated from the spending priorities that we settle on as a Government.
Since 2007, this Government and our public services have focused on creating a more successful country, with opportunities for all of Scotland to flourish, through increasing sustainable economic growth. Our budget sets out our actions to deliver on that purpose through supporting economic recovery while creating jobs and new opportunities through the transition to a low-carbon economy; maintaining our commitment to a social wage for the people of Scotland; and protecting our public services by taking forward an ambitious programme of public service reform, driving a decisive shift in resources to preventative approaches and delivering improved outcomes for people and communities.
As the Government’s chief economist noted in his most recent “State of the Economy” report, economic recovery in Scotland has continued through 2013 and Scotland has now seen its sixth consecutive quarter of growth. The recent growth performance has moved Scotland’s economy closer to 2008 levels, so that Scotland is now only 0.9 per cent below our pre-recession peak in output, whereas the United Kingdom is 1.9 per cent below that level.
Statistics that came out this morning highlight that Scotland continues to be the best performing of the four nations in the UK on employment and unemployment. Consistent increases in employment levels show that the policies of the Scottish Government to create jobs and boost the economy are making progress, but we know that the recovery is fragile and needs continual support.
We have consistently recognised the importance of infrastructure investment by the public and private sectors in increasing the momentum of the recovery. The budget confirms that we will secure more than £8 billion of investment in Scotland’s infrastructure over the next two years, which will be used to build homes, schools, colleges, hospitals and transport links. As part of that, investment to support sustainable and active travel will be increased to around £60 million over the period of the spending announcements.
On Monday, I was privileged to see the construction that is under way of the new Inverness College, and yesterday I saw the progress that is being made on City of Glasgow College, where £228 million of investment will create 170 jobs over the life of the contract and will deliver a centre of excellence for skills development in the city for many years to come.
We will continue to fund a record number of modern apprenticeships, including 40 at City of Glasgow College, which I visited yesterday, and will maintain our commitment to opportunities for all, which guarantees that those who are aged between 16 and 19 and who are not in work can obtain the support that they need to progress their journey back into employment.
Although this morning’s statistics confirm that the youth labour market in Scotland is performing strongly—we have a higher youth employment rate, a lower unemployment rate and a lower economic inactivity rate than the UK does—we are considering closely the recommendations of the Wood review on developing Scotland’s young workforce to ensure that our education system continues to deliver the skills that employers need.
The draft budget delivered the most generous package of business rates relief in the UK, which was worth more than £570 million a year at the time and included support for more than 92,000 business properties through the small business bonus scheme. In December, I announced that we would allocate £38.5 million in both 2014-15 and 2015-16 to cap the business rate poundage at 2 per cent and to extend eligibility for the small business bonus scheme. That will extend the benefit of the scheme to 4,000 additional properties, leave an eligible Scottish business up to £3,080 better off than its competitors in England and ensure that Scotland continues to be the most competitive place in the UK to do business. That measure has been included in the Budget (Scotland) (No 3) Bill and the Parliament will vote on it today as part of the bill’s provisions.
In addition, we are acting to protect and reform our public services. We value a national health service that is publicly owned and a local government that is properly funded, which is why the budget again delivers on our commitment to pass on the full Barnett consequentials to the NHS in Scotland and continues to prioritise local government funding, in contrast to the approach that the UK Government has adopted.
We have also ensured, through our reform of the fire and police services, that we will maintain 1,000 additional police on the streets, and from 2015-16, the Public Bodies (Joint Working) (Scotland) Bill will drive the delivery of joined-up, high-quality and sustainable health and social care provision in Scotland.
With that in mind, the budget maintains our commitment to the three change funds in 2014-15 and will allocate funding of £120 million in 2015-16 to support national health service boards, local authorities, the third sector and other partners in delivering better integrated health and social care provision and to fund national initiatives into the bargain.
Investing in and improving crucial public services can bring significant benefits to our economy. The draft budget in September provided more than £190 million of investment over the next two years to increase early learning and childcare provision to 600 hours a year for three and four-year-olds and the most vulnerable two-year-olds, saving families around £700 a year. That investment will fund the commitment in the Children and Young People (Scotland) Bill and increase available childcare from the 412 hours a year that we inherited in 2007. High-quality childcare can make a huge difference to outcomes, both in the life of a young child and in their parents’ ability to participate fully in the economy through work or training. That is why when the financial opportunity to extend the provision became available the First Minister announced plans to extend the provision to two-year-olds in households where parents are looking for work.
To maintain the quality of childcare, we are also investing £3.5 million in supporting around 2,000 new jobs and enhancing the skills of our childcare workforce. The bill allocates the funding for that expansion.
As the cabinet secretary knows, we welcome the investment in two-year-olds as well as three and four-year-olds. I know that he has plans for the following financial year, but will he give a commitment that if finance becomes available and opportunities arise to extend the scheme even further he will continue to expand the scheme to more two-year-olds?
The Government has made absolutely clear its commitment to expanding the availability of childcare. In “Scotland’s Future”, we set out an ambition that it is essential to realise for Scotland, but only when we have the resources available to us. We believe that the type of transformational resources we need to take forward these issues will come when we have the normal powers of an independent country.
Alongside increasing childcare provision, we are continuing to place the delivery of better outcomes at the heart of the budget through our social contract with the people of Scotland. As I set out in September, the budget continues our work with our partners in local government to deliver a council tax freeze that will save the average household £1,200 by the end of this parliamentary session. It provides support to our students through our commitment to free higher education and a minimum income; maintains free personal care and support for concessionary travel and free prescriptions; and embeds the Scottish living wage in our public sector pay policy.
Moreover, earlier this month, we confirmed our intention to fund free school meals for all schoolchildren in primaries 1 to 3 from next January, which will be worth £330 a year for each child to families throughout the country. That investment, which will help to tackle poverty amongst our youngest children and ensure that every child has access to a hot meal every day, has been included in today’s budget bill and I hope that members will show their support for it in this evening’s vote.
This Government is delivering real support to deliver better outcomes for our people and to tackle some of the difficult issues that have arisen from the cuts to welfare provision. Alongside local government, we are again investing £40 million in the council tax reduction scheme, which has helped some 550,000 people who would otherwise have seen their bills increase and would have faced the risk of falling into arrears. We have allocated £33 million to the Scottish welfare fund and in September I confirmed £20 million of funding to help reduce the impact of the disastrous bedroom tax on the most vulnerable in our communities. As figures published yesterday show, more and more people affected by the bedroom tax are turning to local authorities for discretionary housing payments and our £20 million funding ensures that local authorities can pay the maximum allowable within the law to protect some of the most vulnerable in our society. This budget confirms that we will make that support available in 2014-15.
Although welfare policy and its funding are reserved to Westminster and although it is not an area in which we have legislative competence or for which we receive consequentials, I point out that, in order to mitigate the worst of Westminster’s cuts, our spending plans will take our investment in dealing with the implications of welfare reform to more than £244 million during the period 2013-14 to 2015-16.
Although there have been challenges in setting this year’s budget as a consequence of the macroeconomic failures of the UK Government and the budget cuts that it has imposed, it comes at a particularly exciting time for our nation, when the eyes of the world will be on Scotland. We will welcome visitors from across the globe to enjoy the Commonwealth games and the Ryder cup; we will have an opportunity to showcase Scotland to the world in the second year of homecoming; and, of course, on 18 September, the people of Scotland will have the opportunity to vote on our country’s future.
I have set out the principles of the Budget (Scotland) (No 3) Bill. The budget is based on the Government’s vision of a nation that is founded on the principles of fairness and prosperity and which demonstrates the benefits to it of decisions being taken in Scotland by those who care most about it: the people who live and work here.
I move,
That the Parliament agrees to the general principles of the Budget (Scotland) (No.3) Bill.
14:55
Our criticism of the budget that is before us, ever since it was published in draft, has been consistently less about what can be seen in it and more about what cannot. Our criticism is simply that, when the budget is compared with the Government’s stated objectives—many of which are very creditable and many of which are inarguable—at best, no connection can be found between them and, at worst, budget decisions seem to reflect different priorities altogether.
There is no discernible long-term plan or strategy in the budget to create jobs and growth, reduce inequality, eradicate poverty, address climate change, or move definitively to preventative spending. That was the theme of almost every committee report on the budget this year, and it was reiterated by almost every expert witness whom those committees heard. The Finance Committee report summed it up bluntly. It said that there is
“no link between the Government’s spending plans ... and the intended impact”.
The Health and Sport Committee, the Infrastructure and Capital Investment Committee, and the Rural Affairs, Climate Change and Environment Committee all echoed that.
When we last debated the budget, just before Christmas, Mr Swinney suggested that when indicators move in the right direction, that in and of itself is the proof that he has a plan and it is working. To a degree, he did that again today with regard to the employment figures, which is not surprising following today’s welcome improvement in the unemployment and employment figures. However, I presume that, when we see more families resorting to food banks, falling into fuel poverty or rent arrears, more in homeless accommodation, increasing numbers of our young people not in employment, education or training, a 37 per cent drop in college admissions, or our carbon emission indicators going in the wrong direction, that means that he has no plan or that the plan is not working.
That is not a new feature of this year’s budget; rather, it is a pattern over time. Take the challenge of eradicating poverty. What could be more important or desirable? In 2007, Mr Swinney inherited a budget in which £1.5 billion-worth of anti-poverty spending could be readily identified; indeed, he badged £160 million of it as the fairer Scotland fund. Seven years on, £1 billion of that, including the fairer Scotland fund, has disappeared.
The budget fails to rise to the challenges that Scotland faces. It is a steady-as-she-goes budget that changes little and risks less to get the Government past its only real objective: the referendum in September. Indeed, when the draft budget did change with a consequential increase from the autumn statement, the Government could have brought forward much more of its own childcare plan and started it now to help many families—especially women—back into work right now, but it chose instead to continue with the argument that it first needs independence to deliver that.
Would Iain Gray accept that if I had followed the approach that he is talking about, I would have had to allow business rates in Scotland to increase and free school meals to be denied to children in primary 1 to 3?
We certainly argued that, given the choice between two good things—the free school meals and the increase in childcare—we would have preferred to prioritise childcare. However, there is one improvement to the budget that we have consistently advocated since its introduction, which is to fully mitigate the impact of the bedroom tax, thus to all intents and purposes abolishing it in Scotland. We should not kid ourselves, because that tax is not the biggest coalition welfare cut. However, it is big enough, with 80,000 households affected, and it is one of the most iniquitous, because it cannot work. Even if tenants could move to smaller houses, there are none for them to go to. The alternative that they face is debt and possibly losing their home. The tax is iniquitous because most households affected include someone living with a disability. The tax is iniquitous because it attacks those who need space for the equipment that they need to live, carers who need the respite of a spare room and divorcees trying to be, usually, a father to their children.
I agree with Mr Gray about the iniquity of the bedroom tax, but why is he in cahoots with the Conservatives and the Liberals in the better together campaign, enabling the bedroom tax to be enforced in Scotland by the power of the Westminster Government?
Let me come to agreement and disagreement across the chamber on that.
Protecting tenants would be a start, which is why Jackie Baillie has a bill before the Parliament to stop them being evicted. However, it would be so much better to find the resource so that they can avoid arrears in the first place.
The bedroom tax does wider damage, too.
Will the member give way?
No, I am sorry.
Local authorities have seen rent arrears soar, which means cuts elsewhere in already stretched services. The consequences for housing associations are worse, because soaring arrears compromise their income steam and undermine their ability to borrow, and they cannot build new houses. Indeed, the Scottish Government’s housing budget—the welcome increase from the massive cuts in this budget—will mean little if housing associations cannot borrow the balance of funding that they need to use the housing grant to build. It is no wonder that housing associations asked this morning that the Scottish Government amend its budget to fully mitigate the impact of the bedroom tax. They calculate that that needs around £25 million more per year. We have consistently suggested a figure of £50 million a year, based on research that was commissioned by the Welfare Reform Committee. We acknowledge that the cabinet secretary has found £20 million.
Will Mr Gray give way?
No, I am sorry. I need to get on to the point that Mr Swinney raised. I will get to it.
However, at least half of the households affected are getting no help and arrears are rising. The figure of £30 million is not a trivial amount, but it is a small fraction of 1 per cent of the Scottish Government’s budget. It is well within the margins of end-year flexibility, even in Mr Swinney’s tightly managed budget.
Can Mr Gray take this opportunity to explain to the Parliament the mechanism that would allow us to pay that additional resource to the individuals to remove their arrears?
I will come to that.
We believe that Mr Swinney could do more. In December and again today Mr Swinney argued that he has gone as far as he can under UK legislation to provide for payments to tenants, but we believe that he could do more to mitigate the impact of the bedroom tax, perhaps through his responsibilities to prevent homelessness and to support housing associations and perhaps through local authorities’ power of general wellbeing. On this matter we believe that where there is a will, we can find a way—and we should.
Will the member give way?
No, I am sorry.
We even have the Under-Secretary of State for Scotland assuring us publicly that the Scottish Government can fully mitigate the impact of the bedroom tax if it wishes—[Interruption.]
Oh, well. There we are, then.
Order, please. Interventions are best not made from a sedentary position.
We should do that, because the truth is that the Labour benches and the Government benches agree on the matter. We agree that the bedroom tax is iniquitous. Albeit for different reasons, we even agree that it is temporary. We expect to see the bedroom tax abolished next year by a Labour Government; the Scottish National Party says that it will abolish it in an independent Scotland in 2016. Either way, its days are numbered, but those days will be dark for the tenants affected by the tax. Mr Swinney was courteous enough to invite us to meet him to discuss the budget and we were clear that we want to see that change. He agreed to work with us to find a legal way to do it, and those meetings have started. I believe that they have been constructive and I hope that he does, too. I want them to bear fruit. We can set our differences aside and do this thing on which we agree.
On that basis, we are willing to support the budget bill this evening, in spite of the weaknesses that we believe it embodies, so that it can come back at stage 3 enhanced by measures and funds that in effect consign the bedroom tax to history in Scotland right here and right now.
15:05
It is often worth looking at what happened in the equivalent debate a year ago, so yesterday I looked at the stage 1 debate on last year’s budget bill. The Scottish Government’s central plank at that time was that the UK Government’s economic approach was not working. Mr Swinney said:
“The UK Government’s approach to public spending does not effectively support the need to strengthen economic recovery.”
Later in his speech, he said:
“a different strategy is required from that of the UK Government”.—[Official Report, 22 January 2013; c 15721-2.]
How different things look 12 months on from last year’s stage 1 budget debate: growth has returned and unemployment is down. Some very encouraging figures for both Scotland and the rest of the UK came out just today. Employment is up, confidence is growing and the growth projections from the International Monetary Fund, which came out yesterday, have gone up once again. I and members in this part of the chamber are glad that the Chancellor of the Exchequer stuck to the path and did not follow the Scottish Government’s advice in the budget process last year.
What Mr Brown has to do to complete his explanation of what happened is to refer to the fact that the amount of borrowing that the UK Government is having to undertake to support its economic strategy is £197 billion more than the chancellor expected in 2010. Furthermore, the chancellor did not stick to plan A: he changed his plan at the instigation of the Deputy Prime Minister, who said that capital expenditure had been cut too quickly. That is exactly what we have said throughout the period since 2010.
I am not sure that Mr Swinney added much to the Scottish Government’s case with that particular speech. On the point about borrowing, he completely ignores the entire effect of the eurozone crisis and a continent almost in meltdown with six uninterrupted quarters of contraction. On the economic case that he seeks to build, Mr Swinney genuinely seems to put forward the case that all the growth in the economy across the United Kingdom is down to the policies of the Scottish Government. Macroeconomic policy is decided at a UK level, and it is about time that he gave the UK Government just a little slice of credit for the path that it has taken and the results that we have seen.
Let us look at the public finances. My colleague Mr Fraser will look at them in greater detail, but the point is this.
Will the member take an intervention?
I will in a minute.
In 2008-09, according to the Scottish Government’s own budget—I say to Mr Swinney that it is on page 189—it had £31.9 billion to spend. In the next financial year, the figure for total Government spend will be £35.3 billion. Yes, overall, in real terms that is a small decrease, but in cash terms it is a £3.5 billion increase. To put the record straight—because ministers talk about savage cuts—I note that the First Minister has £3.5 billion more to spend now than he had when he first became First Minister of Scotland.
I said that I would take the First Minister’s intervention, and I am happy to do so now.
I admire Mr Brown for wishing away inflation, which he constantly does to try to make his point.
I will pursue Mr Swinney’s point about whether the UK Government’s approach has changed. This time last year, the Deputy Prime Minister said:
“If I’m going to be sort of self-critical, there was this reduction in capital spending when we came into the Coalition Government ... But I think we’ve all realised that you actually need, in order to foster a recovery, to try and mobilise as much public and private”
investment
“as possible.”
If the Deputy Prime Minister says that there was a change of course—three years after coming into government, admittedly—why does Mr Brown not acknowledge the wisdom of his coalition allies?
I know that the First Minister likes to filibuster during First Minister’s question time, but now he is filibustering during Opposition speeches—good grief. He cannot stand anybody else getting to speak in the chamber—[Interruption.]
Could we have a little bit of order, please?
The First Minister has the audacity to say that I wish away inflation. When he talks about his public sector pay policy, he talks about a 1 per cent increase and a pay freeze, not a real-terms cut in public sector pay. Yesterday, he said that he did not want to debate with the Secretary of State for Scotland and that he wanted to start at the top of the UK Government and work his way down. If Alex Salmond’s intervention shows the quality of the contribution that he can make, he should start at the bottom of the UK Government and work his way up if he is good enough.
This is not a budget for the economy. The Scottish Government no longer even pretends to talk a good game on the economy, which is not front and centre. The budget is all about the referendum. The Government is doing little on business rates, apart from what the chancellor forced it to do. It is not bringing in a retail rebate like the one that we will get south of the border. It is doing nothing about a town centre regeneration fund. It is doing less than nothing about its non-profit-distributing programme, which seems to be stuck in the mud again. It is doing even worse with its so-called business rates incentivisation scheme.
This is a weak budget that does not put the economy front and centre. That is why we will not support it at decision time.
15:12
I congratulate the finance secretary on again putting together a budget to bolster the recovery that Scotland is experiencing, to protect our public services, to help families who are struggling with the cost of living and to make Scotland a fairer and more equitable society.
Scotland is outperforming the UK on a number of key economic indicators. Scotland continues to punch above its weight on foreign direct investment and, outwith London, it was the top-performing area of the UK last year. This morning’s heartening figures show that, although the UK unemployment rate stands at 7.1 per cent, the unemployment rate in Scotland stands at 6.4 per cent—its lowest level since the first quarter of 2009—and the divergence is growing. The chief economist’s most recent report predicts that, in 2014, Scotland’s economy will at last move beyond 2008’s pre-recession output levels.
All that is encouraging and has been achieved despite—not because of—the UK Government’s discredited austerity measures. It should be remembered that the Scottish Government called for years for a boost in capital spending to grow the economy and create employment, to which the chancellor is only a belated convert.
It is undoubtedly the result of the UK Government’s commitment to austerity that virtually every forecast that the Office for Budget Responsibility has made for UK growth has had to be revised downwards. On new year’s day, Jonathan Portes of the Financial Times said:
“This remains the weakest recovery in recorded UK economic history. In June 2010 ... the Office for Budget Responsibility predicted that by now, the economy would be about 7 per cent larger.”
It is clear that the Scottish Government’s decision to switch resource spending to capital projects was wise and has contributed to the considerably lower levels of unemployment in Scotland as opposed to the UK as a whole. I am pleased that the budget recognises that link and maintains a strong commitment to capital investment.
As Mr Swinney said, the Scottish Government is to invest more than £8 billion in Scotland’s infrastructure over the next two years. That will improve the transport network, the college estate, our national health service and schools; aid the delivery of public services; and ensure that Scotland is a more attractive place to live, work and invest in. As members know, it is estimated that every additional £100 million of capital spending creates or supports about 1,400 jobs in the Scottish economy.
On 19 December, Gavin Brown tried to pull the wool over our eyes by pretending that a cash increase in annually managed expenditure from 2012-13 to 2015-16 does not represent a real-terms cut in the Scottish Government’s budget, despite the rate of inflation that we have experienced over the past two years and anticipate over the next two years. Today he repeated that mantra.
I point out to Mr Brown that a true measure of available resource is its real rather than its notional value. Indeed, is it not Conservative policy to reduce Scotland’s budget in real terms? If so, why does Mr Brown hide behind cash figures year on year, whether he is talking about departmental expenditure limits or annually managed expenditure? Given the arguments that Mr Brown has been making, it seems that, if he had been the finance minister in the Weimar republic, he would have been arguing that the increase in budget every year represented good husbandry.
For clarity, I acknowledged that there is a real-terms cut. Does the member acknowledge that there is the highest cash-terms total Government spend ever?
Mr Brown makes the same intervention every time we debate the matter, and I always respond that, as the First Minister and Mr Swinney said, what matters are the real-terms figures—what we can actually do with the money and spend it on—and not the cash numbers behind them.
On 11 December, Mr Brown said, somewhat triumphantly:
“Our economy is now growing faster than any other major economy in the industrialised world, apart from that of the United States of America.”—[Official Report, 11 December 2013; c 25581.]
Mr Brown will recall—painfully, I have no doubt—that I had to point out to him that growth in the UK is sluggish in comparison with growth in dozens of other nations across the globe, and that the UK ranked 28th in terms of growth rates, according to that week’s edition of The Economist. Six weeks later, The Economist is pointing out that the UK is now in 27th place. Things are not moving as fast as they would have done if we had had an effective economic policy. There is a long way to go.
I am pleased to note that the budget ensures that Scotland will continue to maintain its place as the most progressive nation in these islands, preserving our proud commitment to universal services such as free personal care for the elderly, the free bus pass, free prescriptions and access to university tuition that is based on the ability to learn and not the ability to pay—or, as some call it, the “something-for-nothing society”.
Not only has the Scottish Government protected those policies but it will enhance social provision through the introduction of universal free school meals for all children in primary 1 to 3. The policy, which will cost £55 million over two years, will remove the perceived stigma of free school meals and ensure that children from all backgrounds are properly nourished, alert and ready to learn. For that reason, the policy has been welcomed by the Educational Institute of Scotland, the Scottish Trades Union Congress, Unison, Save the Children and the Child Poverty Action Group. To their shame, Labour members voted against the move.
Will the member give way?
I am in my last minute, sadly.
To judge by the farcical bickering on the Labour benches at decision time that day, it is obvious that many Labour members fully supported the idea but voted against the policy because it was proposed by the SNP, proving again that Labour remains unfit not only for office but for opposition. Indeed, when a Daily Record editorial criticises the Labour Party, Labour knows that it is in trouble.
Although our progressive policy, along with a substantial extension of childcare provision, will improve the lives of families and children, it is evident that only independence will release the resources that are necessary if we are to introduce the transformational policies on learning, childhood development and childcare that Scotland needs. The benefits of such policies, which have been implemented by our Nordic and Scandinavian neighbours, are manifest.
We have heard that the changes that we want to bring about could be achieved under devolution, but that ignores the reality that the maintenance of such radical policies requires funds and access to the increased tax revenue that would accrue.
By the end of this parliamentary session, the Scottish Government will have spent £224 million of our devolved budget in an effort to mitigate some of the UK Government’s Dickensian welfare policies.
You must conclude, please.
The cabinet secretary’s budget does much, with the resources that are available to this Parliament, to build on the economic and social progress that we have made in recent years. I urge all members to support it at decision time.
We must have speeches of six minutes, please.
15:18
Labour’s objective, at budget time and throughout the year, is to achieve gains for the people and causes that we came to the Parliament to represent.
I could give many examples. After Ed Miliband’s speech on energy, the UK Government and the Scottish Government were suddenly forced to make statements about the actions that they want to take in the area. After the great campaigns of Stella Creasy at UK level and Kezia Dugdale here, we saw action on payday loans from the UK Government and the Scottish Government.
Two weeks ago, the real significance of the first budget debate that we had—this year’s budget is really in two parts—was that the Scottish Government was forced, by the Labour Party’s active and vigorous campaigning on childcare, to allocate a reasonably significant sum of money to childcare for two-year-olds. No one can doubt that, if Labour had not made the issue its number 1 budget priority, the Scottish Government would never have announced the policy on budget day.
That was the significance of what happened two weeks ago. Today, however, members on the SNP benches have repeated—to my great disappointment, because Kenneth Gibson is very sensible when he wears his Finance Committee convener’s hat but today he reverted to party-political mode—the sustained nonsense that we have seen in the chamber, the newspapers and social media about Labour’s vote two weeks ago.
The absolute final proof that we could not vote for that motion because it was about independence is the vote of the Liberal Democrats. Nobody in this chamber or this country doubts that the reason why we have free school meals here is the instigation of the Liberal Democrats at UK level—let us congratulate them on that. However, two weeks ago today the Liberal Democrats voted against the Government’s motion. That is the final proof that the SNP has been talking absolute nonsense about our vote on free school meals.
John Swinney said today that he hoped that members will show support for free school meals. We will, and we will vote for the budget, but the SNP and the Scottish Government should listen carefully to the reason that Iain Gray gave for that. It is connected to our single most important objective as we debate the budget at this stage: to achieve gains in relation to the bedroom tax.
We can already claim some advances on that. Members will remember that it was Labour that first advocated the allocation of money to alleviate the consequences of the unjust bedroom tax, and the Scottish Government announced the £20 million in response to Labour’s demand. Our simple priority and objective over the next two weeks is to ensure that the £20 million sum is significantly increased.
Members on the SNP benches were laughing in a disrespectful way when David Mundell was mentioned, but they cannot lightly dismiss the words of a UK Government minister in that way. Members on the SNP benches and indeed members on my side of the chamber might not like the words of a UK Government minister, but they cannot be dismissed as irrelevant to this discussion.
Is Malcolm Chisholm aware of the Department for Work and Pensions guidance on discretionary housing payments? It states:
“Once you have met your authority’s overall cash limit you cannot award any more DHPs. By cash limit we mean two and a half times your government contribution. If you award above this limit, you are breaking the law.”
What is the mechanism to get round that, irrespective of what David Mundell has or has not said?
There are several suggestions for that, which should be the subject of discussions between the cabinet secretary and my colleagues over the next two weeks. I am sure that Jackie Baillie and perhaps others will go into the various options. With only two minutes left, I do not have time.
One obvious way to proceed—albeit not the most desirable—would be to allocate money for housing to housing associations or councils to make up for any shortfall. In the first instance, explanations should be made of whether and how the money can be targeted at individuals. There is no doubt that a way can be found. That is our objective in the budget process.
I do not have much time to deal with the rest. We have had the Government’s response to the Finance Committee’s report, which bears scrutiny. Iain Gray started his speech by reminding us that the Finance Committee made the central point—which Kenneth Gibson would have made today, had he been in Finance Committee convener mode—of the failure to link spending with the intended impact of policies in the budget. We had quite an interesting discussion about that in December, and the point still stands.
The cabinet secretary came back by saying that we should judge the budget by the outcomes, and we heard of economic indicators again today. Two points must be made in response to that. First, people can debate how good or bad the economic indicators are. I accept some of the figures that have been given, but I also note an employment drop of 37,000 among 16 to 64-year-olds over the past year. It is a rather grey area. In its own report, the Government showed concern about the increase in the number of 16 to 19-year-olds not in education, employment or training. There is a mixed picture.
The other point—and this is a pattern—is that the Scottish Government will always claim credit when there is some progress, but if the figures are going in the opposite direction, it will blame the UK Government. It is an easy strategy for the Scottish Government to adopt.
I have lots more to say, but I have only 10 seconds, so let us keep it simple this year. Let us have more on the bedroom tax and we will continue to support the budget.
I apologise that time is quite tight this afternoon.
15:24
I welcome the opportunity to take part in the debate.
There are a number of measures that we can all be positive about, especially the emphasis on childcare and free school meals, which ties in with briefings that we have received from Save the Children and Children in Scotland.
Malcolm Chisholm slightly overstates the influence of the Labour Party in all that. Usually he is quite balanced, but he went a bit off balance in his speech. If we were asked which member has been going on more than most about childcare, we would probably say Willie Rennie. The third sector and a number of my colleagues have been pushing on the issue, and I think that we would say that the Labour Party has been a poor third when it comes to campaigning.
I was particularly struck by one of the questions that Save the Children asked in its briefing for the debate:
“How has Scottish Government ensured that funding is adequate to achieve its policy aims”?
In many ways, that is a key question—in fact, in many ways, it is the key question—because the answer to it is that the funds that are available to the Scottish Government are not adequate to do all that we want to do, so the budget is very much about choosing how to use limited resources to have the maximum positive effect.
It is worth re-emphasising why we need wider powers, especially over taxation. At present, if we spend more on childcare or boost the economy in any other way, the pay-as-you-earn, the national insurance, the extra VAT and the extra corporation tax all go to Westminster. It is not that we are mean or begrudge Westminster a few extra pounds here or there, but we need to get that tax money back to continue to finance the policy.
That point seems to have been missed by some of the speakers in previous debates on the subject. We can afford to pay for more childcare only if the resulting tax is recycled into the system. Otherwise, it is like paddling a leaky boat so that, however much effort we put into paddling hard and well, our efforts are counteracted by the water leaking in or, in the case of the economy, the money leaking out.
Another example of what we have to do with our limited resources is the bedroom tax, which has already been mentioned. I very much welcome the £20 million to mitigate those welfare cuts, but that is £20 million that could have been used to improve other things. In fact, Mr Swinney mentioned £244 million as the total amount that is going on countering some of the welfare cuts.
Iain Gray said that those cuts, specifically the bedroom tax, are iniquitous. Most of us agree that the bedroom tax is iniquitous but, sadly, it is not the only iniquitous thing that is happening. In some ways, the sanctions on peoples’ benefits are more iniquitous. I have constituents turning up at surgeries whose bedroom tax arrears may be piling up in the background but whose issue when I meet them is that, for no apparent reason or because they were meant to be in two places at one time, their benefits have been sanctioned and they have no money for heating, food or their phone.
I do not know whether Mr Gray is suggesting that we could compensate for all the sanctions as well as the bedroom tax, but it is clear that choices have to be made. The money that we have to put into compensating for Westminster cuts could be put into health, housing or colleges rather than just cancelling out the attack on some of our poorest folk. In fact, it could be said that our efforts to improve things in Scotland are being put on pause while Westminster messes us around.
Do we want Scotland to be put on pause every time there is a Tory Government at Westminster? I presume that the Labour members accept that, for roughly 50 per cent of the time in the future, there will be a Tory Government at Westminster. Therefore, for 50 per cent of the time, Scotland will be on hold while we try to deal with that. Whoever is in power at Holyrood cannot implement progressive policies during those periods.
Do we want a system that allows Labour and the SNP Government to tackle poverty? Of course we do—and although we will not have enough funds to do everything that we want to do straight away, we could have a situation in which we are much more the masters of our own destiny.
The national performance framework has been mentioned. We spent a lot of time considering it at the Finance Committee, and it featured in the committee debate before Christmas. However, it is worth referring to it again, not least because it is still not as well known as it could be and one way that we can make it better known is by talking about it in the chamber, especially in supporting the scrutiny of the budget.
A key strength of the national performance framework is that it goes beyond gross domestic product. I suspect that GDP will continue to be a central measure in this country and beyond for some considerable time, but I think that most of us agree that it is not enough just to measure GDP.
Of course, the national performance framework can always be improved on, not least because what the public is looking for and the specific challenges that we face this year and next year will change over time. Therefore, the detail will need to change. However, I come back to the fact that some extremely positive comments were made about the framework at committee. Frankly, I think that some of us were surprised at how positive some of the witnesses were about Scotland’s position on the NPF and Scotland performs. That should encourage us to talk about the framework more, use it more and build on it.
As mentioned earlier, the key point for the Finance Committee is that we could not always see the link between the NPF and some of the spending in the budget, but I do not think that we were questioning the fact that a link exists.
We once again face a budget that has been severely curtailed by the failure of the United Kingdom over many years. I support the budget as proposed but I hope that, in the future, the Parliament will be able to make a much wider range of decisions that could make things much better for all the people of Scotland.
15:31
I am normally very impressed by Gavin Brown’s forensic approach to the budget process but I think that he let himself down today. He is probably one of the few members who has not stood up for the Liberal Democrats in the chamber. As he is a fellow coalition member, I am very disappointed with his behaviour—I will be speaking to his business manager later.
I think that we have disappeared into some kind of vortex when the First Minister says that he agrees with Nick Clegg’s wise words about the economy, particularly given that, only a year ago, the First Minister condemned the Deputy Prime Minister’s strategy on the economy, saying that it would not work. However, today we have seen yet again significant improvements in the economy, with unemployment in Scotland dropping down by 25,000 to 176,000 and employment going up by a further 10,000—it has gone up by 120,000 since 2010. We should remind ourselves that this is a plan that Labour and the SNP said would not work, would not be successful and would not help the economy turn the corner.
We have a long way to go—we should not be complacent—but the economy is on the right track, and it would be nice if, on occasion, the Government and the Labour Party were to recognise—
Will the member take an intervention?
Not just now.
It would be nice if they were to recognise the success of the strategy that we set out and which, by and large, we have stuck to—although admittedly bits have changed to take into account issues in the eurozone and beyond. We were condemned for sticking to the strategy, but now the SNP Government claims credit for that progress. Given the Scottish Government’s policies on the NPD programme, which is falling way behind track, it is clutching at straws when it claims that somehow Scotland is in advance of the rest of the UK.
I will take Kenneth Gibson’s intervention now.
Is it not the case that since the recession the UK has been the second lowest among the G7 countries in relation to economic growth? Only Italy has a lower growth rate. That is hardly an endorsement of the coalition’s policies over the past four years.
I have admitted that there is a long way to go yet. However, just this week the IMF recognised in a report that it was having to upgrade our growth forecast yet again. It also said that, out of the developed countries highlighted, we are second only to the United States. That is significant progress for a plan that Kenny Gibson and his colleagues said would not work.
I praise John Swinney for his approach to the Scottish Government’s budget. He is very open, he is prepared to have discussions and he listens very carefully to our proposals. I am grateful for that approach. We sent him a letter before Christmas in which we set out how we would like the consequentials to be spent and his budget to be shaped. The process does not always work—we voted against the budget last year although we voted to support it the year before—but we have already seen significant movement.
John Swinney knows that I have praised the Scottish Government for getting it right on nursery education and free school meals. Save the Children has warmly welcomed the developments on nursery education—for which we have been calling for some time and which we are pleased are being introduced—and free school meals. The fact that so many children in Scotland—an estimated 40,000—do not receive free school meals even though they are classed as being in poverty means that something is not right and needs to be reformed, which is why we are in favour of the Government’s proposals.
In the letter that we sent to Mr Swinney before Christmas, we made a number of other suggestions, which included match funding for Shetland to deal with its housing debts so that it can invest more in infrastructure. We also suggested extra funding for colleges to make up for the significant drop in funding between 2011-12, when college funding stood at £544 million, and 2014-15, when the proposed funding will be £521 million. We would like college funding to be restored so that some of the damage can be undone.
The Scottish Government has described financial transactions funding as “funny money” and said that it is a con. However, I distinctly remember seeing Nicola Sturgeon in a fluorescent jacket earlier this week, when she praised that “funny money” as crucial in helping people to buy housing. The policy’s popularity is evident—it is amazing what a difference a year can make, with another Scottish Government conversion to a UK Government proposal. We would like that money to be diverted to increase the amount of social housing that is built in Scotland, as there has been a reduction in spending on that in recent years. We have made that suggestion to Mr Swinney.
Even so, the budget will not be perfect. It might be good enough for us to vote for it, but we will have to see how discussions develop in the coming weeks. If we were running the budget by ourselves, we would do some things differently. We would use Scottish Water borrowing differently. Rather than lending £150 million to Scottish Water this year, we would allow it to source that funding from the markets because we believe that, as a solid company, it would be able to access that finance elsewhere. That would allow us to undertake some of the actions on fuel poverty and active travel that WWF Scotland is calling for. We need to invest in those areas. It would also allow us to extend nursery provision to the 40 per cent of two-year-olds who are currently being provided for in England.
That is the progress that we would make. I can say to Mr Swinney that the discussions will continue and that we will be constructive. We look forward to finding ways of reaching agreement on those issues.
15:37
I commend the cabinet secretary for introducing a budget that protects the social wage and expands the delivery of services to hard-pressed families who are having to deal with the austerity budget that Westminster has thrust upon us. I am pleased that there will be continuing support for free prescriptions, free tuition, concessionary fares, free personal care and—for the seventh year in a row—a council tax freeze. The cabinet secretary says that since the freeze came into being, it has saved the average Scottish family £1,200—and up to £1,600 in some areas of Scotland, such as Aberdeen and Fife.
Does Kevin Stewart agree that the council tax freeze has been warmly welcomed across the country, and that the Labour councillors throughout Scotland who question the freeze must answer to their constituents and explain why they want them to pay more?
I do not think that Labour supports the council tax freeze until it comes to by-elections, which is the only time we see Labour members supporting it. In every other forum in which I come across Labour members, they say that the council tax freeze should go and that councils should once more be able to increase that tax. That is yet another one of those Labour policy fudges—[Interruption.] Jenny Marra may laugh from the sidelines, but I want to know what Labour’s position on the council tax actually is. When is the cuts commission going to report back? When will we really know what Labour policy is?
We have heard much about mitigation of welfare reform, and I am pleased that the cabinet secretary has found £244 million over three years to deal with the worst excesses of that Westminster policy. Unfortunately, under the devolved settlement, there is absolutely no way in which the cabinet secretary can mitigate every single aspect of welfare reform. All members have to realise that that is the case.
Has the Government looked into the local government power of wellbeing, which Iain Gray mentioned in his opening speech? I presume that Kevin Stewart will be familiar with it from his previous life as a councillor.
I am very familiar with it, and there have been many arguments over the years about what that power actually means. However, we have a restriction, which was put in place by the Westminster Government, to two and a half times the amount that that Government gave. That is a fact, and one that Mr Eadie pointed out to Parliament earlier.
I am glad that Miss Marra and her colleagues have changed their position on the bedroom tax, but I remind them that it was the Labour Party that introduced the bedroom tax, although the Tories and Lib Dems extended it to social housing.
Will the member take an intervention?
No, thank you—I have taken enough interventions and I need to progress.
I reiterate that we all have to understand that not every aspect of welfare reform can be mitigated, which is why I think that the Parliament should have control over all aspects of welfare.
We have had good news today on employment. The unemployment rate is at 6.4 per cent, which is the lowest since the first quarter of 2009. Over the year, the number of women in employment increased by 62,000, which is the largest annual increase on record, and we have had the largest annual increase in the employment level since April to June 2007. However, I think that we could do more. For example, we have done extremely well on modern apprentices, yet Westminster prevents us from having the European youth guarantee scheme, which is a real pity. Beyond that, the transformational changes to childcare that are proposed in the white paper “Scotland’s Future” could result in even more women in work.
A huge amount of the Westminster Government’s economic policy is based round the needs of London. This week, Tony Travers said:
“London is the dark star of the economy, inexorably sucking in resources, people and energy. Nobody quite knows how to control it.”
Last month, Westminster’s business secretary Vince Cable said that London
“is becoming a giant suction machine draining the life out of the rest of the country”.
I want that giant sucking machine to be switched off and the Scottish Parliament to control all the levers of power so that we can do even better in budgeting for the future.
15:43
As members have pointed out, this year the Finance Committee was asked not just to look at whether the figures in the budget added up and moneys were being spent where the Scottish Government said they were but to scrutinise the budget by examining its contents against its ability to meet the aims of the national performance framework. I certainly found that form of budget scrutiny to be more interesting than the forms that I experienced in previous years. The one thing that has not changed since last year is that we remain in a very difficult economic climate in which to bring forward a budget. We must recognise that.
I believe that checking the budget against the aspirations of the NPF is a more useful way of scrutinising the Government’s proposals because, regardless of whether a budget line rises or falls, the ability to meet the NPF’s aspirations will always be the measure against which we judge a budget’s efficacy.
Whereas before we simply argued about whether we believed that we were being presented with a budget that would do what the Government said it would, now we can identify the outcomes that are expected of it against the Government’s set of indicators. We will still have disagreements about whether we believe that the Scottish Government is addressing the correct priorities, but we should be able to do so in the context of whether the outcomes that it has set itself can and will be met via its budget proposals.
Clearly, there are spending commitments in the budget that deserve our support overall, but the budget is, sadly, devoid of a coherent strategy to achieve the Government’s own declared objectives in areas such as creating jobs, growing the economy, eradicating poverty and reducing inequality, although there are clear budget lines that relate to each of those well-intentioned purposes. The major concern for me is bedroom tax mitigation, but I will come to that later.
I am a member of both the Finance Committee and the Welfare Reform Committee, and the perspective of the budget that I have developed leads me to believe that, in purely presentational terms alone, the Scottish Government must enhance the budget document to show more clearly how the welcome additional contribution that it has made towards mitigating the impacts of welfare reform will help.
For example, in relation to advice services, Scotland received £1.7 million a year as Barnett consequentials between 2013-14 and 2014-15. The extra money allocated by the Scottish Government, gives an overall projected expenditure on advice of £7.9 million up to 2015. The £5.4 million that is going to advice work is presented, on a different page in the budget document, as £7.45 million. That higher figure includes £2.35 million from Money Advice UK, but it is left out when it suits the Government’s purpose.
The budget document gives two values for the Scottish welfare fund: £33 million and £37.6 million. The reason for that is that the latter figure takes account of £4.6 million for administration, but that fact is disguised in different parts of the budget.
The component elements of the Scottish welfare fund should be clearer, as doubts are already emerging. For example, Citizens Advice Scotland has stated:
“We have not seen much evidence of the holistic approach that was envisaged for the scheme”.
Clarifying those budget details and having guidance on the scheme would undoubtedly assist people who are looking for information on what is being made available and would help them to assess the fund’s efficacy.
Clarifications can be found in the budget, but the contributions made by various measures are not always explained, and I am left to wonder why that is the case. We need single, consistent totals for expenditure, and no expenditure should be cited that is not associated with an identifiable cost.
We really should not have to trawl through supplementary information from a range of sources to establish what spending is actually being proposed by the Government.
I could list a few other examples, but time does not permit. Suffice it to say that, in future budgets, all available breakdowns of costs should be reported.
However, no amount of smoke and mirrors can mask the fact that it has now been verified, on more than one occasion, that there is no legal impediment to the Government spending more of its own money to fully mitigate the impact of the bedroom tax.
Is the member aware that article 7(1) of the Discretionary Housing Payment (Grants) Order 2001 says that we cannot do anything more than multiply by 2.5? It is just not allowed.
I must have used a buzz word, because the member obviously had her briefing handy. Well done for trotting out the facts about DHP.
The facts.
Yes, the facts. No one disputes the fact that DHP can be multiplied by only 2.5. That is a well-established figure. We have discussed it in the Welfare Reform Committee. We know that.
I turn to the important point that we cannot get around. The £20 million that John Swinney has allocated so far has rightly been welcomed, but it is also estimated that it is less than half the money that is needed. Just as the no-eviction policies that have been introduced in local government do not protect all social tenants, the £20 million that has been provided to top up discretionary housing payments is not sufficient to cover the impact of the bedroom tax.
If North Lanarkshire Council can top-up its DHP allocation to the maximum and then put £2.2 million towards additional hardship funding, it surely cannot be beyond Mr Swinney to do likewise in his own Scottish budget. If it is the case that authorities are only allowed to spend up to the figure that Fiona McLeod outlined, North Lanarkshire Council must be breaking the law. If so, what is the Scottish Government doing to try to prevent North Lanarkshire Council from finding additional resources to help those who are affected by the bedroom tax? If that council can do it, the Scottish Government can do it. Where there is a will, there is a way.
15:50
I welcome the budget from the cabinet secretary, and I agree with him when he states that it is a budget to support our economy and vulnerable members of our communities.
The cabinet secretary rightly says that it deals with the challenges of our time, and it is because of those challenges that I will talk about the Scottish Government’s commitment to delivering free school meals for children in primary 1 to 3 and to expanding childcare. That is, of course, supported by children’s charities throughout the country and welcomed by many. The budget confirms funding for 2014-15 of £55 million over two years to expand the provision of free school meals, and £59 million over two years to provide additional childcare places, all of which takes the total additional funding for children to approximately £250 million over two years. From August 2014, all two-year-olds in workless households will be entitled to 600 hours of free nursery education. That will benefit 8,800 children, or 15 per cent of two-year-olds.
That is all being done against the backdrop of the limitations of the devolved settlement, and shows that the Scottish Government is committed to helping families to be able to work, train, and help our economy.
From January 2015, all children in primary 1 to 3 will be entitled to free school meals, which will save families £330 per child per year. That commitment means that, from August 2015, Scotland will provide 6.5 per cent more hours of free childcare than we would have done if we had implemented the English system.
It is good to see that the Labour Party will get it right tonight by supporting the budget and backing free school meals and childcare at this stage. However, its earlier lack of support was disappointing and it will probably be remembered by the public.
We can only transform childcare in Scotland with independence. It is the next step. An SNP Government in an independent Scotland will introduce a universal system of high-quality learning and childcare for children from the age of one. The white paper, “Scotland’s Future”, sets out how we can transform childcare. By the end of the Scottish Government’s first budget, we will provide 600 hours of childcare to around half of Scotland’s two-year-olds. Those whose parents receive working tax credit and child tax credit will benefit. By the end of the first parliamentary session, we will ensure that all vulnerable two-year-olds and three and four-year-olds will be entitled to 1,140 hours of childcare per year, which is the same number of hours that children spend at primary school.
By the end of the second parliamentary session, we will ensure that children will receive that support from the age of one to school age. We will continue to invest and improve the life chances of all our young people and all the people of Scotland.
The Children and Young People (Scotland) Bill is going through Parliament. It will strengthen children’s rights and set in statute key elements of the getting it right for every child approach to ensure that every child and family gets the support and help that they need when they need it. It also includes elements that will ensure better permanence planning for looked-after children. The Education and Culture Committee recently agreed an amendment to the Children and Young People (Scotland) Bill at stage 2 that means that the Scottish Parliament is leading the way, because there will be added support for young people when they leave care.
Yesterday was the third anniversary of the death of Derek Mackay’s and my political father, Councillor Jim Mitchell. When he was a young man, he was split from his family and was in care. He often talked about the lack of support that he received when he left care. Obviously, that was a long time ago, but we have the opportunity to be a world leader and show that we will support and help the next generation of young people who come through that system. At one stage, Renfrewshire Council talked about naming one of its care homes after Councillor Mitchell, and I hope that it will keep that promise, because it could be an inspiration to the generation of young people who are coming through.
I welcome the cabinet secretary’s commitment to having 25,000 modern apprenticeships per year. Continuing to focus the employability fund on young people and maintaining financial support for employers will enable them to recruit and train young people and give them the skills that employers need.
In 2014-15 and 2015-16, the Scottish Government will implement the Post-16 Education (Scotland) Act 2013. The main opportunity that that will provide is widening access for all to our universities, ensuring that people who come from parts of my constituency, such as Ferguslie Park, get the chances in life that others do. That is about ensuring that it is people’s ability to learn, not their parents’ ability to earn that gets them their place in university.
Part of the act covers the principles of good governance for the university sector, with significant changes in how colleges are governed. West College Scotland has welcomed those changes. Principal Audrey Cumberford said:
“It is exciting times in the college sector and our new College provides a unique opportunity to enhance education provision in the West in an ever changing economic environment. Our commitment as always is to change people’s lives, create opportunities for our students, strive for excellence in everything we do”.
That is a perfect example. Principal Cumberford is in tandem with the Scottish Government’s approach.
The further education sector in general is ambitious about its future. John Henderson, the chief executive of Colleges Scotland, said:
“The Scottish Government made a commitment to maintain colleges’ cash funding earlier this year and we are very pleased that this has been incorporated into the draft Budget for 2014-15.
We also welcome the additional resources that are being allocated to the college sector for 2015-16.”
That shows what the Scottish Government can achieve with this budget, even with the limited powers of devolution. We can only guess what we could achieve and what life-changing differences we could make to young people in Scotland if we get independence.
15:56
I want to talk about the budget in the context of the national performance framework. Before I do, I will put a couple of questions to the cabinet secretary about an admittedly slightly more obscure topic—his 5 per cent limit on revenue-financed long-term investment.
It was back in 2011 when the Government first announced its decision to cap future revenue commitments relating to long-term capital investment to a maximum of 5 per cent. That was a welcome move. The publication of further information at the back of this year’s budget documents is also to be welcomed. Unfortunately, there is still some confusion about how and why the 5 per cent limit is calculated in the manner that it is. As an aside, given the First Minister’s confusion over percentages last week, I urge all members to look at the very useful briefing from the Scottish Parliament information centre on the subject.
The numerator—in other words, the payments to be made out of the Scottish Government’s resource budget towards those long-term projects—includes all private finance initiative, public-private partnership and NPD projects, borrowing on the rail regulatory asset base and some projected debt repayments relating to future borrowing to be made under the terms of the Scotland Act 2012. However, the denominator—the figure against which the resource payments are calculated as a percentage—includes capital, although the payments are only from the resource budget; it includes the local government finance settlement, although local government payments are excluded from the numerator; and it includes non-cash departmental expenditure, such as impairments or depreciation, although those do not represent the Government’s spending power. [Interruption.]
Mr Macintosh, can I stop you for just a moment? Someone has a mobile phone switched on and it is interfering with the sound. I ask members to check that their mobiles are switched off. Thank you.
As just one example of why that matters, it is difficult to be sure what might be affordable under the future borrowing powers that are coming our way through the Scotland Act 2012. Furthermore, the Scottish Government’s projections assume a 25-year repayment period, whereas the Treasury assumes a 10-year timeframe.
I fully recognise that this is a complicated issue and I do not wish to be overly critical of the cabinet secretary. As I have said, the 5 per cent limit is a welcome move in the right direction, but there could be greater confidence and support for the security that it gives us all with regard to the sustainability of Scotland’s long-term finances were the cabinet secretary to expand on how he reaches his calculations and offer the Parliament greater transparency in his reporting on achieving the target. Those are not just my observations but the conclusions of the Auditor General, and I would welcome the cabinet secretary’s comments on how he intends to take the initiative further.
As the cabinet secretary will know, many of us across the chamber have also been very supportive of his move to establish a national performance framework. I was delighted to see that the Finance Committee focused on that area in its report. However, I was also not surprised to read its conclusion that the performance framework has yet to fundamentally shape the budget decision-making process.
I believe—or, at least, I hope—that the point of the NPF is to move not just to an outcomes-based approach but to values-based decision making; in other words, not to pretend that economic decisions are somehow value free, neutral or objective. I want the budget to more accurately reflect the values that we hold dear and the lives that we lead. I want us to move away from our reliance on GDP and the credit rating assessments of agencies such as Moody’s, which are downright damaging to our society, let alone our economy.
That is why I am disappointed not just by the lack of process to formally link the NPF to budget decision making but by the decisions that the cabinet secretary has presided over. They have been most disappointing, and I believe that they are not in keeping with the aims of the NPF. For example, in the past few weeks, we have heard that the number of students who attend college has fallen yet again, this time by 7 per cent. That means that 140,000 fewer Scots are going to college compared with just four years ago.
Would the member not accept that, given that 80,000 of those people spent less than 10 hours a year at college and the average was only five hours a year, that is hardly affecting their lifetime chances?
I am very disappointed by Mr Gibson’s remarks. It is not that long ago that the Parliament was committed to lifelong learning and to building a knowledge economy. For many people, the way for them to get back into the economy is through part-time learning at college, as Mr Gibson will well know. In writing them off in the way that he does, by suggesting that their education is somehow not worth while, Mr Gibson does himself and the Scottish Government a disservice.
I simply ask the cabinet secretary whether he believes that those cuts are sustainable. In contrast, just this week we heard that university principals, who are already the highest-paid public servants in Scotland, have awarded themselves huge pay rises, at a time when most of the public sector is subject to a wage freeze or below-inflation pay increases. When I asked the Cabinet Secretary for Education and Lifelong Learning about that yesterday, he pretended that he could not get involved, as that would somehow compromise the autonomy of our universities. Given the hundreds of millions of pounds of public funds that go into our universities, holding them accountable for the salary of senior managers does not compromise academic freedom in any way whatever.
When I talked about building a moral economy in Scotland in our first debate after the recess, the cabinet secretary went out of his way to tell me how much he shared that vision, but does he not appreciate that it is the decisions that he takes in the budget that determine whether we put that ethical approach into practice? It is his Government that is giving millions of pounds to tax-dodging companies such as Amazon, it is his Government that is supporting companies that are involved in the Borders rail link or our universities in using zero-hours contracts and it is his Government that is funding huge construction cartels through the Scottish Futures Trust in a way that is entirely unaccountable to this Parliament and which makes them exempt from any of the conditions in the Procurement Reform (Scotland) Bill, such as those on blacklisting.
I accept that that might not be the cabinet secretary’s intention and it may not match his rhetoric, but it is the reality of the outcome of public spending decisions for which he is accountable. The Labour Party has offered him an opportunity to demonstrate that progressive, transformational and compassionate values underpin his thinking and his decisions. I urge him to take the opportunity to support us on the bedroom tax that he has been offered.
16:03
I welcome the chance to speak in the debate, and I welcome the range of measures that are set out in the Scottish Government’s budget.
I want to focus on just a few areas, primarily how the budget relates to Scotland’s youngest citizens. The Finance Committee, of which I am a member, looked at the preventative spend agenda, as it has done in previous years. One of the areas that we examined in that regard was the early years change fund. The committee recently had an extremely useful evidence session with the Minister for Children and Young People and the chief medical officer, in which we received some compelling evidence on what is happening in that area and the work of the early years collaborative. The committee was interested to learn how the change funds have leveraged in additional funding.
In its response to the committee’s report on the draft budget, the Scottish Government set out that the community planning partnerships had provided returns that indicate that
“significantly more is spent on the early years by Health Boards and local government than is captured by the Change Fund. The additional spend is estimated to be around 10 times the £272.5 million minimum agreed contributions invested in the Early Years Change Fund. From the 29 CPPs that provided a breakdown in figures, 12 reported local authority spending above the Change Fund guidance levels.”
That is very welcome news indeed but, of course, the policy’s true effectiveness will be judged not by the money that is invested and the funds that are leveraged in but by the outcomes for Scotland’s young people.
The minister and the chief medical officer set out very vividly in their evidence the scale of the challenge and the ambition. Indeed, the chief medical officer mentioned his ambition for one of the outcomes of these efforts to be the closure of Polmont young offenders institution, such would be the positive impact on Scotland’s young people. Such an idea might seem grandiose, but surely we can all agree that it would be a positive outcome. The work of the early years collaborative and the funding that has been allocated in recent budgets to this activity might well take many years to manifest themselves, but they stand as a positive example of the Scottish Government’s budgetary and policy interventions.
As we know, many children across Scotland need assistance and there are set to be many more. More than 50,000 children in Scotland are at risk of being pushed into poverty by 2020 as a consequence of the UK Government’s welfare reform and austerity agenda, which is why the Scottish Government’s efforts to mitigate such reforms are so important. The Finance Committee has welcomed the money that has been invested in that regard; I will not rehearse all the figures that have been mentioned but will say that the cabinet secretary certainly demonstrated the Government’s commitment when he mentioned the £244 million that would be allocated over a three-year period to try to limit in Scotland the damage of the UK Government’s welfare policies.
However, we have to place that in some context. We know that the UK Government’s welfare reforms will remove £4.5 billion from the Scottish economy by 2015 and, according to the Scottish Government’s estimates, £2 billion thereafter. Those estimates tally with the findings of the Sheffield Hallam University research that was commissioned by the Welfare Reform Committee, of which I am a member, and we must be clear that no devolved Administration would be able to undo or mitigate that scale of reform.
Nevertheless, what the Scottish Government is doing is making a difference and, in that respect, I want to focus on an issue that has already been touched on: the money that has been invested in discretionary housing payments. I very much welcome the £20 million that was invested this year and the further £20 million that has been set aside in this budget for the next financial year. As has been pointed out and as we all seem to agree, the legal maximum by which local authorities can top up their DHP fund is only 150 per cent of their allocation from the DWP, up to a maximum of two and a half times that allocation. That said, it is important to point out in this debate where that stipulation comes from. The legal maximum was set out in an order made under section 70 of the Child Support, Pensions and Social Security Act 2000, which was introduced when Alistair Darling was Secretary of State for Work and Pensions. It was interesting, therefore, to hear the litany from Labour members, demanding more funding to combat the bedroom tax. They would be a lot more credible if they themselves had not imposed the legal maximum for DHPs in the first place, or indeed if they could bring themselves to welcome the funding that has matched their own imposed legal maximum. In fact, far from welcoming it, they voted against the allocation of that funding during the Economy, Energy and Tourism Committee’s consideration of the budget.
In the limited time that I have left, I want to focus on two other areas in the budget that have already been mentioned and which will further support Scotland’s young people and their families. First, the extension of the 600 hours of free nursery education to two-year-olds from the hardest-pressed families will benefit 15,400 children and, secondly, free school meals will be extended to all schoolchildren from P1 to P3. I should declare an interest in that my young daughter will be one of those children. The move has been welcomed by many folk and other organisations outwith the chamber; indeed, Save the Children welcomes it in its great briefing for this debate. I just wish that it could be welcomed to the same degree across the chamber. I very much welcome it, which is why I will be voting for this budget this evening.
16:09
We have heard a lot about austerity this afternoon and, again, there have been references to savage cuts, a phrase that we hear regularly from SNP members in particular. It is worth looking at the actual sums involved and the evidence of what has happened to the Scottish Government’s budget.
As Gavin Brown pointed out, in cash terms, the budget, which is £35.3 billion in 2014-15, is the highest in history for the Scottish Government or the Scottish Executive. People will say, “What about the real-terms figures?” We have heard that from Mr Gibson and others. I have the real-terms figures, too. Using 2013-14 prices, this year’s budget is higher in real terms than last year’s and the current year’s. In fact, in the 15 years since devolution in 1999, the total has been higher in only five years; in 10 of the years since 1999, the total has been lower. In that historical perspective, Mr Swinney has a relatively high sum of money to deal with.
We accept, of course, that there has been austerity. Every country in the western world is affected by a downturn in public finances. François Hollande’s approach in France was the only exception, but he accepted in his famous new year’s speech that it was not working. He had to change direction—although, of course, he is somewhat focused on other issues at the moment.
Let us look at the evidence of the savage cuts that we keep hearing about. We agree with some of these policies and not with others, but people in Scotland have free personal care for the elderly, free prescriptions, free bus travel for the over-60s and free university tuition, none of which is available south of the border. They all still exist in Scotland; none has been affected by cuts. People south of the border say, “How can Scotland still afford to pay for those things, notwithstanding the impact of austerity?”
That is not the end of the story, of course, because even since 2010, not only have all those benefits continued, but Mr Swinney has been in a position to announce whole new areas of spending. In brief research, I picked up eight new spending lines that have been announced since the election of the coalition Government in 2010, with its so-called savage cuts. There is £13 million next year and £42 million the following year for free school meals for children in primary 1 to primary 3, and £15 million next year and £44 million the following year for an expansion of childcare. In December, Mr Swinney announced additional business rates relief worth £38.5 million next year; a town centre housing boost of £2.7 million was announced by Margaret Burgess and Mr Mackay; and an £8.6 million family nurse partnership extension was announced. In November, Margaret Burgess announced a £25 million regeneration boost for communities.
Will the member give way?
I will when I have finished my long list.
In October, the Scottish veterans budget was increased by £40,000, and there was the announcement of a £20 million increase for discretionary housing payments, of course. In January last year, a £21 million rare medicines fund was announced.
There will be many more examples of new spending commitments over and above all the benefits that already exist. I am sure that Mr MacKenzie will have yet more to add to my list.
Does Mr Fraser accept that at least some of those extra expenditures are possible only because of savings on capital projects? Does he welcome those savings, as I do, given that it has been almost unheard of—at least until this Government took office—that capital projects have been delivered under budget?
The evidence under this Government is that many capital projects are not being delivered at all. That is precisely the point that my colleague Gavin Brown and others have made all too often.
My point is very simple: there is no evidence of savage cuts. The Scottish Government is, relatively speaking, insulated from cuts in budgets elsewhere and is still able to maintain very high levels of spending and announce all sorts of new spending commitments.
I accept that Mr Swinney has a difficult job in trying to balance all the priorities and demands on him. He usually handles that pretty adeptly, but I suspect that the budget that is before us is more about politics than anything else. Mr Swinney tried to set a trap for the Labour Party in relation to pledges on childcare and free school meals, but so far it has been careful not to fall into that trap.
Our criticism of the budget is that the priority is wrong. Our priority would be putting the economic recovery first. Our concern is that Scottish businesses will lose their competitive edge, and our priority should be restoring that.
Just two weeks ago, Mr Swinney made the very welcome announcement that the retail levy would not continue when it comes to the end of its life. He announced that at the Scottish Retail Consortium event, and people were very pleased to hear it. He gave the impression to me of being a slightly embarrassed father not admitting that that wayward child was his responsibility; it seemed to be someone else’s idea.
I am very pleased that the retail levy is coming to an end, but of course it was a mistake to introduce it in the first place. It has now been revealed that the levy was nothing whatever to do with public health, which is how it was dressed up when Mr Swinney introduced it, and that it was purely a revenue-raising measure. It has now been accepted that the levy was costing jobs and investment, as those in the industry said it would. Mr Swinney has taken the very welcome decision to get rid of the levy, but it is a pity that he could not bring that in in this budget as opposed to waiting for next year.
We have had some very good economic news for the UK, with unemployment figures better than expected. As Willie Rennie said, the IMF forecast for UK growth for 2014 has been raised from 1.9 to 2.4 per cent. Mr Swinney is very good at claiming credit when the Scottish economy does well, but some forecasters are saying that Scottish economic performance in the future will not be as good as that of the UK as a whole and that we will fall behind. In that context, we think that this budget is a missed opportunity and that Mr Swinney should be prioritising economic recovery.
16:15
In any other country in the world, in coming out of recession, as we are, a finance minister would begin to have more latitude as taxation receipts began to increase. That is not so in Scotland, where we face continuing cuts and real-terms cuts, and potentially cuts well into the future, with George Osborne recently announcing plans for austerity plus. There is of course a neat solution to that problem: that is a future that we do not need to share.
Mr Swinney, as ever, has put together a carefully balanced budget. The necessity of having a balanced budget is a fact that the Labour Party in particular often seems to forget. Over the past few months, we have heard a very long wish list of increased spending that the Labour Party would like to see, but as usual it will not tell us what it would cut in order to fund that expensive list—except, of course, that there is the vague and lingering threat of Johann Lamont’s cuts commission, where everything is apparently still on the table. If even the Labour Party’s long-held commitment to universal services has been cut, surely nothing is sacrosanct.
I am pleased to say that once again the budget is grounded in the bedrock of economic sense, with a careful moderation towards capital expenditure for the very good reason that it delivers a better multiplier. It is important to realise that budgets are not an end in themselves and that it is the effect of the budget on the wider economy that really counts. Again, Labour often misses that point.
Since the SNP Government came to power in 2007, Scotland’s economy has begun—thanks to successive and economically competent budgets like this one—to outperform that of the rest of the UK, as today’s employment figures demonstrate. Scotland’s unemployment rate is now down to 6.4 per cent—well below the UK average—which not only demonstrates this Government’s economic competence, but underscores the fact that that has been achieved despite, and certainly not because of, George Osborne’s austerity agenda. I find it absolutely astonishing that anyone can assert that cuts give rise to greater employment. I would be very grateful if Mr Brown or Mr Fraser would explain just how that works.
Does the member acknowledge that unemployment is dropping drastically in the rest of the United Kingdom as well?
It is dropping, but not to the extent that it is dropping in Scotland. I note that Mr Brown failed to explain the link between austerity and increases in the number of jobs.
I am delighted that the cabinet secretary, within this carefully balanced budget, has found funds to extend free school meals and childcare, and that he has taken measures to protect our most vulnerable people against the worst excesses of the UK Government welfare cuts. However, here I find Labour wanting again. We have heard Johann Lamont say continually in the chamber that the Scottish Government is not doing enough to mitigate UK welfare reforms—we have heard that this afternoon from others. However, in the Delegated Powers and Law Reform Committee, where journalists fear to tread, Labour members have voted against the council tax reduction scheme, not once or twice but on five separate occasions. Johann Lamont constantly tells us that this Parliament has all the powers that it needs, yet Labour members, in the dark but never dusty recesses of that committee, argue that the council tax reduction scheme is ultra vires, or outwith the competence of this Parliament. That is proof, if any is needed, that Labour says one thing in public in the chamber and another in private when it thinks that nobody is watching.
A yes vote in September will avoid the dreadful cost of George Osborne’s continuing austerity and the reduction of the Barnett formula by the proposed £4 billion, but it will also deliver a further bonus. It will restore integrity to this Parliament by enabling the Opposition parties to serve their true masters—the people of Scotland.
16:21
There is no doubt that we are facing the worst cost-of-living crisis in almost a century. Hard-working families are struggling, pensioners are struggling and people without work are struggling. There is no doubt that people on low or fixed incomes are finding it extremely hard to make ends meet.
Across Scotland, people are now facing electricity and gas bills landing on their doorsteps following inflation-busting increases by the energy companies, and we know that it is not just energy costs that are going up. The costs of food and housing have gone up, too, and across a basket of essential goods and services costs have risen by more than 25 per cent over the past five years. That is the estimate from the Joseph Rowntree Foundation and its work on minimum income standards.
At the same time, incomes have at best stagnated and at worst, as in many cases, fallen in real terms. Since 2010, wages in Scotland in particular have fallen in real terms by more than £27 a week or about £1,420 a year. I think that we would all agree that that is a lot of money for someone who is low paid.
It is therefore little wonder that people are being forced to make choices between heating and eating, rent arrears are spiking and the number of people who are using food banks has increased by a staggering 150 per cent. The number of households in fuel poverty is now likely to be nearer 900,000, and it is unlikely that the Scottish Government will meet the commitment to end fuel poverty by 2016.
It is exactly at times like these that people expect help from the Government, whether that is the Scottish Government or indeed the United Kingdom Government. In the context of this budget debate, I genuinely believe that the Scottish Government is not focusing its budget on the scale required to make a substantial difference to the lived experience of hardship that people now have. I know that John Swinney faces many different and difficult policy choices, but we surely agree that tackling poverty and alleviating the cost-of-living crisis must be an increased priority.
Given the context, it is perhaps not surprising that the fuel poverty and child poverty figures have not improved and that the suggestions are that they are beginning to go the wrong way. That paints a very different picture from that which the Conservatives who have spoken this afternoon have painted. I welcome the refresh of the child poverty strategy, but I echo a point in Save the Children’s briefing that was mentioned earlier. How will the budget support the aims of that vital strategy? I recognise that these are big challenges, but on tackling poverty, we surely have a shared ambition to find solutions that will help people now.
On that basis, I turn to the bedroom tax. I start, of course, by welcoming Labour’s commitment to the abolition of the bedroom tax when we win the general election in 2015, and in the spirit of consensus I also welcome the SNP’s commitment to abolish the bedroom tax if it secures independence. In both cases, however, people who are suffering hardship as a result of this unfair and unjust tax will have to wait for two years or more before they get any relief. Meanwhile, arrears will mount and the fear and pressure on individuals and their families will remain. It really does not have to be that way. The Scottish Government can and should do something now. It has the power to do that; it just needs the political will.
I was genuinely disappointed to hear the SNP’s previous excuse.
Will the member give way?
No. SNP members have quoted the Scotland Act 1998 three, if not four, times and I will deal with that.
I was genuinely disappointed to hear the SNP’s excuse for its lack of action, which was that it did not want to let Westminster off the hook. I do not want to do that either, but the SNP implies by that position that it is content to leave some of the poorest people on the hook. However, we can and should do better. I believe that the view is shared across the chamber that the Scottish Parliament was created for times such as this.
The debate has shifted to whether you have the power. I make it clear that, although the Scottish Government does not have the power to make social security payments to individuals, it has the power to make funding available to councils and housing associations in devolved policy areas. Housing and homelessness are entirely devolved—Michael McMahon’s comments highlighted that. What about a prevention of homelessness fund or a housing sustainability fund? Surely you agree that they would be useful vehicles to protect tenants from the bedroom tax. Alternatively, local government’s general power of wellbeing could be used.
Will the member give way?
Mike MacKenzie rose—
Let me continue.
Jackie Baillie is in her last minute.
The required sum is £50 million, according to estimates from Shelter.
Will the member take an intervention?
I have been told that I am in my final minute.
I think that the cabinet secretary would acknowledge that that figure is a tiny drop in the ocean of his overall budget. I welcome the £20 million that he has provided for discretionary housing payments, but it is not enough—the Scottish Federation of Housing Associations echoed that point today.
I have proposed a member’s bill to protect tenants from eviction because of arrears that are due to the bedroom tax. I am genuinely grateful to members across the chamber for their support, which means that the bill can move to the next stage. Whether I proceed is up to the Scottish Government. It has until 14 February—Valentine’s day—to give me its answer, but let us not wait, because we can do this. Tenants should not have to wait for the votes to be counted in the referendum or the next general election.
Begin to conclude, please.
We can do this now. I look forward to meeting John Swinney in the next week or so, because I know that, if we work together, we can make this happen and axe the bedroom tax.
I remind all members to direct their remarks through the chair.
16:27
Governments and—more frequently—Government party back benchers like to suggest that a vote on a budget is either an endorsement of every detail or an absolute rejection of everything. We have heard some of that argument today. However, when most budgets are looked at impartially, the reality is that most people can find measures that they welcome and measures that they feel the need to challenge.
All Opposition parties—including the SNP when it enjoyed the somewhat limited privilege of being in opposition—look at budgets and decide where they need to challenge and oppose the Government, where they need to encourage the Government to go a bit further, and where they need to offer constructive suggestions. Only once we see how the Government responds to all the debate can Opposition parties decide whether, on balance, a budget is worth supporting or needs to be opposed. I can find in the current budget examples of measures in all the categories that I described.
Several members have mentioned GDP. I know that the Scottish Government is interested in—but needs encouragement to go further on—reducing its reliance on GDP and designing economic policies that balance properly economic, environmental and social priorities.
I know that the Scottish Government wants to go further on climate change; it recognises the urgency of that challenge, but it is not yet providing budgets that genuinely offer a turnaround and the ability for us to start meeting the world-leading targets that we all agreed to.
I know that the Scottish Government would like to do more on active travel and cutting energy consumption, but goodness knows that it has needed more encouragement on that.
There are aspects of the budget that I feel the need to criticise and to oppose, but on which I know the Government is not likely to give ground. For example, we have repeatedly criticised the unsustainable transport projects that the Government has pushed through with the support of most Opposition parties. There has been a shift from revenue to capital over the past few years, and much of that money is going to fund transport projects that we do not support. A consequence of the shift from revenue to capital is that there is less money for the likes of public sector pay; if we were not making that shift we would be able at least to match inflation in public sector pay.
As for the council tax freeze and the small business bonus scheme, those are untargeted measures. There would be far better ways of using the resources to achieve social, economic and environmental objectives, if we cared to balance those issues.
On the cuts to colleges and to housing, in particular, over the past few years, the Government needs to be challenged.
However, there is much to welcome in the budget. The finance secretary talked about the concept of the social wage. Under that broad heading are many policies that the Greens have been happy to welcome. The recent announcements on childcare and free school meals are important steps in the right direction, and I commend the cabinet secretary for them. He could do more, and he should—if he is able—meet colleagues from other parties to discuss the bedroom tax. Solutions might not be easy or straightforward, but if the cabinet secretary and his colleagues bring their undoubted creativity to the challenge, they might find a solution. If they can do that, they will add to the Government’s credibility on the concept of the social wage.
As I said in a Finance Committee debate before the recess, the Government’s thematic change funds represent a constructive approach, which we think could be taken further in relation to public health and active lifestyles. We have put to the cabinet secretary a proposal for a healthy challenge fund, which is modelled on the climate challenge fund. The cabinet secretary agreed to the climate challenge fund in a previous budget negotiation some years ago, and he has continued the policy year on year—although he no longer needed Green votes in budget debates and could have got rid of it—because he has recognised that empowering communities to put in place their own solutions can often lead to an approach that is far more creative than a top-down solution would be.
On issues such as healthy and active lifestyles, active travel and an active, healthy approach to food, which includes local growing schemes, there is a great deal that we could achieve that would bring social, economic and environmental benefits. By empowering communities to put solutions in place through a healthy challenge fund, the Scottish Government could achieve a great deal more than it achieves through its existing activity under such headings.
I encourage the cabinet secretary to give serious consideration to those ideas and to other ideas that have been proposed across Parliament today. If he does so and is willing to make concessions in many of those areas, I think that he will end up with a better budget, for which he will secure the broadest support.
16:33
Members on the Conservative benches think that this has been an interesting debate. Our view is that the Scottish Government must do everything in its power to focus on the economy, to help growth and ensure that growth is sustained not just in 2014 but over the next few years, and to increase employment and decrease unemployment. We think that the Government must use every lever at its disposal—I emphasise “every lever”—to do that.
An issue on which we feel strongly is business rates. We welcome the fact that rates will rise by 2 per cent instead of the expected 3.2 per cent, although it should be acknowledged that the approach was driven by the chancellor’s decision in the autumn statement.
We strongly encourage the Government to look at the retail rebate south of the border, which was announced in the autumn statement. Retailers have had a particularly tough time and, given that the retail levy came to Scotland, a retail rebate would be welcomed across the board.
Barnett consequentials will flow directly from the UK Government’s decision to have a retail rebate: £29 million of consequentials in 2014-15 and £39 million in 2015-16. This Government wants the most competitive business rates across the country; it is important that it not take measures that help that goal to recede, and that it keep pace with some of the positive measures that are happening elsewhere. That is why the retail rebate is important and why we think it critical that the Scottish Government introduce a rebate to help retailers across Scotland.
In last week’s debate, we expressed our great disappointment at how the business rates incentivisation scheme has operated so far. It was announced by the cabinet secretary in 2011, when it was said that it would “attract new economic growth” and help to grow business rates income in councils across the country. It was the flagship centrepiece of the SNP’s campaign in the local government elections in 2012. It was heralded as a great way forward, through which councils would get 50 per cent of anything that was collected above the targets that they were given. In year 1, the targets were changed at late notice. Most councils were expecting to get something; it now looks as if many councils will get nothing and some will get little. In year 2—the current financial year 2013-14—unless the position has changed in the past week, councils still do not have targets. The financial year will end in a couple of months, but councils still have not been given targets for collecting business rates. If that is the case, how on earth can the Scottish Government call it an incentivisation scheme?
The Scottish Government’s own external expert advisory group reported last summer. It felt that the scheme was a key action point and it put forward the idea—which I think is excellent—that 100 per cent of what is collected over the target should go back to councils. That was a Scottish Conservative policy at the last election. We think that it is a radical idea that needs to be progressed.
Gavin Brown will be delighted to learn that I have discussed that with the chair of the external advisory group, who understands the reasons why not to proceed with BRIS+ because of the circumstances around BRIS, in which delays have been down to local government auditing its own figures. For about the fifth time, I ask will Gavin Brown not accept that the delay in progressing is entirely down to local government and not the Scottish Government?
That is weak. If one cannot blame the UK Government, blame local government; blame anybody except the Scottish Government for the failures. It was not the Convention of Scottish Local Authorities that went across the country in April 2012 talking about the business rates incentivisation scheme. It was not COSLA’s policy; it was the Government’s policy. It was its pledge. If the policy has not worked out as it was promised it would and as we were told it would, responsibility rests with the Government. It is regrettable that it is trying to pass the buck and blame COSLA for a failure of its own making.
My colleague Murdo Fraser talked about the retail levy. Why not abolish it now? The Scottish Government has, I think, conceded the principle that the levy did not help public health in any way, shape or form. I was at the Scottish Retail Consortium event two weeks ago, and the cabinet secretary seemed to take great pride in saying that that unpopular measure is going to be abolished. It was almost as if it had not been his idea in the first place: it was someone else’s fault that it had been introduced, and he was coming to the rescue to get rid of it. It was an ill-thought-out tax to begin with—a revenue-grabbing measure that we should see the back of now, instead of having to wait until the middle of 2015.
Let us see the Scottish Government take more action on empty property taxes, in which they took away the advantage that we used to have over the rest of the UK. What about listening to the concerns of business about the land and buildings transaction tax? Businesses have said loud and clear that they need to know what the rates and thresholds are likely to be. The Government should stop delaying that measure and start listening to business, from which the evidence was particularly clear.
We do not believe from what we have seen that this Government has put the economy front and centre in this budget. It is imperative that it do so.
16:39
Our budget should reflect, and match up with, the priorities that we have for our nation.
In March last year, the largest survey of poverty ever conducted revealed that levels of deprivation in Scotland were at their worst for 30 years. The University of Glasgow’s poverty and social exclusion survey told us that one Scot in 20 cannot afford a balanced diet, that one in 14 cannot afford basic items of clothing such as jackets or shoes and that one Scot in three suffers from financial insecurity.
Since the SNP came to power in 2007, £1 billion has disappeared from poverty projects in Scotland. The fairer Scotland fund and projects in our most socially excluded communities have gone. Draft budgets this week in local authorities have voluntary organisations bearing the brunt of cuts. There are cuts in Dundee to Dundee Women’s Aid, Barnardo’s and countless other organisations that do work with people in our communities who are struggling.
Today’s budget has no clear link to poverty reduction. With anti-poverty budgets being slashed since the SNP came to power, that priority has all but vanished. The use of food banks in Scotland continues to soar, but we have no discernible plan for those who need and use them.
What of Scotland’s climate change targets, which the First Minister heralded as the most ambitious in the world but which were missed again last year? The policies that the Government has put in place to tackle climate change have been openly criticised by Scotland’s two largest local authorities because there is no clear funding line to pay for them. Targets without funding and action become merely empty rhetoric.
That is why I have been pleased to hear in the debate and during the Finance Committee debate before Christmas consensus that the Government’s budget must be linked to its own priorities—the national performance framework. Michael McMahon made the case for that well. I hope that the cabinet secretary will take the point on board in his next budget. Brave and bold Governments look to reassess priorities, to be strategic with their money and to be focused on economic growth and creating a new and better Scotland now.
Labour’s key ask in the budget is familiar to the cabinet secretary. We have discussed publicly and privately that we want £50 million to mitigate the bedroom tax. The SNP’s answer to that, as we have heard many times in the chamber over the past couple of years and today, is to get rid of Westminster, but that is overly simplistic and counterproductive. While Parliament remains within the economic strength of the United Kingdom, its duty is to enhance or mitigate policies and factors that affect people’s lives in Scotland.
In every jurisdiction, Governments will pass policies that are iniquitous. That is why Labour members campaign for progressive policies and Governments throughout these islands. It is our duty to do all that is in our power to mitigate the bedroom tax.
The cabinet secretary and countless SNP speakers said that they did not have the mechanism to do that. I expect that the cabinet secretary might be able to find the money if he did, as I have heard SNP members say many times in the chamber that they want rid of the bedroom tax, so I assume that they are also committed to mitigating its effects in full and have already found the £20 million for that purpose. What the cabinet secretary and his officials say they cannot yet find is the mechanism to mitigate the full effects.
I ask the cabinet secretary whether he and his officials have exhausted the local authorities’ powers of wellbeing. Iain Gray made that suggestion in his opening speech and I made the point earlier in the debate to Kevin Stewart.
We are talking about the local authorities’ duty of wellbeing towards their residents. How does Jenny Marra feel about East Dunbartonshire Council, which is a Labour-Tory-Liberal Democrat coalition that said, up until Christmas eve, that anybody who wanted to apply for a discretionary housing payment had to produce the receipts for their messages? Is that about wellbeing for the tenants?
We are looking for the money across the country. The cabinet secretary has come up with £20 million. We need to find the full amount of money to mitigate the bedroom tax and Scottish ministers must give direction to all local authorities on that.
Has the cabinet secretary exhausted or considered local authorities’ power of wellbeing? That suggestion has been made. It is a power that was given to local authorities across the United Kingdom by the Labour Government in 2003. It allows local authorities to enhance wellbeing and to address certain needs in their communities. Some of the Government’s stated aims in legislation are to tackle poverty and deprivation and to reduce inequalities. A cursory reading of the provisions in the Local Government in Scotland Act 2003 gives me confidence that it could be used to find the mechanism that John Swinney is looking for. Have Government officials considered that? I also draw the cabinet secretary’s attention to the provisions in the 2003 act that give Scottish ministers powers to extend the scope of that power of wellbeing and enable Scottish ministers to give direction to local authorities on that power.
As Iain Gray said, a Labour Government in Westminster next year will abolish the bedroom tax and the SNP is committed to doing the same in the event of an independent Scotland. We have said today that we believe that it is in the cabinet secretary’s power to cancel out the effects of the bedroom tax now for families up and down Scotland who are struggling to pay it, and for the families who are paying it, but at the expense of other essentials, in these hard-pressed times.
The bedroom tax is an iniquitous tax. The indignity that is at its heart offends so many members across the chamber, which is why Labour has made this our single ask: we will support the Government budget if the cabinet secretary finds the money to mitigate the tax and tells Scotland clearly that he will no longer tolerate it. In good faith, in good hope and with the commitment that we will work with the cabinet secretary over the next few weeks to achieve that, we will put our support behind his budget tonight and I hope that he can deliver.
16:47
I thank members for their contributions to the debate, which have informed the Parliament about the respective positions that different members are taking in relation to the contents of the budget and about how the budget can proceed to further parliamentary consideration at stages 2 and 3.
Mr Harvie has—fairly, I think—reflected on the fact that in any budget, a judgment has to be made as to whether the elements of the budget can be sufficiently considered by individual members and parties to be in the correct balance and therefore worthy of support, despite the fact that not all provisions within the budget may be to their liking. That is a responsible way to look at the budget. It is a way to look at the budget and say that although not all things in the budget would be the choice of individual parties, on balance the exercise of parliamentary responsibility to ensure that public authorities are properly funded and supported can be undertaken by the provisions of the budget. I welcome Mr Harvie’s contribution in that respect. I also welcome his suggestion about the healthy challenge fund, which the Government is of course exploring. Mr Harvie raised that with me in our private discussions and we will consider the issues in connection with that fund during the consideration of the budget.
Mr Rennie delivered a speech that was consistent with what he said in the first debate back after the Christmas recess. He acknowledged again the way in which the Government has addressed the priorities that he has raised in relation to childcare and free school meals. Of course, we will continue our discussions about how we advance some of those questions in the remainder of the budget process.
However, I highlight to Mr Rennie a point that I think Mr Adam made about the provision of childcare services in Scotland. In August 2015, Scotland will be delivering about 6.5 per cent more childcare per child than the amount of childcare that will be implemented south of the border. That is a result of the Scottish Government’s progress since coming to office, combined with our recent announcements to the Parliament, which have enhanced the situation.
The Conservatives have, to put it bluntly, got themselves into a foolish position on the budget; I cannot find any other way to describe it. To be fair, their responses on budget issues have been among the most considered in the years since the SNP Government came to office, but their position this time is foolish.
Murdo Fraser reeled off a range of measures that the Government has introduced since 2010: the rare medicines fund, free school meals, childcare, business rates parity with the headline rate south of the border, family nurse partnerships, the veterans fund and discretionary housing payments. He and his colleagues propose to vote against all those measures, including the Government’s business rates proposition, modern apprenticeships and the college budgets—[Interruption.] Mr Brown and Mr Fraser may guffaw, but—
Will the cabinet secretary give way?
I will finish my point and come to Mr Brown in a moment.
Mr Fraser and Mr Brown guffaw, but when the Labour Party voted against our budget in 2009—and the vote was tied, so the Parliament could not agree a budget—the first people to hound Labour members for not being prepared to support the public finances and the public services were Mr Brown and his colleagues on the Conservative benches. On that basis, perhaps Mr Brown will lead the Conservative party towards a bit of revisionist thinking on the budget provisions.
Does the cabinet secretary seriously think that, if a party votes against the budget, that means that it is against every single measure in that budget? He said that he respected Patrick Harvie’s speech, in which Mr Harvie made that exact point. Is he now disagreeing with Mr Harvie on that?
The point that I am making—and which I made to Mr Harvie—is about parliamentary responsibility. Mr Harvie recognises that, on balance, we have to come to a view on the budget. Mr Gray and his colleagues had to come to the same view in 2009, and they eventually voted for the budget, because they realised that they had got themselves into a ridiculous pickle as a consequence of first voting against it.
Mr Brown’s central argument has been about business rates and the supposed revelation that I have done some sort of U-turn on the public health supplement, which will now be concluded. I have a letter in front of me that I sent to the corporate affairs director of Tesco on 8 February 2012. The letter states—as I confirmed to the Parliament at the time—that:
“I can confirm that the public supplement will be a temporary measure and it will apply for the three years of the spending review only from 2012-13 to 2014-15.”
There is no revelation—that was clearly stated by the Government.
Will the cabinet secretary give way?
No, I want to make a little more progress on this point.
Mr Brown said that he wants me to keep pace with the business rates system in England. If I was to do that, I would be going to small businesses the length and breadth of Scotland and asking them for £3,000 a year back. “Give us back some more money,” I would have to say to them.
We are delivering in Scotland, and I have made that point reasonably to Mr Brown on countless occasions. The evidence is all here to show that we have a business rates system that is saving businesses in Scotland thousands of pounds every single year, but Mr Brown wants me to go and take that money back from them.
Since the SNP became a majority Government, it has done its best to damage that system: it has brought in the retail levy and an empty property tax, and now it is not having a retail rebate.
If Mr Brown wants me to keep pace with England and do things in the same way, I will have to go and take that money back from the small businesses of Scotland. I look forward to explaining to people in Scotland that the Conservatives want us to echo what is going on south of the border, so that businesses will, over the five-year period, have to give us back £15,000.
I welcome what has been said about the bedroom tax but, before I come to that, I will make one point. Malcolm Chisholm became indignant about the Labour Party’s commitment to free school meals, but his argument was somewhat undermined by the fact that Mr Gray confirmed to me that the Labour Party would not spend money on free school meals in the current budgetary provisions. Mr Gray was clear that, if there was a choice, the choice would be to spend the money on childcare.
Malcolm Chisholm was making a perfectly valid point in response to fatuous points that were made about the motion that we voted against two weeks ago, which was a motion supporting the equally fatuous argument that childcare can be improved only with independence. We do not support that.
I think that Mr Chisholm was getting indignant because we rumbled the fact that the Labour Party had voted against free school meals and the choice had been exercised in a different way.
Will the cabinet secretary give way?
I had better give way to Mr Chisholm.
By the cabinet secretary’s logic, is he therefore saying that the Liberal Democrats—the instigators of the policy—also voted against free school meals because they voted against the same motion?
I am simply pointing out to Mr Chisholm that his point was contradicted by his front-bench member, who said clearly that, if the choice was there, Labour would have childcare over free school meals, and that is what Labour voted for.
I want to dwell on the bedroom tax, which is an important point in the debate, although I do not have much time to discuss it.
There is not much time, but I will give you another couple of minutes.
I am grateful, Presiding Officer, because I want to put some information on the record.
I welcome the fact that the finance team has had private discussions with the Labour Party. I followed that up with a discussion with Jackie Baillie to explore the issues in connection with the mitigation of the bedroom tax. As I said to Mr Gray earlier, I view the bedroom tax as iniquitous and I want to mitigate its effects. However, crucially, the debate comes down to whether we have a mechanism that enables us to make payments to individuals to deal with the arrears that have arisen as a consequence of the bedroom tax. That is the point.
I think that Jackie Baillie rather helpfully made the point—if I have written it down incorrectly, I will revise this after I see the Official Report tomorrow—that the Scottish Government does not have the power to make benefit payments to individuals. I agree with that, as it is a pretty fair statement of the law. Section F1 of schedule 5 to the Scotland Act 1998 reserves the provision of assistance for housing costs to the United Kingdom Government.
Will the cabinet secretary give way?
No—let me finish the explanation, please.
The United Kingdom Government enables local authorities to make discretionary housing payments to individuals where individuals are affected. However, the crucial point is that the Department for Work and Pensions guidance to local authorities states:
“If you award above this limit”—
we know what the limit is—
“you are breaking the law.”
It continues:
“The legislation which specifies the overall limit on expenditure is Article 7 of The Discretionary Housing Payment (Grants) Order 2001.”
Jenny Marra raised a point about local government’s general power of wellbeing. Of course local government has that power, but the crucial test is whether we can get the money to the individuals to remove the arrears that they face. The guidance from the DWP, which is consistent with the Discretionary Housing Payment (Grants) Order 2001, states that there is a limit on that.
Will the cabinet secretary give way?
I am afraid that Mr Swinney will really have to draw to a close.
Having said all that, I want to continue discussions with the Labour Party about the pursuit of the practical options. [Interruption.] I do not know what Mr McMahon is muttering about, but in his speech he said that local government is taking approaches to try to ensure that supplementary resources are available. From the Government’s point of view, it is crucial that there is a mechanism that can ensure that the resources get to the individuals to remove their arrears and that we exercise that responsibility in a way that is consistent with the legal framework that is available to us. We will have further discussions about those points, but it is crucial that we find a way of tackling the hardship that individuals are experiencing, and doing so in a fair and effective way that meets their needs and helps us to deal with the iniquity that is a product of the bedroom tax in this country.