The next item of business is a debate on motion S4M-12776, in the name of Jackie Baillie, on supporting Scotland’s economy.
I call Jackie Baillie to speak to and move the motion. Ms Baillie, you have 14 minutes.
15:12
It has been a mere two weeks since we last debated the issue of supporting Scotland’s economy, and I note that both of the debates that we have had on the subject have been brought forward by Scottish Labour, not the Scottish National Party. In that time, we have reflected on the publication of the Government’s annual accounts for 2013-14 and not one but two papers from the Scottish Government on the benefits of improved economic performance. Of course, last week, we also had the United Kingdom budget. All provide insights into the choices that voters face in the upcoming general election, and I want to take each of them in turn.
Let me start with the record of the Conservative and Liberal Democrat coalition in government. In the past five years, four out of five new jobs that have been created in Scotland have been low paid, with 84,000 workers trapped in zero-hours contracts. Under David Cameron, energy bills have increased by more than £300, while the number of families with children who cannot afford to heat their homes has risen to an all-time high. Since 2010, the average Scottish worker’s annual wage has fallen by almost £1,600 in real terms and, unsurprisingly, the Tories have cut taxes for millionaires and have raised VAT—a regressive tax that hits the hardest-pressed families the most—to 20 per cent.
Will the member give way?
Will the member give way?
I see that both the Tories and the Lib Dems have popped up. I will give way in a second.
Thanks to the Tories and Lib Dems, we have had 24 tax rises that have left families £1,127 per year worse off. I will now take an intervention from one of the coalition partners.
If the position is as dismal as Jackie Baillie paints it, why do 40 per cent of the population prefer George Osborne as chancellor and only 21 per cent think that Ed Balls would do a better job?
Obviously there is no accounting for taste. I disagree with the number that would prefer George Osborne—and unsurprisingly so, given that, under his watch, tax avoidance is now costing us £34 billion. We also saw more than 22,000 children in Scotland relying on food banks last year. I do not know what some members are laughing about; I think that that is pretty serious. In 2011, there was one Trussell Trust food bank in Scotland; now there are 48. Taken together, I think that that is a damning indictment of five years of Tory misrule.
Just yesterday, the Scottish Government published an analysis of inequality in our country, and it told us the stark reality of Scotland today. The wealthiest 10 per cent of households own 44 per cent of all of the wealth. In contrast, the least wealthy half of households in Scotland own just 9 per cent of total wealth. There is no doubt that, under the Tories, the rich are getting richer and the poor are even worse off than they were before. Inequality is increasing. That is not good for the economy and it is not good for the country. Those figures show that we simply cannot afford another five years of failed Tory austerity so that those at the top continue to thrive while working families across Scotland struggle to make ends meet. That is simply not fair, and only Labour is in a position to end Tory austerity.
What about the Tories’ attempts to reduce the deficit?
Will the member give way?
Will the member give way?
On the basis that Mark McDonald has an injured leg, I shall give way to him.
I am grateful to Jackie Baillie for her sympathy. I note her claim that only Labour offers an alternative, but given that the shadow chancellor stated, the day after the budget, that he would reverse absolutely nothing from George Osborne’s budget, in what way is the Labour Party offering any sort of alternative to the austerity proposed by the Tories?
There is a significant alternative. Labour has never supported Tory austerity plans. The Tory budget is so insignificant that it does not begin to address the problems that we have. The Tories have said that they would reduce the deficit, but they have quite simply failed to do even that. In 2010, the Tories said that they would balance the books by 2015 and that they would raise living standards for all. Living standards have fallen. Real wages are down. Prices are up. We are facing a significant cost-of-living crisis. The Institute for Fiscal Studies has confirmed that living standards are lower now than when the Tories came into office. As for balancing the books, the Tory-Liberal Democrat Government is set to borrow more than £200 billion more than it planned to borrow in 2010.
Jackie Baillie has forgotten one very important fact, which is that it was her Government that left us with this mess to clear up in the first place. She has also forgotten that we have created 187,000 extra jobs. Does she have an answer to that?
I simply say that it ill behoves a Liberal Democrat to talk about budgets, particularly when the Liberal Democrats promised, going into an election, to scrap tuition fees, and the minute they were in power changed their minds.
The Tory budget last week did very little to redistribute wealth in this country or to improve the lot of hard-working people and families. Perhaps most significant was what the Tories did not say. There was barely a mention of public services such as our national health service or schools. There was not a word on the cuts to come, and there are cuts to come. They will be deeper and more significant in the next two years than anything that we have seen in the previous five. That is what the independent Office for Budget Responsibility has told us.
Tory spending plans will mean £70 billion of cuts to public spending if the Tories win the election—more than double the amount admitted to by David Cameron and George Osborne. That would mean a real-terms cut of £2.7 billion a year to spending in Scotland by the end of the next Parliament.
We know that continuing Tory austerity undermines our NHS. We know that Tory austerity denies opportunities for our young people and that it denies security in old age. To end Tory austerity, we need to get rid of the Tories at the election or we will have another five years of the deepest and most savage cuts to our public services, the likes of which have not been seen since the 1930s—a time before we created the NHS and when kids left school at age 14.
Labour has a better plan. Our values and our vision are of an economy that works for all, a politics where everyone’s voice is heard, and a society based on the common good. A Labour Government will raise the minimum wage to £8 an hour. We will ban exploitative zero-hours contracts. We will freeze energy bills so that they can only fall not rise, and we will have fair taxes in place of the regressive taxation of the Tories.
A Labour Government will increase the taxes of the wealthiest few to give working-class Scots a better shot at life. We will use the mansion tax on homes worth £2 million to fund 1,000 more nurses in Scotland’s NHS, and we will increase the top rate of tax to 50p to invest in the next generation.
Will Jackie Baillie give way?
Will Jackie Baillie give way?
No, I have taken lots of interventions already.
We will end tax avoidance by the hedge funds and the tax havens and bring an end to big companies doing sweetheart deals with Her Majesty’s Revenue and Customs.
The Tories will not support that because they oppose the redistribution of wealth, and Alex Salmond told us at the weekend that he agrees with the Tories. There we have it. The Scottish National Party will oppose tax rises even on the wealthiest few. So much for progressive politics from the SNP.
Let us examine what the SNP promises. It offers full fiscal autonomy, under which Scotland raises all its own taxes for all its own spending. That means scrapping the Barnett formula, which protects Scotland’s public services, such as our NHS and our schools.
A fortnight ago, we knew that full fiscal autonomy would mean that Scotland had more than £6 billion less for public spending in 2014-15. That was based on what we knew about the structural gap as well as the falling oil price.
Since the UK budget and the revised OBR projections, we know that the situation is even worse. The independent Institute for Fiscal Studies tells us that the cost of full fiscal autonomy—the SNP’s policy—is now a staggering £7.6 billion black hole at the heart of the Scottish budget each and every year. That is a bombshell of £1,400 for every person in Scotland. We would need either to have huge cuts to services or raise taxes by that amount. It is simply staggering.
Scrapping the Barnett formula, as the SNP wants to do, would mean cutting our NHS in half, scrapping every school in the country and cancelling the state pension in Scotland. It would have devastating consequences for all of us.
This is getting surreal.
Last week, we estimated that Scotland would lose at least 138,000 jobs based on a £6 billion black hole. That is a loss of one in every 16 Scottish jobs.
Oh dear!
Mr Stevenson!
With a £7.6 billion black hole, that number just got bigger.
The SNP promises not just Tory austerity but austerity on steroids. It is a completely bizarre policy that would cost us all dearly. With the SNP’s austerity max, cuts would be not a risk but a certainty.
Will Jackie Baillie give way?
No.
As Peter Jones put it in yesterday’s Scotsman, “Dump fiscal autonomy—it’s insanity”. Peter Jones is not the only one saying that. The Scottish Trades Union Congress has strongly voiced its opposition, as have a number of leading economists and impartial experts who have warned of the consequences for our public services.
We were also treated to the First Minister’s plan to reduce the deficit and increase spending. She promised £180 billion of investment across the UK and debt reduction in every year. The truth is that the SNP got that wrong and debt would increase. The Deputy First Minister read out the figures for us all to know the truth. The SNP had to revise its figures to show a decrease in investment so that debt would reduce but, even though it has been caught out, it returns to using the original figures, which are simply not true. We just cannot believe a word that we are told by the SNP finance minister.
However, the SNP tells us that we can grow our way out of the problem. In its two papers on the benefits of improved economic performance, it points to increases in factor productivity and investment and to exports going up by 50 per cent. The economics are fascinating; the assumptions are, to be frank, heroic. The SNP publishes two papers in six days and, suddenly, we have added £700 million to the bottom line.
That analysis is not rooted in reality but, even allowing for the SNP’s figures, which are contested, there remains a huge gap in the nation’s finances. Using the SNP’s best figures, we would receive an additional £17 billion in 10 years. That sounds a lot but, with the Barnett formula, we would receive an extra £76 billion over 10 years, so where would the difference come from? The truth is that it would come from all of us in tax rises or deep and catastrophic cuts to services. It would also mean that there was absolutely no possibility of Scottish public finances being in any fit state to ease austerity. Under full fiscal autonomy, there could only ever be harsher and longer-lasting austerity.
As I said two weeks ago, no amount of name changing will help the SNP. Full fiscal autonomy became full revenue retention but the policy itself remains entirely wrong-headed and the modelling is suspect. Do the assumptions include the block grant? I look forward to hearing from the finance secretary about that. Do the assumptions include Barnett? John Swinney knows that we cannot have both and there is dishonesty in the modelling.
It is truly astonishing that John Swinney is backing a policy of full fiscal autonomy that he knows is madness, lacks credibility and will hurt the country deeply.
Much of Labour’s policy offer in recent weeks has come about because of the Barnett bonus. We would use the proceeds from the mansion tax to invest in our NHS and to invest in 1,000 extra nurses. We would use the money from pension tax relief to deliver a better future for 18 and 19-year-olds, keep tuition fees free and improve bursaries for the least well-off students.
We would back the living wage, making employment fairer—something that the SNP has voted against five times in this chamber. We would make sure that Scottish people succeed because we know that when Scottish people prosper, Scotland prospers too. None of that would happen with the SNP’s policy of full fiscal autonomy and none of it would happen under the Tory austerity plans.
Scottish Labour has a better plan. Our values and vision are for a better future, so let us go out and change Scotland. This is not a time to gamble with the SNP. Let us make sure that we end Tory austerity and kick the Tories out of Government.
I move,
That the Parliament rejects the UK Government’s plans for further austerity; believes that George Osborne’s economic plan is based on extreme spending cuts and regressive taxation and will have a detrimental impact on the UK’s economy; notes that the Office for Budget Responsibility has warned about yet further and more savage cuts in the next two years; further believes that the Scottish Government’s plans for full fiscal autonomy within the UK would have instant and damaging consequences for Scotland’s economy, with huge funding cuts to health, education and policing totalling £7.6 billion in additional cuts or tax rises, as confirmed by the Institute for Fiscal Studies; understands the necessity for progressive taxation to support hardworking families across the UK; believes that Labour’s redistributive policy plans, which include a 50p top rate of tax for those earning over £150,000, a 10p starting rate of tax to save money for hard working families, the introduction of a mansion tax and banker’s bonus tax, counter Conservative austerity, and believes that the only way to avert a £7.6 billion deficit would be to reject full fiscal autonomy within the UK in favour of keeping the Barnett bonus.
We are desperately short of time. I call the Deputy First Minister, who has up to 10 minutes.
15:27
I thought when Jackie Baillie started her speech that, on such a landmark occasion, when the Labour Party had decided to have a debate about Scotland’s economy, we would have a comprehensive explanation of that party’s alternative strategy to advance the issues about which it is concerned. I think that about 90 seconds out of the 14 minutes were about the Labour Party’s plans; the rest of the speech was just the usual bile from Jackie Baillie, dished out to absolutely everybody, on the critique of the Labour Party.
I will try to be as helpful as I can be in finding common ground with Jackie Baillie in the debate. The one thing that I agree with her on is that the United Kingdom’s austerity programme has failed, by any standard. The programme has delayed the UK’s economic recovery, has done little to achieve the chancellor’s original deficit targets and has disproportionately hit the poorest in our society.
Members are criticising me—I hear muttering from Conservative members—so let me share some of the issues. The Conservatives are aware that, in June 2010, the chancellor predicted that the UK would run a surplus on the structural current budget of £5 billion in this financial year. He now expects to run a structural current deficit of more than £45 billion this year. That evidence demonstrates that the public finances have not recovered in the fashion that he predicted in June 2010.
Will Mr Swinney give the chancellor some credit for having created a situation in which we have, in the United Kingdom, the fastest-growing economy in the western world?
The thing about that analysis is that we have to look at all the years of the chancellor’s term in office. Back in 2010, he predicted that we would experience in 2012 and 2013 the type of economic conditions that we are experiencing now. The current conditions are welcome—I put that on the record—but we should have been appreciating and experiencing them in 2012 and 2013.
At that time, we experienced nothing of the sort. We experienced the implications—as I told Parliament that we would—of the severe cuts that were made in 2010, which interrupted the first signs of economic recovery that were starting to appear when the Conservatives came to office. As a consequence, the chancellor has failed to meet his economic targets. He said that the structural budget should currently be in a £5 billion surplus—
Following Murdo Fraser’s point, why, in the Deputy First Minister’s view, is growth in the UK projected to be better, and the employment rate predicted to be higher, than in almost all the eurozone countries?
The answer is the same one as I gave Mr Fraser: we had two years in which we should have experienced faster growth, as the chancellor predicted that we would, but we experienced nothing of the sort. We are now beginning to see the emergence of that growth. If we compare the pattern of economic growth that we are experiencing now with the period that the chancellor’s predictions covered, we find that his predictions for 2012 and 2013 were utterly flawed.
Last week, the chancellor had every opportunity to change his economic direction. However, despite the headroom that has been generated by the improvements in the economic outlook that I have just acknowledged, he chose to continue with the harmful austerity agenda. We were told last week that austerity would end one year earlier and that planned spending cuts had been scaled back, but the reality is that, the day before the budget, George Osborne planned £30 billion-worth of cuts, and the day after the budget, he was still planning £30 billion of cuts. Those are the damaging implications of the stewardship of the UK public finances, courtesy of George Osborne.
I hear what Mr Swinney says, but why does he think that the answer to record high levels of debt is even more debt?
I will address that issue in a moment—I plan to deal with such questions later in my speech.
Given that critique of austerity, what was remarkable was not just the chancellor’s inflexibility last week but the fact that Labour’s shadow chancellor Ed Balls explicitly approved of the chancellor’s approach and said that he would not reverse any of the budget measures. Labour has embraced the chancellor’s austerity agenda by signing up to the UK Government’s fiscal mandate. As the chancellor confirmed in his speech last week, meeting the fiscal target would require £30 billion of spending cuts over 2016-17 and 2017-18.
I tell Labour members who are unsure about their position that the charter for budget responsibility, for which their colleagues in the House of Commons voted on 13 January, contained an implicit assumption. To meet the fiscal mandate and the supplementary debt target set out in the updated charter, the UK Government estimates that, on current forecasts, around £30 billion of discretionary consolidation is likely to be required over the following two years—2016-17 and 2017-18.
I think that the Labour Party—
Will the cabinet secretary give way?
I will give way in a moment. Jackie Baillie has, as usual, made her clarion call for everybody to be honest and transparent. She should be honest and transparent and accept that Labour is as wedded to austerity as are the Conservatives.
Perhaps the cabinet secretary disagrees with the Resolution Foundation, which suggested that Labour’s plans for the next Parliament would see an extra £43 billion invested. Perhaps he disagrees with the Institute for Fiscal Studies, which says that there is
“not a huge amount of difference”
between the Labour and Scottish National Party spending plans. If he thinks that we in Labour support austerity, is it not the case that he does, too?
It is lovely to hear all those quotes, but I want Jackie Baillie to explain to Parliament why the Labour Party voted in favour—
We did not.
Jackie Baillie has just said, “We did not.” She obviously does not know what day of the week it is.
Will the cabinet secretary take another intervention?
No. I have already given way—
He does not want to hear it.
Well, okay—we will have it. Go on.
Voting to balance the books is entirely different from voting for a package of cuts. We reject Tory austerity, and it is about time that John Swinney did, too.
The Labour Party voted for the charter for budget responsibility, which requires £30 billion of discretionary consolidation—in plain language for Jackie Baillie, that means cuts. She has just said that the Labour Party does not support cuts. Maybe I am now able to follow her argument. Maybe she is persuaded by the line of argument that the approach should involve
“sensible reductions in public spending”.
Those are not my words; they are the words of the Labour motion that was put to the House of Commons on 4 March. The last time that I looked, the phrase
“sensible reductions in public spending”
meant cuts. Whichever way Jackie Baillie wants to have it, the Labour Party is just as wedded to austerity and cuts as the Conservative Party is.
I was rather surprised by Jackie Baillie’s argument in criticising the fiscal approach that the First Minister has advanced. Jackie Baillie’s argument was that investing in the economy, which is what we want to happen, is somehow a bad thing.
The point that I told Mr Rennie that I would come on to is that I believe that there is a moment in economic recovery when we have to invest to support, encourage and nurture growth, and the proposals that we have set out are designed to do that. They are designed to invest in the economy and create a climate in which we can undertake greater levels of economic activity, which will encourage and motivate greater participation in the economy. That will ensure that we have more taxpayers and, as a consequence, the public finances will become stronger. That is the thinking behind our stance. I would have thought that that might have attracted support from the Labour Party, but—who knows?—the result of the election might lead to that.
Willie Rennie rose—
I will give way.
You are in your last minute, Mr Swinney. You are not taking an intervention.
I am sorry—thank goodness someone is here to overrule me, Presiding Officer.
The Scottish Government is committed to taking forward a programme of investment in the economy. We believe that the UK Government should change its fiscal stance to enable us to do that more effectively by having the resources to invest in securing economic recovery and development in Scotland. We want to be able to do that through the power and effectiveness of a strong group of SNP MPs in the Westminster Parliament after the election. I look forward to seeing that result on 8 May.
I move amendment S4M-12776.4, to leave out from “further believes” to end and insert:
“condemns the Fiscal Mandate, endorsed by Labour, which will lead to a requirement for a further £30 billion of cuts over 2016-17 and 2017-18; further condemns the statement from the Shadow Chancellor that there is nothing he would reverse from the Chancellor’s 2015 Budget statement; endorses the need for increased investment in public services; agrees that this can be achieved while reducing the deficit, and believes that full fiscal powers over the Scottish economy would enable Scotland to improve its sustainable economic performance and boost the revenues available for tackling inequality.”
15:37
I commend the Labour Party for bringing the issue of the economy to the Parliament. To borrow the language of Sir Humphrey, it is courageous of Labour to wish to debate the economy. It does not want to do that at the UK level, but fair play to Scottish Labour—this is the third time that it has debated the economy, although I have to say that it has not got much better by the third time, and I am no clearer on what its alternative plan is. However, perhaps in closing, a rabbit or two will be pulled out of the Labour Party hat and we will hear what it intends to do.
Ultimately, the economy makes uncomfortable reading for the Labour Party and the SNP. Several years ago, they were loud in their chorus saying that the plan would not work and that what we were doing would not be effective at all. They said that we would have a deeper recession—I think that the Scottish Government’s prediction was a double-dip recession—but that did not happen. Last week at the budget, we heard the headline figures on the economy, which are all positive and moving in the right direction and which are projected to get better and stronger for each year of the forecast period.
To counter Mr Swinney’s point, when we compare the projections for the UK with those for our trading partners, including those in the rest of the European Union, we fare very well. To take growth as an example, in 2014, we had the highest growth in the G7. Our growth projections for 2015 were revised upwards last year by the Office for Budget Responsibility, whereas the OBR’s projections for world growth were revised downwards. The eurozone will be lucky if its growth rate hits 1 per cent in 2015.
Will Mr Brown take an intervention?
Will Mr Brown give way?
I will give way to the cabinet secretary first.
I am grateful to Mr Brown. Does he acknowledge the strength of my point from the fact that gross domestic product per capita remains—as at the end of 2014—at nearly 2 per cent below pre-recession levels? The growth that the Chancellor of the Exchequer projected has not materialised, as a consequence of the decisions that were taken.
The projections of 2010 did not materialise in the way that the chancellor predicted, but what he did not know and what nobody else knew was that the entire continent of Europe would be on the precipice a year later. Of course growth was delayed by two years, because there were six quarters of negative growth across Europe, with which we do almost half our trade. If the Scottish Government’s finance secretary cares to read the reports of his own chief economist, he will see that that impact is acknowledged in almost every one of those reports, which I have read.
Of course that situation was going to have an impact. It would have had an impact whether we had gone with Labour spending plans or SNP spending plans or whether we had been independent. The eurozone crisis would have affected this economy regardless of the spending plans laid out.
Will Mr Brown give way?
The Deputy First Minister was generous in giving way, so I will give way to him again.
I am grateful to Mr Brown. Does that not make the case that we repeatedly made to the UK Government for an early change to the austerity agenda to invest in the economy?
No—it does not. Having taken the difficult decisions as we did and when we did, we now find ourselves in a far better position than our European neighbours. Growth is projected to be two and a half times that of most of our competitors. We have the highest employment rate that we have ever had in this country.
The unemployment rate is still too high but, at just over 5.5 per cent, it compares very favourably with the double-digit unemployment rates in France, Italy and many other European countries. The cabinet secretary’s arguments would be fine if we were on the same page as the rest of Europe and if we were all doing well at the same time, but he has to accept and acknowledge that the UK Government’s action has achieved something positive if we are doing well and are projected to do better, whereas the countries that we compete with are not projected to do the same.
Will the member take an intervention?
I have taken a number of interventions, so I hope that Mr Robertson will forgive me for not giving way.
That situation has not happened by accident; it has happened because of the difficult decisions that were taken earlier. It has happened because the UK Government stuck to the path. It has happened because UK businesses and the people of this country stood firm, stepped up to the plate and created jobs. That is underpinned by the UK Government’s competitive policies, whether that is on corporation tax, freezing fuel duty, raising the personal allowance or cutting national insurance.
What really grates among Conservative members is the SNP’s assertion that, somehow, if we had fiscal autonomy, there would not be austerity—that, somehow, we would be able to get rid of austerity. That is blatantly untrue. I know that Mr Swinney knows that, because he judiciously looks at all the figures. He knows—based on the “Government Expenditure and Revenue Scotland” figures from a couple of weeks ago, based on the figures that we are likely to see in GERS next year and based on the oil revenues that we are likely to see over the next five years or so—that, if we went for fiscal autonomy, there would have to be far deeper austerity than we have under the UK Government, whether it is Conservative or Labour.
I move amendment S4M-12776.3, to leave out from “rejects” to end and insert:
“welcomes the fact that the UK’s economic growth was the highest among the G7 economies in 2014 and notes that the Office for Budget Responsibility has revised up its forecast for UK growth in 2015; welcomes the high employment situation across the UK and the deficit being reduced by over a half since 2010; believes that measures taken by the UK Government, such as cutting employer national insurance contributions and maintaining the lowest level of corporation tax in the G7, are providing considerable benefits to Scotland’s businesses; believes that measures, such as raising the income tax personal allowance and freezing fuel duty, have helped household budgets; calls on the Scottish Government to publish an update to Outlook for Scotland’s Public Finances to take into account changes to the projected public finances since its original publication in May 2014 and to reflect the current Scottish Government policy of seeking full fiscal autonomy, and further calls on the Scottish Government to publish an updated Oil and Gas Analytical Bulletin.”
15:43
I am grateful to the Labour Party for calling the debate, which gives all of us in Parliament an opportunity to shine a light on the different economic plans of the parties. For me, the debate should be about economic competence and fairness. We cannot have one without the other.
It is worth reminding Parliament that the Government said that Scotland would be on the verge of a “second oil boom”, with a blossoming oil fund, more jobs and ever-increasing tax receipts. Now we face a low oil price, at half what the Government confidently predicted it would be, jobs have been slashed and tax revenues have plummeted. In fact, it has been estimated that the shortfall on the Government’s predictions is worth £155 million every day. It is worth reflecting on that, because it goes to the heart of the SNP’s competence in managing the economy. The SNP said that we would be far better off with that oil boom; the reality is something different. The GERS figures show exactly that shortfall, which is worth about £800 for every single person in this country. That is the penalty that we would have paid for independence or full fiscal autonomy. The Government’s central economic argument for independence has been found wanting.
I am interested in Willie Rennie’s point that economic competence can be determined as a result of predictions on oil price. At the time when the Scottish Government was predicting $110 per barrel, the UK Government Department of Energy and Climate Change, which is led by Mr Rennie’s colleague Edward Davey, was predicting $120 per barrel. What does that say about the economic competence of the Liberal Democrats?
Mark McDonald is not comparing like with like. What that actually proves is that the economy cannot be run based simply on the big resource of oil. It is very volatile and has a big impact, making generous predictions about oil reveals how incompetent the SNP has been on oil and on the economy.
Despite the animosity that clearly exists between Jackie Baillie and John Swinney—in fact, between the whole Labour Party and SNP—there are many similarities between the two parties’ plans. Members will have heard me say before that the nationalists and Labour have said that the UK economic plan would fail; that unemployment would rise, GDP would stagnate and employment would fall. However, now, thanks to the plan from the UK Government, we have falling unemployment and higher employment, and growth is back. Despite those facts, the SNP and Labour continue to say that the plan has failed, yet the latest figures show that employment in Scotland is at a record high—up 187,000 since 2010. Growth is back, as Gavin Brown said, and the UK is vying with the United States of America to be the best among the G7 countries.
As Labour did, the SNP said that the UK’s economic plan would fail, just before the economy started to grow again. Also as Labour did, the SNP argued for lighter regulation of the banks, just before they went bust. Now, just like Labour, the SNP thinks that the answer to high levels of debt is ever more debt. The SNP and Labour were wrong on the banks, wrong on the economy and wrong on jobs, and now the SNP has the audacity to say that that is all in the past and that it is definitely right this time. It wants to borrow billions of pounds more when we should be eliminating the deficit and cutting debt. Its plans will put the economy at risk. We should not put our faith in parties that have been consistently wrong on the economy.
Even though we have over the past five years worked quite constructively with the Conservatives to get the economy back on track, we part company with them on their plans for the next five years. They want to do two things. First, as we do, they want to eliminate the deficit by 2017-18, but they want to do so with no tax rises, whereas we are planning £6 billion worth of tax rises on banks and mansions. Unlike the Conservatives, we do not believe that public services can bear the full impact of the cuts.
Secondly, once we have eliminated the deficit, we want to invest in capital works for the good of the country. The Tories disagree. I have to say that the Conservatives seem to be hell-bent on an ideological mission to reduce the size of the state, which will damage public services and take the UK back to the 1960s.
Does Willie Rennie accept that his party does not want to eliminate the deficit but just wants a current-budget balance?
We agree with the Conservatives that we should eliminate the deficit by 2017-18. That is the plan that we have, that is the £30 billion reduction that we have in place, and that is where we agree with the Conservatives. We disagree on the mix of spending and taxes that will be required to achieve that.
We reject the volatile see-saw economics of the past—
Draw to a close, please.
—with Labour and the SNP borrowing too much, which risks the economy, and the Tories cutting too much, which threatens public services. Look at the progress we have made: we have cut taxes by £900 for workers, we have increased pensions by £900, we have got the economy back on track and we have expanded childcare for the families that need it most. That is how to balance fairness in society with getting the economy back on track. That is why people should stick with the Lib Dems.
I move amendment S4M-12776.1, to leave out from “the UK Government’s plans” to end and insert:
“a return to volatile see-saw economics, which has the potential to cause great economic damage and divert the UK economy from the employment and economic growth achieved; therefore notes with great concern the Conservatives’ ideological drive to reduce the size of the state, recklessly cutting public services on one hand, and Labour and SNP plans to borrow more, repeating the mistakes of the past and indebting future generations, on the other; believes that the SNP’s proposal to borrow £180 billion would put the hard-won economic recovery at great risk, and endorses the Liberal Democrats’ plans to balance the country’s books by 2018 and to use the benefits of the economic growth achieved by that plan to increase public expenditure in line with the economy, keeping Scotland and the UK on a steady path to prosperity.”
15:49
I begin by acknowledging the point of agreement that I have with both the Government and the Labour party in rejecting the UK Government’s economic agenda of austerity. The rejection of that austerity agenda is a point of common ground for all the political parties in the Scottish Parliament that are not part of the UK Government coalition.
If I remember rightly, both Jackie Baillie and John Swinney described that as a “failed” agenda. I would take issue, to a certain extent, with that point, because in my view that agenda was not designed to serve the common good. In particular, from the Conservatives’ point of view, that agenda was designed to entrench an ideology and an economic model to which that political party is wedded. Given the political situation that has been engineered by the Conservatives, in which they see very little coherent opposition to the basic proposition of cuts coming from the main Opposition at Westminster, from their point of view ideologically they have succeeded, even if they have not achieved the benefit for the common good that most of us would wish for.
The Institute for Fiscal Studies said that spending cuts on the scale that is implied by the chancellor’s plans would lead to
“a fundamental reimagining of the role of the state”.
I think that that was their intention and purpose all along; on those terms, they have been catastrophically successful.
If we look at the alternatives that are before us, we see that there is a debate between the Labour Party, which wants a slower pace of cuts, but essentially the same broad policy, and the SNP which implies that increased borrowing from the UK Government, compared to what is currently planned, would allow some £180 billion extra of spending and investment over the coming session of Parliament. Neither should be seen as the only option. The Scottish Green Party amendment intends to begin a debate on an alternative.
Over the past few years we have seen, and in Europe we are still seeing, quantitative easing—the quite legitimate creation of money—through the use of central banks. In the UK in particular, to the amount of £375 billion, it has been used principally to rebalance the balance sheets of the financial services sector. Whether one takes the view that that has created a “benefit for bankers”, and whether we attach blame to “the bankers” as the great villains of the economic crash, it is certain that that money has not sent £375 billion of investment into the real economy and the priorities that would serve the common good.
Investing in priorities that would serve the common good is the alternative that the green new deal group, which includes Richard Murphy, Colin Hines and my colleague Caroline Lucas, has been advocating at UK level recently. In an exchange of letters between Caroline Lucas and Mark Carney, Caroline argues that the green new deal group’s plan is designed fundamentally to transform a still-broken financial system and reduce the deficit, while transforming the UK’s aging infrastructure to meet a range of environmental and social challenges. Many of the challenges are those that we have all, on paper, agreed to address—some of them unanimously—but we are not seeing the investment that is required to meet those challenges.
Some of us might have expected the Bank of England to take a slightly conservative approach and perhaps to dismiss the green QE programme as being unachievable. In fact, Mark Carney replied to say that
“It is possible that if the MPC did vote to increase its asset purchases in future”—
in other words, another round of QE—
“it could expand the range of assets it purchased.”
In fact, the idea of a green QE programme is very realistic indeed and I hope that it is not completely out of kilter with the priorities of some of the other political parties.
In the past week or so, David Blanchflower has said:
“the next move in interest rates has to be either more quantitative easing, or a cut in interest rates, or both”.
If more quantitative easing is even to be contemplated—if it is on the agenda at all—surely we must take the opportunity to inject it as real investment into the real economy and into the social, economic and environmental challenges that the country faces.
SNP members are knocking on doors around the country with optimistic faces, and are full of enthusiasm about the influence that they may have in a balanced UK Parliament after May.
Could you draw to a close, please?
Whichever political parties have influence in a balanced UK Parliament after May should ensure that they use that influence for the right priorities and not for those that Fergus Ewing might want, or by pushing the Government to exempt coal from carbon taxes or to bail out outdated, redundant and polluting infrastructure. Instead, let us invest in the new infrastructure and new priorities that Scotland and the UK need for the future. That would be far better than inviting in private equity or overseas Governments to build and own the country’s infrastructure on our behalf. I hope that the Scottish Government is open to that argument.
I move amendment S4M-12776.2, to leave out from “rejects” to end and insert:
“considers that the UK Government’s austerity agenda is ideologically motivated by those who seek an ever-smaller state and poorer public services as ends in themselves; deeply regrets that the main opposition party in the UK Parliament also remains committed to cuts that will have the same effect; believes that a credible alternative to austerity is available in the form of a programme of green quantitative easing (QE); recognises that, instead of creating money to rebalance balance sheets in the financial services sector, a green QE programme would provide investment in the transition to a sustainable economy; sees many benefits of such a programme, including stimulating the real economy and the creation of jobs in every constituency of the UK, more rapid progress toward social and environmental targets and localised control of economic assets instead of a privatised model of infrastructure investment; believes that Scotland’s economy needs such investment, and considers that this would complement the progress that has been made on the development of renewables and energy efficiency in Scotland.”
We move to the open debate. Speeches should be of five minutes. We are extraordinarily tight for time, so if members do not manage the time keeping, the Presiding Officers will be making cuts of our own.
15:56
On the basis that I can keep my balance for five minutes, that is how long I intend to take.
As has been highlighted, two weeks ago the Labour Party led a debate on the economy. Sadly, I was not able to participate in it, because I had sustained an injury the previous Sunday. I was distraught to miss out on the opportunity to contribute to that debate, and I am sure that members were equally distraught. Luckily, the Labour Party has brought back a debate on the economy just for me, so that I can have the opportunity to speak on the issue.
While I might have sustained a broken leg, it is clear that the Labour Party is still acting like a broken record. Labour members continue to talk down the prospects of Scotland’s economy and its economic future in an effort to perpetuate the myth that Scotland as a nation is uniquely incapable of sustaining itself, of growing and of performing well as an economy. That does the Labour Party no service whatever, and I suspect that it might be the genesis of the reason why it is performing so spectacularly badly in opinion polling in Scotland at the moment.
I want to look at the agenda that we are putting forward on the economy. We have chosen to focus on the opportunities that exist for modest growth in public spending at a UK level, which would deliver direct benefits to Scotland and would have other benefits for the wider UK by addressing the continual cuts that are being made in public expenditure. As we know from the analysis that the IFS has undertaken, that would enable the deficit reduction projections that the Labour Party has made to be achieved while allowing us to operate within the financial envelope of increased public expenditure.
I believe that that is a win-win scenario. Deficit reduction undoubtedly needs to be tackled, but it does not need to be tackled by being made a priority ahead of everything else. That is the unfortunate position that we find ourselves in under the current UK Government, which sees reducing the deficit as the be-all and end-all, with the result that the poorest and most vulnerable in society are seen as an afterthought and a means to achieving the deficit reduction targets.
Today, the Conservatives have talked—as they often do—about the difficult decisions that have to be made. Those decisions are not difficult for Conservative ministers, because they do not tend to impact on them. They are certainly not difficult for many of the powerful corporate interests that are supportive of the Conservative Party and are quite friendly with some of its front-bench members at Westminster, because they do not impact directly on them. The people who are bearing the brunt of those difficult decisions are the poorest in society, who face regular assaults on their incomes and their way of life as a result of UK Government decisions. That is acknowledged in any analysis that is done of the impact of budget decisions by income deciles in the UK. It is those at the lower end who face significant detriment, while those at the top end face no significant detriment.
We can see that only too clearly if we look at where the focus in respect of effort, budget and rhetoric is directed between welfare—and in particular the concept of benefit fraud as it is often called—and tax avoidance. Welfare fraud should undoubtedly be tackled—I am not suggesting for one second that it should not be—but it accounts for less than £2 billion per annum. Less is lost to the Exchequer from welfare fraud than it retains through the failure of individuals to take up benefits to which they are entitled.
You are in your final minute.
The Exchequer makes a net saving in that area.
Tax avoidance and tax evasion cost the Exchequer £30 billion to £35 billion annually, but a disproportionately higher number of staff are allocated to tackling welfare fraud compared with those who are allocated to tackling tax evasion and tax avoidance. We have a UK Government that has got its priorities 100 per cent askew on that.
We should consider the number of people who face benefit sanctions, driving them to call on the assistance of food banks. In Aberdeen, we have seen the Instant Neighbour food bank run out of supplies in recent days.
You should begin to close, please.
We should consider that point versus the point about those who are being actively pursued and prosecuted for tax evasion. Again, we can see that the UK Government has its priorities 100 per cent askew.
There is a better way to do things. We have outlined a better way to do things, and I hope that, in May, we will have the opportunity to get on with doing things differently.
You have to close. I am afraid that there is no time available.
16:01
While Gavin Brown and Willie Rennie pat each other on the back for where they are, it is worth remembering that we were coming out of a recession in 2010 when the Tories, with the support of the Liberals, went into government. The economy was growing following the first global banking crisis and a global recession. I put it to both parties that, as a direct result of the economic policies and the austerity measures that were then pursued, the economy did not continue to grow at the rate at which it should have grown. That is why we are not any place now.
Will the member give way?
I have only five minutes; I am sorry.
The other key point that is worth making to the Tories in particular is that, although employment is growing, we need to look at the types of jobs that are being created in the economy. The levels of unfairness and inequality in the economy are not being tackled, with low pay and zero-hours contracts. Most workers have had to take a five-year pay freeze, in effect, while energy prices and the cost of living have continued to rise. Therefore, people are not in a really good place at this stage in terms of their budgets and moving forward.
The other big problem with Tory austerity is that it is an attack on the poor. It is not about saying that we will all take our share and that we all have to suffer equally to come out of this. The type of welfare reforms that are taking place, the sanctions and the targets that are being set for sanctions are creating absolute poverty in communities across Scotland, probably for the first time since the 1940s. That is an absolute failure of economic policy, no matter how we measure it, and it cannot be and is not right.
Mark McDonald mentioned that, rather than having a war on the poor, we should go after the tax dodgers, cheats and evaders and start to collect the billions of pounds that can be brought in to start to address the deficit. It is a fact that the Tory chancellor has not addressed the deficit. We still have major problems with the country’s debt levels. To be honest, we still have a major problem with what our economy produces and with the manufacturing base, which was destroyed in the 18 years of the previous Tory Government.
In the short time that I have, I want to speak about the policies that John Swinney and the Scottish Government are putting forward. I do not think that we are attacking with bile, as has been suggested, when we question the impact that full fiscal autonomy would have on the Scottish economy in the short to medium term.
The figure that was given in independent advice from the Scottish Parliament information centre was that the Barnett formula would mean that £6.5 billion would have to be made up from somewhere else under full fiscal autonomy. It is legitimate to ask the Deputy First Minister how we would make up that difference. I am genuinely concerned that that would result in major cuts to public services or in the need to increase taxes, which would be equally damaging to the economy. It is legitimate to ask whether full fiscal autonomy would result in deeper cuts and more job losses than we have already experienced. The Deputy First Minister has to deal with that question.
The Deputy First Minister’s amendment talks about the economy performing and starting to tackle inequalities, but I do not believe that the Government has a clear anti-poverty strategy. When I looked for one, I found that there was a framework to tackle poverty and income inequality in Scotland in 2008. I am told that some updates have been made to that, but I cannot measure anything to see where the outcomes have been achieved. If there is no clear anti-poverty strategy for Scotland, we will not start to tackle inequality and poverty. Those are legitimate points that should be raised with the Government.
16:06
Labour’s motion contains a number of issues, and we need to look at it in more detail. It talks about full fiscal autonomy and suggests that Scotland would be £7.6 billion worse off. That point does not hold water for a number of reasons.
The motion looks only at one year on its own, and we need to take the long-term view. We need to remember the many, many years when Scotland was subsidising the rest of the UK. When we debated the economy two weeks ago, I spoke about the failure of the UK over the longer term. I will not mention all those points again today, but some particular failures include the UK’s failure in manufacturing and the failure to grow Scotland’s population.
Will the member give way?
I am not taking any interventions.
If we ask the public which party stands best for Scotland, the answer is always the Scottish National Party, even among people who do not vote for us. Some politicians want what is best for the UK as a whole, even if Scotland suffers in the process, and they are entitled to do that if they are in the Labour Party, the Conservative Party or the Liberal Democrats. That is not a position we will find in the SNP. No one actually believes Labour when it talks nonsense about the SNP wanting Scotland to lose out.
As long as we stay in the UK, we want a better deal for Scotland. If there is to be a hung Parliament in London after May, we want more powers but we also want more money—for example, through high-speed rail being brought to Scotland.
Westminster has clearly stated that the transfer of powers should be on a no-detriment principle. More powers for Scotland must not mean that Scotland or the UK is automatically better or worse off as a result. For all those reasons, Labour members’ suggestion that full fiscal autonomy could leave Scotland worse off is just laughable, and no one believes them.
Labour’s motion also mentions “Labour’s redistributive policy plans”. Is it really the case that Labour would redistribute wealth and income? I have a few points to make about that. Why did the previous Labour Government preside over a widening gap between rich and poor in society? Labour’s plan is to have income tax rates of between 10 and 50 per cent, which, on the surface, sounds progressive. Of course, it is not as progressive as a previous Labour Government that I remember, which took income tax rates up to 98 per cent—I think that even Labour members would accept that that is a bit extreme nowadays. At least a 50 per cent rate appears to be a step in the right direction.
We need to remember that national insurance is a factor. NI is not progressive. It starts at 12 per cent and falls to 2 per cent. According to Labour, the combined rate would start at 22 per cent and the top rate would be only 52 per cent. Can that really be described as progressive? I do not think so. Will Labour increase the 2 per cent NI contribution for high earners, including MSPs? We can argue for or against higher income tax rates and higher NI contributions, but a combined top rate of 52 per cent cannot be called progressive, and 22 per cent is still too high a hurdle for low earners.
If we are serious about redistribution, surely we have to look at redistributing wealth, and not just income. Inheritance tax is the obvious player here, although we have also had capital transfer tax. It is very difficult for Labour to claim to be progressive or redistributive when its motion makes no mention of redistributing wealth.
Will the member take an intervention?
Overall, it seems that we would see little more redistribution under a future Labour Government than we saw under the previous one.
Will the member take an intervention?
I am not taking any interventions.
All of that leads me to wonder how the public view Labour. Is it seen as a progressive party with redistributive policies, and if not, why not? If we look back to last September and the referendum, we can see that something seems to have changed then.
Rightly or wrongly, many people saw the referendum as being about whether we wanted a fairer society. Clearly, many richer people voted no because they did not want a fairer and more equal society in which they might lose out. Many poorer people voted yes, not because they had some romantic idea about Scotland and not even because they thought that Scotland as a whole would be better off, but because they thought that, even if the cake was a little smaller, it would be shared out more fairly and equally. I therefore suggest that it is because Labour sided last September with the rich, with the status quo, with unfairness and with inequality, and because it campaigned against fairness and equality, that it is now suffering in the polls.
You must draw to a close, please.
Labour can wheel out fine words such as “progressive” and “redistributive”, but people saw last September what it really meant. It was against those things, and people will not support Labour.
16:11
John Mason did his argument no favours, glossing over the facts and spending most of his speech dealing with politics and parties and not with supporting Scotland’s economy, which is the subject of the motion.
A lot of statistics have been exchanged this afternoon, and at times my head spins as the parties opposite try to provide views on how Scotland and the UK in general are moving forward. In that context, I am loth to add any additional statistics, but I will mention a few. Jackie Baillie alluded to the wealth and assets survey that was published yesterday, but I do not think that the full impact has been brought to the Parliament’s attention. It says that 10 per cent of households own 74 per cent of financial wealth in Scotland and that that same 10 per cent have 55 per cent of the pension wealth and 43 per cent of the property wealth. Can it possibly be right, in a 21st century Scotland, that those statistics can appear in our national newspapers and we do not have a sense of social injustice? We need to take steps to move forward instead of marking time with good words and constant referrals to statistics that are meaningless.
I received another set of statistics today that adds to our fund of knowledge. The latest UK business register employment survey shows that many districts in Scotland lost jobs between 2009 and 2013. In East Ayrshire, 3,000 jobs were lost; in East Renfrewshire, 700 jobs were lost; in Glasgow, 24,500 were lost; and so on. Those were real jobs that offered a real purpose in life and represented an opportunity to develop an economy within a family. They gave people meaning and purpose, they created a distance between daily life and poverty, and they offered people a future contributing to the wellbeing of Scotland.
Much has been said about what the Labour Party is contributing in moving forward. We have said that we believe that energy costs should be capped and that we would raise living standards, initially by increasing the minimum wage to £8 an hour. We have introduced the idea that every young person aged 18 or 19 who leaves school and goes straight into work should have £1,600 allocated to them to help with training, tools and start-up costs for business. We have indicated that we believe that we should move forward on balancing the books and introduce a mansion tax in order that we can begin to shift wealth from those who have to those who have not. We would see 24 million working people being relieved of the burden of much of the tax that they face by the creation of a 10p starting rate for tax.
Will the member give way?
I am sorry; there is not sufficient time.
Those are practical options that will take us forward in a productive way for the future.
The SNP has indicated that it would like full fiscal autonomy. That presupposes that the Barnett formula will no longer be applied in our relationship with the UK. It was only six months ago that we were told that the wealth of Scotland’s oil would see us through any future that we might face and that there was enormous confidence that that wealth would continue to flow. How times have changed—not because an SNP Government has made any wrong choices but because, unfortunately, the world has impacted on decisions that we take in Scotland, and those impacts will be long-term ones.
There is a need to take a more productive look at the way forward. We should reject George Osborne’s approach, which suggests that we are all doing well and are moving forward together. Whatever his plan was—I think that the Green Party had it right—it was not to ensure that those who have not could take part in our economy in the future, but to ensure that the wealthy did much better.
16:16
I am probably going to be rather unkind to Jackie Baillie in the course of this speech, so let me start on a point of agreement. I agree with the part of the Labour motion that refers to the SNP’s disastrous plans for full fiscal autonomy. As Jackie Baillie says, there would be huge funding cuts to health, education and policing totalling £7.6 billion. Alternatively, there would be substantial tax rises, as confirmed by the Institute for Fiscal Studies. I commend to members the excellent article in yesterday’s Scotsman by Peter Jones. He concluded,
“this is an insane time to be pursuing such a policy”,
and he is absolutely right. The Scottish people would be the ones who would suffer from such a move.
The SNP claims that it can grow the economy faster than even the record growth that it is predicted we will see in the UK in coming years. However, as Peter Jones pointed out, if there were any way of managing an economy to get out of public spending austerity caused by a deficit, would not the Governments of Greece, Ireland, Spain, Italy or Portugal have discovered it by now? Or maybe it is just that our SNP ministers are somehow magically blessed with a talent beyond that of anyone else anywhere in the world. I see that they are not leaping up to defend themselves.
Sadly, it is there that Jackie Baillie and I must part company, because much of the rest of her motion, and of her speech this afternoon, is patent nonsense. I will give her some gentle advice. One of the rules of politics is that you should play to your strengths. When choosing topics for debate, choose subjects on which you have a strong record and on which you can attack your opponents. Avoid areas of weakness where your opponents can undermine your arguments.
On that basis, Labour’s choice of topic for this afternoon’s debate must rank high on the “courageous” register, because the Labour track record on the economy is one that is best brushed under the carpet and quietly forgotten, not one to take to the chamber and champion in a debate. Everyone in this chamber can remember the state of the economy in 2010, with high unemployment, deep recession and the worst set of public finances in the developed world. That was Labour’s legacy.
Thankfully, in 2010, the people of the United Kingdom had the good sense to elect a Conservative-led Government, which took some tough decisions in the teeth of opposition from the Labour Party and others. Those tough decisions are now delivering real success. Since 2010, we have seen—
On a point of order, Presiding Officer. Will you afford Murdo Fraser the opportunity to correct himself? He said that, in 2010, the economy was not in growth but in recession. That is incorrect. The growth, although small, was there.
That is a debating point, not a point of order. Points of order are best made at the end of speeches rather than during them. We are well behind time now.
I hope that the Presiding Officer will give me back time for that intervention.
Mr Fraser, I am afraid that I do not have the time to do that, which is unfortunate. Please carry on as quickly as you can.
I must have imagined the recession that we suffered in the early part of the decade. [Interruption.]
Order.
Since then, we have had an excellent track record. Despite some of the nonsense that we hear from the Labour benches, 80 per cent of the new jobs created are in full-time positions and 80 per cent are in skilled occupations; three private sector jobs have been created for every lost public sector job; and, in 2014, there were 34,725 more businesses in Scotland than in 2010.
In February, the UK’s inflation rate fell to zero, the lowest level since consumer prices index records began in 1998. Wages are rising faster than prices, helping families to meet their bills. The UK has the fastest growing economy in the eurozone, and we are projected to have the fastest growing economy in the developed world in coming years. Scotland is benefiting from all the hard decisions that have been taken.
The Labour motion refers to George Osborne’s economic plan as having
“a detrimental impact on the UK’s economy”.
What is “detrimental”? Is it the rising employment? Is it the falling unemployment? Is it the low inflation? Is it the fast economic growth? If Labour wants to see detrimental decisions, it need only look back at the decisions taken by Gordon Brown and Ed Balls when they were in government.
Were I in the Labour Party I might have chosen some other topic for debate. The simple fact is that if the people of Scotland want to see continued economic growth, the SNP route brings economic disaster, the Labour route drags us back to the failures of the past, and it is only the Conservatives who can be trusted to keep us on the right path.
16:21
I would like to see Murdo Fraser go to Aberdeen and say that it is only the Conservatives who will keep the economy on the right path.
I was there on Monday.
This week, we saw an Aberdeen food bank run out of food. That is absolutely disgraceful. We are a developed nation. It shows the huge divide that we have between rich and poor. If Murdo Fraser is proud of that Conservative record, I want him to go to Aberdeen and see what happens when he tells that to the folk at the food bank.
The opening line of Jackie Baillie’s motion states:
“That the Parliament rejects the UK Government’s plans for further austerity; believes that George Osborne’s economic plan is based on extreme spending cuts and regressive taxation and will have a detrimental impact on the UK’s economy”.
I agree with that part of the motion. However, I wonder where the Labour Party stands on the matter. After all, the day after the budget, the shadow chancellor, Ed Balls, speaking on BBC Radio 4’s “Today” programme, said that he would not reverse any of the budget. That is an admission that, if elected, an unfettered Labour Government would do absolutely nothing to change the damaging Tory-Liberal policies that are having a major impact on the most vulnerable people in our society.
By signing up to the budget, the Labour Party, like the coalition parties, has signed up to an additional £12 billion-worth of cuts, despite the chancellor’s admission that there is headroom for investment in public services. Of course, just weeks previously, the same Labour Party trooped through the lobbies with the Tories and Liberals to vote for the charter for budget responsibility, with £30 billion-worth of austerity cuts over the first two years of the next UK Parliament.
Labour’s statements and actions at Westminster show quite clearly that, although the motion carps about Osborne’s extreme spending cuts, when it comes to the crunch, Labour at Westminster backs his austerity measures to the hilt. Jackie Baillie said that we cannot afford another five years of Tory austerity. I say to her that we cannot afford five years of Labour austerity either.
Can the member tell me how we can afford a £7.6 billion reduction in our budget as a result of the SNP’s foolishness on full fiscal autonomy?
Full fiscal autonomy is not going to happen tomorrow—
Members: Oh!
As John Mason rightly said—[Interruption.]
Order, please.
As John Mason rightly said, we can deal with this over the piece and not just rely on one year. I will come back to that issue later.
The SNP has offered an alternative in which modest increases in public spending allow for £180 billion of spend across the UK. After the First Minister’s speech outlining that policy, Jonathan Portes, director of the National Institute of Economic and Social Research said:
“This idea that further austerity is inevitable, desirable and necessary simply doesn't add up from an economic perspective and in that sense, I think that Nicola Sturgeon is quite right to put these issues on the agenda.”
Perhaps her good sense is the reason why she is the only political leader with a positive approval rating in England, according to YouGov.
You are in your final minute.
In that final minute, I want to say that Scotland’s revenues are growing; that we pay more in per head than any other part of the UK, bar London; and that we can do even better if we break free of the Westminster anchor of austerity. Doing so will mean that we can provide better for those most vulnerable people who have been affected by the austerity cuts that have hit them year on year. The only way to break that austerity anchor is to send a phalanx of SNP MPs to London to haul it up and bring some reality back to politics.
Thank you very much. I must alert the chamber that I am likely to have to reduce speeches—[Interruption.] Order, please. I am likely to have to reduce speeches to four minutes at some point in the afternoon.
16:26
This is a very timely debate, given that we are on the verge of the general election. By allowing the different approaches of the parties in the Parliament to be outlined, it will have very much informed voters throughout Scotland.
What I find incredible is the contrast between the words in the Tory amendment and what is really happening on the ground. The Tories tell us about the growing economy and the number of people in employment, but the reality is that, in the past five years, people have become £1,600 worse off and families on benefits £1,100 worse off. Murdo Fraser says that 80 per cent of jobs are skilled jobs, but 80 per cent of the jobs that have been created in the past five years have been low paid. As a result, more people are on zero-hours contracts, are suffering from benefits sanctions, are struggling with the cost of living crisis and are, I very much regret to say, queueing up at food banks in our constituencies. That is the reality of the Tory approach and the situation would be exacerbated by the re-election of a Tory Government, which would take us back to the 1930s.
As for the SNP’s approach to the debate, I was astonished to hear Mr Swinney and Mr McDonald say nothing about full fiscal autonomy. Perhaps they had forgotten about it, or perhaps they had too much of Alex Salmond’s pink champagne at lunchtime. At least Mr Mason was honest enough to say something about it. Full fiscal autonomy will mean binning the Barnett formula and having £7.6 billion less than we have at the moment—and that is only in the first year. That amount will grow as the years go on.
Mr Swinney needs to examine the effect that that will have on schools throughout the country; they are already struggling with cuts, and some need to be rebuilt or modernised. What effect will that have on the NHS, where our accident and emergency departments are in crisis? What effect will it have when we have 150,000 people on social housing waiting lists? What impact will it have on the struggle to get more of the 400,000 people in Scotland who are not on the living wage on to the living wage? What impact will it have on our growing elderly population if we have £7.6 billion less in our budget?
There is no point in shaking your head about it, Mr Swinney. You never covered it in the whole of your speech, because you are clearly embarrassed. You are embarrassed about the quality—
Order. Mr Kelly, speak through the chair, please.
Let us contrast that with Labour’s plans. We will seek not only to introduce fairness but to support economic growth, and we will do that by introducing a tax on the banker’s bonus, a mansion tax on homes with a value of more than £2 million and a new top rate of tax. From the proceeds, we will support the creation of 1,000 more nurses to help to avert the crisis in the NHS, and we will create a jobs guarantee and a living wage of £8. In addition, we will freeze energy prices, give support to student bursaries and create a £1,600 allocation to those working-class kids who are not able to get to college or university.
In the next six weeks, the choice will be clear, as we have seen in the chamber today. We can continue with the Tory austerity cuts that are so damaging in our communities, we can adopt the SNP approach, which would create a £7.6 billion black hole in Scotland’s budget, or we can adopt the positive redistributive policies of the Labour Party, which will create economic growth and help Scotland’s communities to get back on their feet again.
16:32
The motion talks about austerity, so I wanted to start by having a look at the first anti-austerity national leader, President Franklin D Roosevelt, a man for whom the war on want was not rhetoric but real. Roosevelt’s anti-austerity programme was the new deal, which saved many thousands of Americans from hunger and want by investing in the infrastructure of the country and establishing a social security safety net for the first time. It cost money and it made him enemies among the establishment. He was told that it was too expensive and that the priority should be to balance the books, as Jackie Baillie said.
In his election address at Madison Square Garden, Roosevelt noted:
“Never before in all our history have these forces”—
the forces of conservatism—
“been so united against one candidate as they stand today. They are unanimous in their hate for me—and I welcome their hatred. I should like to have it said ... that ... the forces of selfishness and of lust for power met their match.”
Roosevelt was told that state spending was unaffordable and that a balanced budget should take priority over feeding the hungry and rebuilding the country after the great depression. It is a sad fact that the arguments and forces of fiscal conservatism that lined up against Roosevelt eight decades ago are alive and well today in the UK—ensconced, for the moment at least, in 11 Downing Street, and putting in place another £30 billion of cuts that will hit the poorest people in our society. Scotland alone will see another £12 billion of cumulative cuts over the next four years.
I know that the Labour Party would very much like to pretend to have inherited Roosevelt’s mantle; its motion uses the language of anti-austerity, but Roosevelt never advocated the so-called “sensible” cuts in public spending that the Labour Party has supported at Westminster.
Will the member give way?
No, I have only got five minutes. I am sorry.
Anti-austerity, which means investing, nourishing the economy and encouraging economic activity will, as the Deputy First Minister says, increase the tax take. If we cut spending and reduce economic activity, we inhibit the income from tax and we have to borrow more as a consequence. That is the lesson that Roosevelt and Maynard Keynes taught us many decades ago, and it is why George Osborne’s austerity has failed. It is the reason why borrowing has risen substantially beyond his initial expectation and has exceeded the June 2010 forecast by more than £50 billion in 2014-15.
Disgracefully, the Labour Party has signed up to that failed model. It is surely disgraceful that Ed Balls says that there is nothing that he would change in George Osborne’s budget. George Osborne was explicit in his budget that welfare will take the biggest hit—a hit that disproportionately hurts the disabled and families with children.
In voting for the charter of budget responsibility at Westminster, Labour votes to put those £30 billion of austerity cuts in place over the next two years. Jackie Baillie calls that balancing the books and I suppose that it is inevitable that Labour will use the language of the Tories when it mirrors their policies.
Roosevelt was attacked for failing to balance the books and history celebrates him for doing so. That is the historical context in which we should view the First Minister’s real anti-austerity proposals. As with the new deal, she advocated investment to promote growth through an increase in spending of £180 billion in public services until 2019-20 and she told her audience at University College London that we could use that investment to promote infrastructure, education and innovation, which would support stronger and more sustainable growth in the future.
Franklin D Roosevelt would have endorsed that proposal. In his 1936 campaign address, he said that his anti-austerity agenda had made him the most hated politician ever among the powerful and wealthy. He went on to win a landslide in 1936.
The SNP’s anti-austerity programme has also induced some hysterical outbursts among the UK establishment. They fear and hate us and, as Roosevelt said, I welcome their hatred because we represent hope and offer true change and a true end to austerity if we wield power at Westminster after 7 May.
I call Dennis Robertson but, after him, I am afraid that speeches will have to be reduced to four minutes.
16:36
On 7 May, the people have a choice to make. They will vote for more austerity from the Tories, more austerity from the Labour Party, more austerity from the Lib Dems or a new way from the SNP, which will be able to influence the direction of travel in the hung Parliament. Nicola Sturgeon has the highest poll ratings, even in England.
We have another choice: Osborne, Balls or John Swinney to promote his plans to take Scotland forward. This economy debate is not just about what is happening in the UK but about what is best for Scotland. Scotland will be £12 billion worse off from the budget because Labour has supported the Tories and the Lib Dems once again to ensure that there is a £30 billion austerity cut. Labour members cannot run away from that. It is a fact and is on the record. There will be a £30 billion cut, more austerity and a £12 billion cut to Scotland from the budget. [Interruption.]
Order, please.
Let us look at who has been paying the price for the remarkable and superb term of office for which the Conservatives and the Lib Dems are applauding themselves. It is the most vulnerable and poorest in our society.
Let us look at the welfare cuts and the sanctions that the Department for Work and Pensions has imposed in Scotland. Who stepped in to try to mitigate some of their impact? The Scottish Government did so. No one else has, but we have mitigated many of the cuts that are coming to Scotland. We should not be using the money to mitigate cuts; we should be using it to create a progressive outlook for our economy.
To try to ensure that our economy is prosperous and moves forward, the Scottish Government has put money into capital investments and infrastructure in Scotland, which has created jobs. In my constituency, we have the Inveramsay bridge, the Alford academy campus and the A96. Programmes are taking the economy forward and assisting the construction industry. We are moving forward with a progressive plan.
The plan that Mr Swinney and the First Minister have for a hung Parliament is the one that the Scots will adopt on 7 May because, as we know from the polls, Labour, the Conservatives and the Lib Dems are nowhere to be seen in Scotland. We will have many SNP MPs in Westminster influencing the direction of travel for the benefit of Scotland, because that is what the Scottish Parliament requires to ensure that it implements a plan to benefit Scotland, not to bring it back into austerity.
I call Drew Smith. I can give you about four and a half minutes, Mr Smith.
16:40
I am grateful to you, Presiding Officer. General elections are an opportunity not just to challenge those with power but, ultimately, to take the power from them. As Jackie Baillie has set out, Labour has a better plan for ending Tory austerity and for raising living standards. Under the Tories, plans to reduce the deficit have failed. They have failed because the Tories have failed to understand that the country succeeds when working families succeed. The Tory legacy is one of insecure and exploitative work for ordinary people and a rising cost of living while, at the same time, there are tax cuts for the richest and an on-going failure to tackle tax avoidance, which is robbing public services of proper support.
However, the SNP’s central demand for the general election is for full fiscal autonomy. The time has come for scrutiny of that idea. Alex Salmond and Nicola Sturgeon have been absolutely clear that the SNP’s stated aim for the general election is to have enough influence in the House of Commons to secure full fiscal autonomy for Scotland. Others have defined what that means—we all understand what full fiscal autonomy means.
On one level, full fiscal autonomy is a simple solution to the conundrum about where power lies and in whose interest it is wielded. The outcome would in fact be very simple indeed. It would mean the devastation of Scottish public services, job losses and cuts on a scale that would dwarf the other issues that we are discussing. It would mean full fiscal austerity—austerity max and cuts, on top of cuts, on top of cuts. It is, quite simply, a terrible idea. That is why John Swinney did not mention it once in his 10-minute speech. It is the SNP’s key aim for the general election, yet neither the finance secretary nor Mr McDonald will even defend it. However, we have to give credit to Mr Mason for attempting to do so. [Interruption.] I say to Mr Swinney that if he wanted to talk about full fiscal autonomy, he had an opportunity to do so in his opening speech.
Full fiscal autonomy is an idea that no one who cares about the people who rely on public services could ever conceivably support. I have listened carefully to the SNP arguments this afternoon and the truth is that we have not heard a single cogent reason why it would be in Scotland’s interests. Whatever our views are on the merits or otherwise of independence, or indeed our assessment of the coalition’s record, we should all be able to agree that full fiscal autonomy is a very bad idea.
I am proud to argue the case for my party’s better economic plan, which is to balance the books by growing our economy. I have to say to SNP members who bandied around the word “progressive” this afternoon that not one of them has mentioned taxation. That is shocking. I am prepared to say that achieving a fair balance means asking those with the most to pay a modest amount more. Labour’s proposals are for redistribution from those with the most to those with the least, pooling and sharing the resources that Scotland’s place in the UK—a place that we confirmed last year—delivers. That means redistribution to different parts of the union. The SNP’s plan for full fiscal autonomy would wreck that redistribution across the UK and, in the process, wreck Scotland’s public finances.
There are no arguments for full fiscal autonomy other than an ideological one. Why is the SNP attempting—occasionally—to argue it at all? It is because it is the idea that the SNP thinks looks most like independence. That is the only argument that could be made for that disastrous policy. John Mason said that others were talking Scotland down. The truth is that the SNP would argue for that policy whether it made Scotland richer or poorer and the truth is that we know that it would make Scotland poorer. How do we know that? The Scottish Government’s own figures tell us that and the IFS puts the figure at £7.6 billion.
I understand that many people have a deeply held belief in Scotland being separate from the rest of the UK. I understand that, for SNP members, that is an unshakeable belief and they are not going to change it. I accept that the Conservatives and the Liberals will defend their record. Patrick Harvie is right to say that Conservative members who believe in a smaller state support the continuation and deepening of austerity to achieve precisely that aim.
I am afraid that you must close.
What I cannot understand is that Scottish ministers now choose to campaign for an arrangement that is predicated on staying in the UK but which would make us worse off within the UK.
I am sorry, Mr Smith, but I have no time left. I ask you to close.
It is the worst of all worlds, and I will therefore support the Labour motion tonight. I look forward very much to the general election campaign.
Many thanks. I can give Mike MacKenzie and Chic Brodie four and a half minutes each.
16:45
It is very disappointing to hear Labour Party members reheating those tired old arguments: we are too poor, we are too wee, we are too stupid—[Interruption.]
Order, please.
Next, they will be telling us that we are not genetically suited to taking these big decisions for ourselves.
However, the really disappointing thing about this afternoon’s debate is that only the SNP, and to a certain extent the Green Party, has put forward credible proposals for an alternative economic strategy. The Labour Party is desperately trying to create the illusion that there is any significant difference between its proposals and the Tories’ proposals, but the reality is that those differences are marginal. Only a few weeks ago, Labour MPs marched through the lobbies side by side with their Tory friends to vote for continuing austerity. The reality is that all the UK parties are wedded to austerity, with Labour claiming that its cuts are somehow nicer than the Tory cuts.
The people have not spoken yet, but they are showing all the signs of having greater economic wisdom than their political masters at Westminster. In a Westminster electoral system that is designed to give one party a clear majority, it does not look as if any of the main UK parties enjoys much public confidence.
Scotland is the key battleground in the UK election, and there has been much speculation about the reasons for Labour’s falling fortunes in Scotland. It is not just about the semantic shilly-shallying over what was promised in the vow; the fact that Labour campaigned side by side with the Tories during the referendum; or the enhanced political engagement brought about by the referendum. It is also about an increasingly informed electorate, and a large section of the population who, as a result of the referendum, have received a political and economic education—
Will Mr MacKenzie take an intervention?
I am sorry, but I am short of time.
It is also about the democratisation of information, aided and abetted—as we know—by the internet and shared by means of social media. The increasingly informed electorate knows that deficit reduction is not in itself an economic plan—[Interruption.] Mr Kelly, I said no to your intervention.
Deficit reduction would be one of the happy outcomes of a good economic plan, but it should not be the sole purpose of an economic plan. To focus solely on deficit reduction is to attempt to treat one of the symptoms of the disease and not the disease itself.
If we are to nurse our economy back to good health, it is necessary to deal with the underlying problems of our economy. It is necessary to move from a low-wage economy to a high-wage economy, and from a position of low productivity to one of high productivity. Last night, I was reading about the financial and property crisis of the Roman empire in AD 33. The business cycle has waxed and waned from before that time.
Final minute.
Gordon Brown’s boast that he had ended boom and bust was like a surfer riding on the crest of a wave and trying to claim that he created the wave.
Governments can dampen down the business cycle, but they cannot end it, and good Government economic policies can reshape our economy to deliver better outcomes. Increasing our productivity would increase competitiveness; moving to a higher-wage economy would increase taxation revenues and tackle the deficit far more effectively than implementing harsh cuts; and tackling inequality would deliver real and sustainable economic growth.
That is why economists such as Paul Krugman and Brian Ashcroft—I am not always a fan of those gentlemen—are suggesting that the UK parties have a bogus economic narrative.
You must draw to a close, please.
For those reasons, it is necessary to send a large bloc of SNP MPs down to Westminster—
I am afraid you must finish, or I will have to deduct the time from Chic Brodie’s speech.
—to shape economic policy from there.
16:49
I feel that today we are in a time warp. Fourteen days ago, we were talking about Labour supporting the Scottish economy. Today, we are talking about supporting Scotland’s economy, with the same mood music, which is funereal. Last time, the lyrics were bad; today they are absolutely horrible. The motion calls for the rejection of the UK Government’s plans for austerity and says:
“George Osborne’s economic plan is based on extreme spending cuts and regressive taxation”.
As Mr Osborne did not or would not spell out the extreme cuts or any menu of them, it is incumbent on Labour—in fact, it is essential for it—to tell us now what was on the menu when it voted for the £30 billion of austerity cuts. I will not rehearse all the quotes from Ed Balls on Radio 4 last week on his non-reversal of the Osborne cuts in public spending. Osborne will not tell us, but Balls appears to know, so he should tell us what they are. What has Labour signed up to? Tell the people what the cuts are going to be.
Labour invokes the OBR and its warning about further “more savage” cuts over the next two years, although those are as yet undefined. That would be the OBR of which Alistair Darling said at its inception:
“Right from the start the Tories used the OBR not just as part of the Government but as part of the Conservative Party. They have succeeded in strangling ... a good idea at its birth.”
That would be the OBR that, in its fiscal outlook just a year ago, said that it was unable to forecast the effect of the new Calman taxes on the Scottish budget because its forecasting methodologies are “work-in-progress”, as it put it. That would be the OBR that passed over six iterations of its forecast basis to provide the forecast for Osborne to produce his recent budget.
The motion mentions introducing a 10p starting rate of tax on the first £1,000,
“to save money for hard working families”.
Of course, Labour does not, cannot or will not spell out the personal tax allowances in its taxation programme, but just imagine that we apply the 10p rate to the first £1,000 and retain the current tax thresholds. In that case, someone on £15,000 a year in 2016-17 will see a reduction of £140 in their tax bill, but someone on £50,000 a year will reap a reduction of £203 a year. So much for Labour’s fairness and equality. So much for Drew Smith’s crocodile tears in saying that the well-off should pay more.
The motion states that we should “reject full fiscal autonomy” and keep the Barnett formula. The late Lord Barnett—he of the formula—said that, in the event of Scotland getting more tax powers, retaining the formula would be a “terrible mistake”. Another Labour luminary predicted that the formula would be
“‘diminished’ ... because the funding arrangement would be irrevocably changed by new tax powers coming to Holyrood.”
That was of course Jack McConnell, in August last year.
The only true solution is to have full fiscal autonomy married to full political independence. Labour has sold the jerseys. It sold the first team jerseys in 2008 and it is now selling the second team jerseys, on austerity, on undefined public expenditure cuts, on the spending of £100 billion on nuclear weapons, and on fair work, taxation and pay. Two weeks ago, I said that Labour has no economic strategy, no oil and gas plan and no fiscal determination. This week, Labour members have proved that yet again.
We come to the closing speeches. As ever, I expect members who have participated in the debate to be in the chamber for the closing speeches.
16:54
It is common in these debates for me to find myself agreeing with at least half of what various members who disagree vociferously with one another have said. Maybe I am just in an unreasonably good mood today, but I will focus on the stuff that I agree with, at least at first.
Jackie Baillie began with a strong rejection of the coalition’s record and its promises of austerity to come. She said that there is a clear need
“to get rid of the Tories”,
and I can happily subscribe to that.
Rather than merely condemning Ed Balls, let me hold out the hope that, if he has the opportunity, he will find something in the last Tory budget that he would like to overturn. I could provide a list if that would be helpful.
Jackie Baillie, continuing her attempt to rebrand the Barnett formula as the Barnett bonus, launched an attack—and she was not the last Labour member to do so—on the concept of full fiscal autonomy. Let me try to identify one point of agreement on that. Whatever change is proposed to the fiscal relationship between Scotland and the rest of the UK after the implementation of what the ramshackle Smith agreement led to, it must be subject to a more thoughtful, reflective, considered process than the Smith commission itself. We all know that the commission was given a breakneck timetable. Those who have described its work as “coherent” and “durable” find it hard to keep a straight face when they do so. Whatever comes after the Smith recommendations must be produced on a more thoughtful basis.
Lord Smith’s more agreeable namesake in the Parliament, Drew, was right to raise the question of tax and where it fits. He is quite right to say that it is absurd to argue for a more equal society without talking about the greater contribution that those who are wealthiest must be expected to pay. The Greens have argued for that consistently. I hope that we will not be alone in doing so in the run-up to next year’s Holyrood election, when all political parties will have to set out their stall on a more progressive tax system in Scotland.
Mr Swinney, the Deputy First Minister, places familiar emphasis on the SNP’s approach to stimulating more growth, leading to more jobs and more taxes, and to balancing the books in that way. Notwithstanding our old debate about the limits to growth—the limits to its extent and to its value as a metric—I welcome the fact that the SNP, under its new leadership, seems to have abandoned the nonsense of starting that cycle with tax cuts for big business. That is an important point of change in the SNP’s most recent economic policy, and I hope that it will follow through on that agenda further.
Gavin Brown—here I may struggle to be positive—like so many other members, judges economic recovery on the basis of incredibly narrow metrics. He talks about growth, regardless of who benefits from how wealth is generated or who manages to hoard it; about jobs, regardless of their quality, security or pay levels; and about cuts only in terms of necessity, as he perceives it, and regardless of their human impact.
Willie Rennie is not the first Liberal Democrat I have heard recently trying to create a measure of distance from the Conservatives. It is clear that the Liberal Democrats feel ready for a spell in opposition. I do not think that they need to worry—I feel that the burden may be lifted from them soon. The empty hopes of their activists, the empty soundbites and the empty yellow boxes—all will soon be things of the past.
The Green proposition on green QE is quite consistent with a paper from the Bank of England—I find such radical words astonishing, given that the Bank of England is not the most radical economic voice in the land. In its recent discussion paper, “One Bank Research Agenda”, the Bank of England noted:
“Climate change, and policy, technological and societal responses to it, could have significant effects on financial markets and financial institutions”.
Presumably, as well as crashing the life-support system that we depend on, it will be bad for the markets. The bank concludes:
“central banks may have to respond to the challenges presented by these forces.”
We have offered a means by which the central bank can do that: investing in renewable energy; investing in energy efficiency; investing in the high-quality housing that the country needs; and investing, perhaps, in some of the intellectual property generation in offshore energy, energy storage and alternatives to petrochemicals. Scotland could have a leading advantage in some of those areas. The Green Investment Bank or a national investment bank could be used to enable local authorities, devolved Governments, NHS trusts and boards and other public bodies to make that investment.
As with the previous QE programme, debt issued by one part of government is taken up by another part of the public sector. It effectively ceases to be debt, no interest accrues, and that opens up the possibilities for that investment—investment in the public good, investment in environmental progress and investment in high-quality jobs in every constituency in the UK. That is the kind of programme that the next UK Government should be investing in.
I hope that whoever has influence on the balanced Parliament that is likely to emerge from this year’s election will press that point to the benefit of Scotland and the rest of the UK.
Before I call the next closing speaker, I note that Alex Rowley has not returned to chamber and I do not have an explanation for that.
I call Willie Rennie.
17:00
In response to an intervention from Jackie Baillie, Kevin Stewart said that full fiscal autonomy
“is not going to happen tomorrow.”
Thank goodness for that, because if we had listened to him last year and he had had his way in the referendum, it would be happening next year. If we listen to him on 7 May, it might still be here next year. That is the price that we would pay.
Will Willie Rennie take an intervention?
I will take an intervention from Kevin Stewart to hear whether he has some kind of explanation.
I think that Mr Rennie should tell the public about the deficit that is currently being run by the UK Government and the huge debt—£1.5 trillion—that the UK has. We could grow ourselves out of deficit—
Hurry along, Mr Stewart.
—but there are some things that the UK Government seems incapable of doing. If other countries can do it, why not Scotland?
So we have Kevin Stewart, as chancellor, achieving miraculous rates of growth in just 12 months, in order to deal with a massive hole in the country’s finances that he would bring about.
I never said that.
That is what he is suggesting. He says that full fiscal autonomy is not going to be here tomorrow—and thank goodness that it is not.
I am disappointed that Alex Rowley is not in the chamber. He criticised the coalition’s deficit-reduction plan, but he seems to have forgotten an important thing: when Alistair Darling was Gordon Brown’s chancellor, Darling said that there would be “tougher and deeper” cuts than those implemented by Margaret Thatcher. That was the case because of the state that Alex Rowley’s former boss and colleague Gordon Brown left the country in. Alex Rowley should be a bit more careful when criticising the coalition’s plans, because they are exactly what his chancellor would have done had he been returned to office.
When they talked about the impact on working people, Alex Rowley and Drew Smith also failed to recognise the big tax cuts that we have had. The other day I met a man who receives £12,000 in income a year. Before the coalition came to power, he paid £1,100 in income tax; now he will pay £200 in income tax. That is the biggest tax cut for working people that I have ever seen and probably will ever see in the future. That is the sort of practical measure that we need to implement in order to help working people.
We have heard many people talking about progressive politics. I do not think that it is progressive to leave an ever growing mountain of debt for future generations to pay. I am not going to spend today what our children should have tomorrow. Nor do I believe—as opposed to the Conservatives—that we should cut today beyond what is necessary to balance the books. I think that we should invest appropriately and build that stronger economy and fairer society so that there is opportunity for everyone.
I started off by setting out the differences between the various parties on the economy. I believe that Labour and the SNP want to borrow far too much, and the Conservatives want to cut too much. Either would return us to that damaging, see-saw economics of the past. We should steer clear of advice from those parties.
Many people have talked also about tax dodging. I have a report here that sets out what the UK coalition has done about tax dodgers. We have closed many loopholes—in fact, 33 different tax loopholes. We have prosecuted 10 times more people for tax crimes than the Labour Party did when it was in power. We have clawed back a massive £1.4 billion extra from fraud by using better data and £9 billion in tax from accounts in Switzerland, Liechtenstein and the Channel Islands. Those are practical measures that have resulted in big tax take back to the Government to help us in difficult times.
None of the members mentioned any of that, just as none of the members mentioned the tax cuts for working people. If we are going to have a balanced debate, we should recognise that we have also got the economy in this country back on track and we have done it fairly. We have done it by cutting tax for those on low and middle incomes and by making sure that we are helping those from disadvantaged backgrounds with things such as childcare. There has been a massive expansion in childcare; in fact, the SNP Government needs to do an awful lot to catch up with the UK Government on childcare. We have also made sure that the economy will stay the course.
If we listen to the advice from the SNP and the Labour Party, we will just plunge ourselves into even higher levels of debt. If we listen to the Tories, the cuts to public services will be really deep and will go back to the levels that we had in the 1960s: we will see massive cuts to public services and the NHS beyond what is sustainable.
We need to stay the course and keep the balanced approach that has worked over the last five years, creating 187,000 extra jobs in this country—something that no MSPs other than the Conservatives members are prepared to recognise. We have made significant progress in the last five years, based on a plan that none of those people said would work. We have heard from them repeatedly that the plan would not work.
We should get the balance between borrowing and spending right, keeping us on the path to a fairer society and a stronger economy.
17:06
Let me start by coming back to some of the points made by the Labour Party members. First, they said that the chancellor’s plans would be detrimental and have a negative impact on the economy. However, that does not square terribly well with the growth projections, which, last week, were revised upwards, along with the unemployment projections, which were revised downwards, and the employment projections, which were revised upwards, with full employment now a distinct possibility, perhaps by the end of the next Parliament.
We heard that Labour members would do things differently, but they were a little light on detail. The idea of a 50p tax rate is something that this side of the chamber would obviously be against. However, I ask in all seriousness, particularly with income tax being devolved, how much a 50p rate would actually raise in Scotland relative to the economic damage that it could do, perhaps adding to the perception that Scotland is a difficult place to do business. How much would a 50p tax rate raise? I hope that the Labour Party will return to that in the closing speech.
The Labour Party wants to bring in a 10p tax rate, which is fair enough. Is that then a back-door admission that it was wrong of Gordon Brown to remove the 10p tax rate in the first place? It was his final act as Chancellor of the Exchequer, so why has Labour suddenly changed its position on that?
Although Labour tries to make out that the coalition Government is fond of austerity but that a Labour Government would not have made any change, it is simply not true. I looked deep into the budget, and I found that it says that the total consolidation—if tax changes and spending reductions are added—over the course of the Westminster Parliament until now has been approximately £106 billion. However, £70 billion out of the £106 billion was inherited from the previous UK Government. Labour would have had fewer spending cuts, but it signed up to £70 billion out of the £106 billion that actually happened—and that was before the euro crisis took shape, so Labour may well have ended up in a not-too-dissimilar place.
I want to turn to the comments made by the SNP because a couple of them were really important. First, the stated policy of the Scottish Government is full fiscal autonomy; it has put it down on paper many times and it has been reiterated by almost every SNP speaker today. The Labour motion talks about there being
“£7.6 billion in additional cuts or tax rises”
as a consequence of full fiscal autonomy—it does not mention borrowing, although of course things could be done that way. However, there are only three ways in which they could be done.
The Scottish Government has said that the figures do not stack up—John Mason said that. Kevin Stewart said, “Don’t worry, it is not going to happen tomorrow anyway”, but that is not really a retort. The serious point is this: what is the Scottish Government’s official position on the finances for full fiscal autonomy? What does it think that the impact will be in 2016-17, 2017-18 or 2018-19?
If full fiscal autonomy is the Scottish Government’s stated policy and what it hopes to achieve if it gets a “phalanx”—to quote Kevin Stewart again—of MPs, that is what it would be pushing. I think that the people of Scotland and wider society have a right to know what the Scottish Government’s projections are if that were to happen. It is easy to rubbish other parties’ projections, but what is the Scottish Government’s view?
Will the member take an intervention?
In a moment.
That is why in our amendment we call on the Scottish Government to publish Scotland’s balance sheet—an update to the “Outlook for Scotland’s Public Finances” report—so that we can see what it believes that the impact on the finances would be.
Would Gavin Brown accept that no Scottish Government is going to ask for more powers that would leave it worse off?
I am not sure where to begin in tackling that, given that every time John Mason and every other SNP member, including the First Minister and the Deputy First Minister, speak on the subject, full fiscal autonomy is their stated policy or aim.
I have a proposal to make. Although we did not put it in our amendment, I hope that Alex Neil will address it when he closes the debate. Given that we have an independent Scottish Fiscal Commission with economic brains on it, which has the ability and capacity to do the work, why do we not ask it to look at the issue? Why do we not ask the Scottish Fiscal Commission to publish a report on full fiscal autonomy in which it uses all the statistics that it can get its hands on to work out to the best of its ability what its projections would be for 2016-17, 2017-18 and 2018-19?
Will Gavin Brown take an intervention?
The member is in his final minute.
I think that that would be fair. Those projections would not come from the Labour Party, the Conservative Party or the Scottish National Party; they would come from the Scottish Government’s Fiscal Commission.
I hope that Mr Neil will address that proposal. I think that it would shed some light on what is a really important issue. It would enable us to see whose figures stack up and what the impacts would be; it would then be up to the electorate to judge to the best of their ability who is correct on the issue.
I close with a question for Alex Neil and John Swinney: why do we not get the Scottish Fiscal Commission to look at the matter and to publish an independent report on it?
17:12
I have listened very carefully to all the speeches, not least those by Labour members. It is a great tragedy that Alex Rowley is not the main economic spokesman for the Labour Party instead of Jackie Baillie. He showed much more sense in his tone and in the serious issues that he raised, and much less illiteracy on economic matters than Jackie Baillie displayed.
The first lesson that Alex Rowley demonstrated was on a fundamental issue, about which Harold Macmillan—then Lord Stockton—made a speech in the House of Lords in the early 1980s, during the Thatcher recession. There are two basic strategies that can be adopted in tackling a structural deficit: a Government can grow its way out of it or it can try to cut its way out of it. We have seen in recent years that trying to cut our way out of the deficit delays the point at which we can get the deficit down, and it does so at enormous economic cost to our people. Professor Simon Wren-Lewis of the University of Oxford estimates that the cost of trying to cut our way out of the deficit has been a loss of 5 per cent of GDP across the UK, which is equivalent to £1,500 for every person in the country.
There are two very practical good examples that prove the point. Let us compare what has happened in the UK with what has happened under President Obama in the States. His strategy has been to grow his way out of the deficit, and the US now has a much lower deficit than the UK and many other countries. Indeed, as a percentage of GDP, the UK’s deficit is one of the highest, if not the highest, in the whole of Europe, so the idea that it is possible to cut our way out of a deficit is absolutely wrong, and it is a very costly way of trying to do it.
There is another very good example closer to home.
Will the cabinet secretary give way?
I will give way in a minute.
The strategy that has been followed was recommended by the World Bank. It recommended that two things can be done to bring down a deficit quicker as part of a growth strategy. First, there should be investment in capital; capital investment creates far more jobs than any other way of creating jobs. That means far more revenue, far more savings in social security and a much bigger reduction in the deficit. The other way is not to cut welfare. As the World Bank has shown, one of the ways in which the growth of a country can be boosted is by redistributive policies. [Interruption.]
Order, please.
If we had pursued redistributive policies at UK level along with an investment plan over the past five years, the deficit would already be much lower, the level of employment and the quality of employment would be much higher, and our overall economy would be far stronger.
The French followed the economics of Alex Neil; they have double our level of unemployment and have had a fraction of the growth this year and last year. Why is that?
Actually, the French did not follow that strategy; they did not have an investment-led growth strategy and they did not pursue the World Bank’s suggested way of doing things.
We just need to look closer to home; we should look at the strategy that John Swinney has followed in recent years. We have placed massive emphasis on the importance of investment, we have shifted revenue spend to capital spend and, as a result of the Scottish Futures Trust—which some members opposed—we have had about £300 million a year on average more capital investment than would have been the case without it.
Will Alex Neil give way?
I will give way in a minute.
We should look at the employment figures in Scotland. Of the countries that make up the United Kingdom, we have the highest level of employment and the second-lowest level of economic inactivity. Those are direct results of the policies and strategy that the Government and John Swinney have pursued.
When Mr Neil talks about redistribution, is he referring only to shifting spending from revenue to capital, or is there any social redistribution policy measure that he would support?
The Government has pursued much more progressive policies than the Labour Party—very often against the opposition of that party. We need only look at yesterday’s and today’s newspapers; the Labour Party pays lip service to redistribution. North Lanarkshire Council, which is one of the biggest councils in Scotland, has had to be forced by the courts to give equal pay to women, which it has fought against for the past 10 years. We will not take lessons on redistribution from the Labour Party. [Interruption.]
Order, please.
The millions of pounds that were spent on lawyers’ fees in order to do in the chances of women getting equal pay is an utter disgrace. [Interruption.]
Order.
Members will notice that no Labour member is getting up on their feet to defend that.
We should look at the Labour Party’s policies. Earlier, we heard a statement on Longannet. What is the root cause of the challenges that Longannet faces? That is part of economy policy. The root cause of the challenges is the tariff structure that Ed Miliband introduced when he was the Secretary of State for Energy and Climate Change. It is that tariff structure that has done so much damage and has brought forward the unnecessary closure of Longannet.
If we listen to the Labour Party, we realise that it has more faces than Big Ben when it comes to economic policy. On one hand, it tries to say that it is pursuing an anti-austerity policy and strategy; on the other hand, it votes for £30 billion of cuts. [Interruption.]
Order.
After the Tory budget, Ed Balls told us that there was nothing in it that he would reverse.
In Mr Neil’s round of issues from Longannet to equal pay in North Lanarkshire Council, will he perhaps address the SNP’s proposal for full fiscal autonomy in the general election, which Mr Swinney singularly failed to address?
The cabinet secretary is approaching his final minute.
Absolutely. Let me give just one example of how, if we were in charge of our own money, we could save £10 billion over the next few years to redirect to good social and economic causes. [Interruption.]
Order, please. We must hear what the cabinet secretary says in his last minute.
We could save that money by scrapping the plan to have a successor to Trident on the Clyde. That is an example of how to use fiscal independence for the benefit of the economy and employment, and to achieve a much fairer society. It is a disgrace that when the Labour Party is supporting £30 billion of new cuts, the one cut that it is not supporting is cutting the £100 billion that the Trident replacement will cost. The Labour Party, of all parties, is going to waste money on that.
Draw to a close, please, cabinet secretary.
Fiscal independence gives us the chance to build up Scotland and the Scottish economy for the future.
17:20
The next six weeks will be about making choices, and today’s debate has made some of, although perhaps not all, those choices clearer.
The Conservative amendment highlights the OBR’s revised forecast for economic growth, but does not refer to the sharp squeeze on real spending in the next two years that the OBR predicted only last week.
Willie Rennie criticised his party’s Conservative coalition partners for their ideological drive to reduce the size of the state, as if that was something that his party had not noticed until now, even though it has been part of a coalition Government that has been cutting the size of the state for the past five years.
Patrick Harvie talked about green investment, so I hope that his party will support Labour’s plans to broaden the base of the Green Investment Bank by encouraging the issuing of green investment premium bonds.
If Mr Blanchflower is right and the next UK Government is going to have to contemplate a new round of QE, will the Labour Party be open to the idea of that investment going into the real economy and green investment, rather than into the financial services sector, as the previous round did?
I am confident that the next Labour Government will want to ensure that any such economic measures are taken forward in a way that boosts the real economy in a sustainable way.
We have heard today that the SNP maintains that it is opposed to further cuts and is in favour of increased public investment. At the same time, it stands for full fiscal autonomy, which would inevitably reduce the revenues that are available for investment and make cuts all the more certain.
The Tories would shrink the state through drastic cuts in services and regressive taxation. The SNP would divide the country by reducing to a minimum the services and the taxes that we share across this island. As Jackie Baillie made clear, Labour rejects those courses of action, just as we reject the ideologies that lie behind them. The best way to balance budgets and to reduce debt is to grow the economy and the living standards of working people, and the best way to secure the benefits of growth for Scotland is to maintain the fiscal union and the Barnett formula.
It is simply wrong to say that there is only one way to get the current budget into balance and to start to reduce the national debt. Gavin Brown and Murdo Fraser claim that it can be done only through drastic spending cuts, and the SNP echoes that because it wants to pretend that any party that commits to deficit reduction is committing to Tory cuts. None of that is true.
The charter for fiscal responsibility does not say what measures need to be taken to balance the books. Voting for a balanced budget and voting for Tory cuts are different things and the SNP repeatedly saying otherwise does not make it true. It was striking that Joan McAlpine criticised Jackie Baillie for using the language of balanced budgets, which is precisely the language that John Swinney likes to use on the front bench.
How quickly the deficit can begin to go down will depend on the state of the economy and levels of productivity. The sooner the next UK Government can achieve improved living standards and higher productivity, the sooner it can begin to cut the debt.
Labour’s approach is to use all the tools that are available to Government to strengthen the economy in ways that benefit the individual citizen and public finances. That means using the tax system so that a greater share of the cost of strengthening the economy is borne by those who can afford to pay more, by reversing the cut to the top rate of tax for those who are on the highest incomes, and by putting a mansion tax on the biggest homes to fund investment in the NHS. Just as the incoming Labour Government 18 years ago taxed the windfall profits of the privatised utilities to provide a new deal for the long-term unemployed, so this year’s incoming Labour Government will put a tax on bankers’ bonuses to fund starter jobs for young people who have been out of work for a year or more.
It is fundamental to Labour’s view of the world and to Labour values that social justice and economic success go together; that is what an incoming Labour Government will seek to achieve. As well as increasing taxes for those who can afford to pay, Labour will reduce the disadvantages of those who have lost the most in the past five years, with a national minimum wage of £8 an hour, use of the tax system to reward private companies that sign up to paying a living wage—as the best have already done—and a move to ensure that workers on regular hours have regular contracts by ending exploitative zero-hours contracts.
One way in which to reduce the amount of money that is spent on benefits is to remove people from the situation of relying on in-work benefits. Does Lewis Macdonald share my concern that a minimum wage of £8 in the year 2020 will not significantly move people out of in-work poverty and the need to rely on in-work benefits?
It will, although perhaps it is not enough on its own, and that is why we want to see action on the living wage as well, with use of the tax system to reward that. It is just a shame that Mr McDonald and his colleagues voted five times against some of the measures that we brought forward in that area.
What is good for working people is good for the whole country. That is a fundamental truth to which the Government must return. It is fundamental, too, to the approach of Scottish Labour that we seek to promote further devolution in the context of the Smith agreement while continuing to pool and share resources across the United Kingdom. A Labour Government will in its first 100 days introduce a bill to implement the Smith agreement.
We want to see the powers of this Parliament strengthened, but we also want to see the sharing of power across all levels of Government entrenched in our political structures and our political culture. For those of us who have supported devolution within the United Kingdom, the rational response to the Smith agreement is to put it in place as soon as possible and then for both Parliaments and both Governments to do whatever they can to make it work.
Of course, we understand that that will not happen in the next few weeks. Full fiscal autonomy will be the platform of the SNP at the next election and is, no doubt, what it will seek to pursue thereafter.
I listened with interest to the Government’s closing speech, because it is always illuminating to compare and contrast the speaking styles of Mr Swinney and Mr Neil. Mr Swinney seeks to stay calm and measured and he often succeeds, except perhaps when he is criticised for what he has not said and he complains from a sedentary position. Mr Neil prefers to put on a more theatrical performance, and he hardly ever fails to achieve that. Of course, when Mr Neil is asked to close a debate, there is always a suspicion that there may be some important issue that the Scottish Government does not wish to be rationally addressed. I think that that was confirmed by Mr Neil’s performance, and Mr Swinney gave the game away not by what he said but by what he failed to say. In 10 minutes, he managed to say nothing substantial about his party’s actual economic policy, which is full fiscal autonomy. Instead, he left the defence of full fiscal autonomy to some of those who sit behind him.
Mr Macdonald criticises what we have not said. He has not said what his view is on Trident or what Labour spending would be on Trident.
I look forward to debating defence issues with Mr Robertson. [Interruption.]
Order.
Clearly, Alex Neil is not the only member on the SNP benches who somehow imagines that full fiscal autonomy involves a decision-making power over the defence of the United Kingdom. It is no wonder that Alex Neil did not want to address the issue of full fiscal autonomy when he was asked about it. The only thing that he could think of was a defence issue—namely, Trident.
When Mr Swinney left defence of full fiscal autonomy to those who sit behind him, he gave us some insights into what the SNP really thinks. John Mason made a sincere but bizarre defence of full fiscal autonomy that seemed to consist only of protesting that his party would not want to do anything that damaged the Scottish economy, therefore its policy must be all right after all. Chic Brodie went further than anybody. He quoted Lord Barnett saying that keeping the Barnett formula alongside the Smith agreement would be a terrible mistake, and he made it clear that he agrees with that.
Will Lewis Macdonald give way?
The member is in his last 45 seconds.
Kevin Stewart’s defence was that full fiscal autonomy is not really a problem because it is not going to happen tomorrow. The question has to be whether the SNP front bench envisages it happening at all. There is clearly a cost to going down the road of full fiscal autonomy, and the Scottish Government needs to tell us what that cost is if voters in Scotland are to make an informed choice in the next few weeks.
The right choice is a Labour Government that recognises that what is good for working people is good for the economy, and rejection of another five years of Tory austerity and the extra austerity of full fiscal autonomy. That is the right choice for Scotland and the right choice for the future.
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