Finance, Employment and Sustainable Growth
Good afternoon. The first item of business is portfolio questions. I have a huge number of prenotified supplementary question requests, so in order to get in as many members as possible, I would prefer succinct questions, with answers to match, please.
Glasgow City Council (Meetings)
The Scottish Government regularly meets representatives of Scotland’s councils, including Glasgow City Council, to discuss a range of issues.
Will the minister enlighten me on whether, in his discussions with Glasgow City Council or any other council, he has said whether the Government still intends to introduce its flagship policy of implementing a local income tax?
Paul Martin will welcome the Scottish Government’s delivery of the council tax freeze for a number of previous years and again in this financial year. We will produce in this parliamentary session a consultation on replacement of the unfair council tax, in line with what is in the manifesto on which the Scottish National Party was elected to government.
Independence (Currency)
The fiscal commission working group set out a number of viable currency options for a country of Scotland’s size and economic strength. It concluded that retaining sterling as part of a formal monetary union with the rest of the United Kingdom would be the best option for an independent Scotland and for the rest of the UK. The Scottish Government is clear that an independent Scotland will retain sterling, and we have set out our currency proposals on pages 109 to 117 of “Scotland’s Future”.
It was reported in this morning’s press that Alistair Cotton, the head of corporate dealing at Currencies Direct, has said that using a currency without a formal union would leave an independent Scotland
As I said to Dr Murray in my original answer, the fiscal commission working group looked at a number of viable options and it assessed and considered the contents of the different propositions. The Scottish Government is clear that we support and endorse the fiscal commission working group’s preferred option, which is to retain sterling as part of a formal monetary union with the rest of the United Kingdom. The Scottish Government will continue to set out that proposition to the people of our country.
Very briefly, Marco Biagi.
Alistair Darling has been noted as saying that a currency union is “logical” and “desirable”, but added to that now is Jackson Carlaw’s endorsement of such a union as being “rational and sensible”. Does the finance secretary agree that, on a currency union, George Osborne now and George Osborne the day after a yes vote will be very different, not least because it will be in the overwhelming interests of Scotland and the rest of the UK to conclude the deal and to do so swiftly?
Mr Biagi makes a fair and strong point. The Scottish Government has clearly made the point that businesses south of the border will save on transaction costs as a consequence of a formal currency union. We estimate that those costs would amount to £500 million, which would be significant for businesses in the rest of the United Kingdom.
The cabinet secretary and his colleagues are fond of quoting Nobel prize winning economists. I wonder whether he read the piece in The New York Times on Monday by the Nobel prize winning economist Paul Krugman, who, in relation to what the independence campaign has said about currency, said:
No.
Yes.
Order.
What is worthy of analysis is the comparison between the fiscal commission working group’s report and the speech that was delivered in Edinburgh by the governor of the Bank of England. [Interruption.]
Order, please.
If Murdo Fraser was to go off and do some homework and look at the contents of the fiscal commission working group’s report—the issues it raises and the solutions it offers to some of the issues relating to a currency zone—and compare that with the analysis that was put forward fairly, reasonably and dispassionately by the governor of the Bank of England, he would find that there is a clear and robust relationship between the thinking of what is in the fiscal commission working group’s report and what is in the governor of the Bank of England’s statement to the people whom he addressed in Edinburgh.
Scotland Act 2012 (Tax Avoidance)
I have made clear this Government’s determination to act decisively on avoidance of devolved taxes. The Revenue Scotland and Tax Powers Bill, which is currently before Parliament, contains powers that will enable revenue Scotland to take robust action to counteract tax avoidance, and we have included anti-avoidance measures in both the devolved taxes acts that this Parliament has already passed.
Is the cabinet secretary aware that the latest HM Revenue and Customs figures report that the United Kingdom Government is failing to collect £35 billion in taxes through avoidance schemes, illegal tax dodging and mistaken underpayments? Given that Scotland’s share of the amount that is being lost to the UK Treasury is approximately £3.47 billion, can the minister tell us how Scotland would benefit between now and 2016 if the UK Government were to implement a general anti-avoidance rule?
As I made clear to Parliament in the introduction of the Revenue Scotland and Tax Powers Bill, the bill will include a general anti-avoidance rule that is simple and more comprehensive than the corresponding provisions that the UK Government is considering. Our general anti-avoidance rule is designed to catch artificial tax-avoidance arrangements, whereas the UK approach is based on a narrow test of abuse.
The cabinet secretary has spoken about building a new culture of stopping tax avoidance so that we never see the scenario that the UK has in place, in which so much more effort is spent on chasing a relatively small amount of benefit fraud than is spent on chasing a vast amount of tax evasion by the wealthiest. A general anti-avoidance rule is a good start, but does the cabinet secretary agree that additional measures such as conditions on public procurement or conditions on corporate welfare payments, such as legal selective assistance grants, can create additional disincentives for companies to engage in tax avoidance?
I reiterate the last point that I made to Stewart Stevenson, which is that the Scottish Government intends to embark on the design of a tax-collection system with maximum intolerance of tax avoidance. The test that I have set my officials, and on which I have been advised by the tax consultation forum—whose contribution I value enormously in relation to the formulation of the Revenue Scotland and Tax Powers Bill—has been to take that maximalist approach. I know that Patrick Harvie will support that approach, given his contribution to the matter over many years in Parliament.
We will hear a brief supplementary from Gavin Brown, and, I hope, a brief answer.
The cabinet secretary said that he had a “sophisticated proposition”. Can he share with Parliament the targets that have been set for revenue Scotland in relation to tax avoidance?
I want to minimise tax avoidance. I am certainly not going to go around saying that X amount of tax avoidance is okay. What an absolutely absurd proposition.
It is in the financial memorandum.
Order.
I want to ensure that the Scottish Government is able to take all possible steps to tackle tax avoidance and to put in place the measures to do so.
Public Sector Staff Recruitment and Retention (North-east Scotland)
The Scottish Government and public bodies have policy and delivery functions across Scotland. Any allocation of central Scottish Government resources, such as to health boards and councils, is typically distributed through needs-based formulae that incorporate indicators such as population, deprivation and rurality.
Last week, in the Evening Express, Richard Carey talked about the difficulty of recruiting to the health sector and other public sector bodies in Grampian, and both local authorities have highlighted problems with recruitment due to the high cost of living in Aberdeen and the north-east more widely. What consideration has the Scottish Government given, or what consideration will it give, to the calls of trade unions and others in the area for an Aberdeen weighting?
We are able to give local employers the flexibility to deliver schemes that are suitable for local circumstances, where there are pressure points. With regard to the health service, the Cabinet Secretary for Health and Wellbeing receives updates about any vacancies that arise. We keep a close watch on the issue.
Does the minister agree that the main problem in recruitment and retention of staff is the lack of affordable housing in the area, and that it would be better for the Labour-led council to agree with the proposal of the Scottish National Party group on the council that the strategic infrastructure plan should include the building of 2,000 council houses, instead of the council’s suggestion to build 1,000 private sector and shared-equity homes?
Clearly, housing is a critical issue in relation to the concerns around growth and demand in that part of the country. I am sure that Maureen Watt will welcome the fact that Aberdeen and Aberdeenshire’s share of housing resources has increased, in terms of the housing planning resource assumptions.
Chancellor of the Exchequer (Meetings)
Scottish ministers regularly meet ministers from the United Kingdom Treasury to promote the steps that we are taking within our limited powers to deliver a more prosperous and fairer Scotland. I will engage with UK ministers in the coming weeks to highlight Scotland’s priorities for the UK budget in March.
I assume that you are not sticking with plan A like the Deputy First Minister, so will you tell me whether the First Minister’s plan B would be a temporary fix and, if so, for how long using the pound without a currency union would last before we were forced to consider a plan C?
I remind members to speak through the chair.
As I explained in my answer to Dr Murray, the Scottish Government took the advice of the fiscal commission working group, which considered a range of what it described as “viable currency options” for an independent Scotland. We accepted its preferred approach, which is the establishment of a currency zone and continued use of the pound sterling, which is Scotland’s currency as much as it is that of the rest of the United Kingdom. That is the approach that the Scottish Government will continue to express to the people of our country.
Will the cabinet secretary confirm that he will, if he meets the chancellor, discuss the debt as well as the pound, and the suggested figure of something like £25,000 per head by which Scotland will be better off if the chancellor refuses to share both?
Mr Mason makes the point that, if the chancellor wishes to continue with the line of argument that he took during his speech in Edinburgh, he will be signing up to saddling the United Kingdom with additional debts of up to £130 billion and debt servicing charges of between £4 billion and £5.5 billion each year. That is equivalent to increasing the basic rate of income tax by 1p.
John Mason raised an interesting question. Many people in Scotland might think that there is some attraction in what he suggests because we would not have to pay that money in debt. However, many disadvantages would clearly go along with that scenario. Why cannot the cabinet secretary be honest with the people and spell out what he regards as the disadvantages?
Mr Chisholm should know that the fiscal commission assessed a number of credible and viable currency options for an independent Scotland. The Scottish Government accepted the preferred option that the commission proposed, which was the establishment of a currency zone. We have set out that argument. It is strong and compelling not only for Scotland but for the rest of the United Kingdom. We will continue to put that point of view to the people of our country.
Minister for Youth Employment Visits (Stirling)
As it happens, I will visit Mr Crawford’s constituency tomorrow. I look forward very much to visiting Fallin Community Enterprises and learning more about its recyke-a-bike project and the contribution that the project is making to employability in the Stirling area.
As members might imagine, I am delighted that the minister will visit the Stirling constituency tomorrow to see for herself the great work that is undertaken at the recyke-a-bike project at Riverside.
As Mr Crawford and other members in the chamber will be well aware, the Scottish Government has signed up to a very ambitious target of 25,000 new modern apprenticeship starts for every year of the lifetime of this Parliament. It was only last week that Skills Development Scotland published information over quarters 1, 2 and 3 to the end of 2013. I am pleased to inform the chamber that we are indeed making very good progress towards meeting that target.
Question 7 was not lodged and an explanation has been provided.
Innovation (Links Between Key Partners)
The Scottish Government and its partners already have strong connections in innovation and we are working collectively to develop those links further. Through the Scottish Government’s innovation and entrepreneurship framework, we are developing—with public, private and third sector partners—practical actions that are aimed at developing and embedding a culture of innovation across Scotland.
I thank the cabinet secretary for that comprehensive answer. Does he agree that the Edinburgh BioQuarter epitomises what can be achieved through successful collaboration between key agencies such as the University of Edinburgh, Scottish Enterprise and NHS Lothian to support innovation in the development of new medicines, diagnostic tools and devices to treat diseases? Also, what more can the Scottish Government do to support and promote Edinburgh as a leading European and global destination for innovation and translational medical research?
The Edinburgh BioQuarter is a stunning example of the collaboration between the University of Edinburgh, Scottish Enterprise and NHS Lothian—and I will add the City of Edinburgh Council to that list.
Spring Budget Revision 2013-14
The substantive changes are detailed in the introduction section of the supporting document to the spring budget revision, which was published on 6 February 2014.
The budget line “supporting economic growth/housing supply” was £373 million at the autumn budget revision. It is £341.6 million as a result of the spring budget revision. Can the cabinet secretary explain the sudden £30 million drop?
Issues in connection with the spring budget revision will be considered fully when I appear before the Finance Committee in the next few weeks to discuss the relevant Scottish statutory instrument. As Gavin Brown well knows, we make a range of changes to budget programmes to align them with a variety of factors to satisfy the Government’s financial objectives in any given financial year. I will ensure that all the changes that we are considering for the spring budget revision are considered fully by the Finance Committee when members assess the statutory instrument.
The outturn figures from the 2013-14 spring revision, among many other things, will inform the cabinet secretary’s preparation of a draft budget for 2015-16. We would usually expect to see that document in early September. When does he expect to publish his draft budget this year?
I expect to publish my draft budget in October 2014.
Work Sharing and Work-time Accounts
The Scottish Government has used all available powers and resources to allow Scotland to continue to provide the most competitive environment for business in the United Kingdom, and to support employment and protect people during the difficulties of the recession. While employment and industrial relations are currently reserved to the UK Government, we have made clear our commitment to a partnership approach involving employers, employees, trade unions and other interested parties to deliver sustainable economic growth.
Does the cabinet secretary agree that, as we emerge from the recession, we have the perfect opportunity to end the old-fashioned practices and them-and-us attitudes that have so often soured employee-employer relationships and move to more collaborative ways of working? Those could include recognising trade unions; promoting tax transparency and employee representation on boards; and focusing on long-term investment and sustainability and commitment to local communities. To what extent might the cabinet secretary use the Procurement Reform (Scotland) Bill to begin that process?
I agree substantially with Ken Macintosh’s point, which is why, on 11 February, the Government set up an independent review of progressive workplace policies. As I am sure Mr Macintosh is aware, the group will be chaired by my former colleague Jim Mather, who was Minister for Enterprise, Energy and Tourism in the previous session of Parliament. I think that it is beyond dispute that he will bring to that area of policy some of the most creative thinking on how some of the practices of the past can be eliminated and we can work more collaboratively. I am delighted with the participation that has been secured for the review, which will involve representatives from the trade union movement, the public sector and private industry in Scotland. I look to the review to produce some creative thinking on how we can advance these issues.
I draw members’ attention to my entry in the register of interests, and in particular to my membership of Unite the union.
One of the limitations of the current arrangements is that many aspects of employment policy and workplace practice are reserved to the United Kingdom Government. The review that Mr Mather is chairing may well raise issues that stray into areas of policy over which the Scottish Government does not have responsibility. We will be able to reflect on those issues once Scotland has voted yes in the referendum. There is of course a wider range of responsibilities that can be taken forward. In “Scotland’s Future: Your Guide to an Independent Scotland” we have set out plans to establish a fair work commission and a national convention on labour and employment relations, which will emphasise further the partnership approach that the Government believes should be taken on employment issues.
Local Authorities (Private and Institutional Funding)
In the current economic climate, the Scottish Government and local authorities have been working jointly to find innovative ways of financing investment in a range of areas, including through the hubco initiative and the Scotland’s schools for the future programme, which includes revenue-financed secondary schools, and by attracting private investment to support affordable housing.
The minister might be aware that a number of businesses that operate in Scotland are talking to local authorities about funding, in particular for the construction of affordable housing. Deals are close to completion in many cases, but there seems to be a logjam and an unwillingness on the part of local authorities to take the issue forward. Is there anything that the minister can do to encourage local authorities to make the move and take the opportunity to help people who need housing in Scotland?
The Scottish Government welcomes opportunities to work in partnership. There can be partnership between local authorities and private developers to deliver housing in a constructive and innovative way. Issues have emerged to do with risks and guarantees, and the Scottish Government has offered constructive support in mediating and navigating our way through such issues.
Island Areas Ministerial Working Group
The island areas ministerial working group will next meet on 24 March in Stornoway. Although the agenda has yet to be finalised, the subjects for discussion will be issues of interest and importance to the island council areas.
The minister will be aware of opposition in the islands to the decision to move control centres for police and fire and rescue services to the central belt, and he will have heard Orkney Islands Council’s criticism of the move. Can he advise the Parliament whether his working group will take time in Stornoway to consider the impact that that decision and other centralising decisions are having on the three island communities, as well as the other issues that will no doubt be discussed?
I advise Mr McArthur that the island areas ministerial working group will consider whatever items local authorities want to discuss with us. There has been a wide-ranging agenda in that regard.
I am sure that the minister agrees that the provision of interconnectors to the island groups is one of the most significant problems that our islands face. Does he share my disappointment at the recent decision by wave energy company Seatricity to relocate from Orkney to Cornwall because of a lack of grid connection to Orkney? Does he agree that that is entirely a failure on the part of the United Kingdom Government, which has continually postponed the provision of a new interconnector to Orkney?
I concur with that. Mr Ewing has been leading work on connectivity on the islands. I am sure that we will return to the subject.
“Coping with the cuts? Local government and poorer communities”
At a time when the Scottish Government’s budget has been cut by around 11 per cent in real terms over the period from 2010 to 2016 as a result of the Westminster parties’ austerity agendas, the Scottish Government has worked closely with our local government partners to protect communities from the worst of the cuts.
Will the minister acknowledge the toxic combination of local budgets falling while costs rise by 10 per cent and the underfunding of the council tax freeze since 2007, which has led to a crisis in council funding and undermined councils’ capacity both to serve low-income groups and to provide the range of services that we would all support across the social spectrum? Will he acknowledge that pitting authority against authority is the antithesis of the partnership working that our constituents urgently need?
I say again that it is the Scottish Government that has delivered the fair funding settlement to local government. I remind the Labour Party that, this year, it voted for the budget and the share of resources that goes to our local authorities. When the Labour Party was opposing all the previous budgets, I never heard it call for extra resources for local authorities around Scotland.
Tourism (2014 Priorities)
In 2014, the Government will be taking forward a range of events with partners. Homecoming Scotland provides the key focus with Scotland joining more than 700 events across the length and breadth of the country, as well as being host to some of the biggest sporting events in the world, such as the 2014 Glasgow Commonwealth games and the Ryder cup, and hosting the MTV Europe awards.
Will the cabinet secretary join me in congratulating Lewis, Harris and the Western Isles on coming top of TripAdvisor’s top 10 European islands?
I agree unreservedly with Rhoda Grant’s comments about Lewis and Harris. They have very special places in my heart, and my family and I visit them regularly. We will not have the privilege of wrestling to get on ferries to the Western Isles this summer because we shall be wrestling to get on a ferry to Tiree, which will, I suspect, be as congested as it was last summer.
Scottish Loan Fund
The £113 million Scottish loan fund issues loans that range from £250,000 to £2 million and, in exceptional circumstances, up to £5 million. The fund is aimed at established growth and exporting companies.
Does the cabinet secretary agree that the Scottish loan fund’s investment of £3.5 million in Coretrax, an energy services company based in Aberdeen, demonstrates the Scottish Government’s commitment at every level to the continued success of the energy sector?
I welcome the investment that was made in Coretrax, which is an example of a number of investments that have been made in the oil and gas sector.
Next
Justice