Budget Revision
We now come to the statement by the Minister for Finance and Public Services on budget revision. There will be questions at the end of the statement and therefore there should be no interventions.
I am delighted to have the opportunity to set out how we are successfully managing our resources to ensure that every penny of the Scottish budget is used for maximum impact.
We are already delivering record levels of investment across the public services in Scotland. Our investment is focused on our five key priorities: education, health, crime, transport and jobs. That investment is delivering results across those priorities and benefiting every community in Scotland. It is underpinned by the prudent and sensible approach that the Executive is taking to public finance.
Today's statement is about the way in which we are using this year's Scottish budget to deliver the Executive's priorities. What I will set out today is good news for the people of Scotland. By effectively managing this year's budget, and resources carried forward from last year, we can deliver more. Parliamentary authority for the changes will be sought in budget revisions in the autumn. A supporting document has been made available to all MSPs through the Scottish Parliament information centre.
As members know, the Executive has placed particular emphasis on ensuring effective use of the Scottish budget in line with its priorities. In the same way as any household or efficient business, we need to manage our expenditure each year to ensure that the money is spent to the best effect. That includes taking advantage of the flexibility open to us at the end of any financial year.
Since 1998 we have been able to carry forward resources from one financial year to the next under end-year flexibility arrangements, or EYF. We use EYF in a planned way to carry money forward for specific purposes, to handle any slippage in capital projects, and to avoid any last minute pressure to spend at the end of the year. EYF ensures that available resources are applied to our priorities. It ensures that resources stay in Scotland and do not return to the Treasury.
We have discussed with the Finance Committee the five elements of EYF. The first is finance put aside against future, planned, spending commitments—the Glasgow housing stock transfer is the biggest example of that. The second element is slippage in the implementation of some, mainly capital projects, for example delays in expenditure on roads due to the impact of foot-and-mouth disease. The third element is fluctuations in demand-led budgets, for example regional selective assistance where demand might dip in any one year. The fourth element is other variances, including our modest contingency reserve, delayed project implementation and additional in-year income, for example the money returned to our budget due to the closure of Motorola. The final element is budgets controlled by other bodies such as water authorities and national health service boards.
The total carry-forward under our direct control is £433 million. Of that, over £250 million is managed budget provision for future spend and capital slippage. Those figures include almost £100 million brought forward from the financial year before last for stock transfer. That demonstrates clearly how EYF gives us flexibility in our financial management.
The Executive's practice is that 75 per cent of EYF is retained by departments so that they can deliver on key policy initiatives such as additional support for the further education sector, funding for the care homes settlement, the public transport fund, and energy efficiency projects. The remainder is returned to the Cabinet to be allocated against our collective priorities. In some cases 100 per cent funding, or more, has been returned to departments, including health, education, social justice and transport. The remaining £73.3 million is available for allocation to initiatives that are important to the people of Scotland.
I have more good news to report. Scottish Water was established last year as the single water authority for Scotland. It has reviewed the investment plans that it inherited from its predecessors, and has made it clear to us that by reprofiling its expenditure, it can achieve the same results for significantly less money. Scottish Water is releasing £100 million in the current financial year while still delivering fully on its five-year plans. That is the sort of performance improvement that Scottish Water was set up to achieve. It is to be congratulated on achieving it.
We therefore have £173.3 million to allocate for additional spending that will deliver results for the people of Scotland. In allocating those resources, we have taken on board the views of others, including the Finance Committee and other committees of this Parliament as part of their consideration of the budget; our partners in the delivery of front-line services, in particular local authorities; and, most important, the individuals and communities throughout Scotland who have told us of their concerns and their local priorities.
As a result, I have identified three areas for action: investment for results, Scotland's children and our local environment. I am announcing today the allocation of £78 million for projects that will generate significant benefits for our front-line services, our economy and our environment. We will use the resources as follows: £14.5 million for capital investment in the police, fire and court services; £15 million to prevent and address youth crime; £17.5 million for higher and further education; £5 million for environmental initiatives; £2.7 million for electronic service delivery in justice and agriculture; £4.75 million to develop Scotland's tourism potential; and, of course, the £18.8 million for the widely welcomed purchase of the Health Care International hospital, with the balance being provided by the health department's EYF. Colleagues will be announcing details of their allocations in the near future.
This Parliament and this Executive were established to make a real difference to people's lives. That means identifying and delivering on our national priorities, but it also means giving local leaders the means to improve the environment in their communities. We have done much already, but we want to do more. Since I took up my post in November, I have spent a lot of time listening to the views of our communities and their leaders, and to the diverse voices of individuals up and down the country. People recognise and welcome the investment that we are making in key front-line services. That investment must continue, but at the same time we must respond to local priorities: improving roads and pavements, traffic-calming measures, removing litter and graffiti, and cleaning up environmental eyesores. We want communities to be cleaner and safer. Those measures will make a difference to people's quality of life.
I am also keen for us to take action in two key areas. First, we want to improve the quality of life for children and young people by making the healthy choices the easy choices—by improving access to sport and leisure facilities. Secondly, we want to improve our local environment, with particular action on streets and roads, crime and community safety, and environmental improvements. That might include, for example, action to deal with potholes, civic clean-ups, local litter campaigns, closed-circuit television and safety lighting in parks.
Our communities and our local authorities are ideally placed to identify the most pressing needs and to deliver the necessary improvements, therefore we will let local leaders lead. I am delighted today to announce the allocation of an additional £95 million to local authorities this year to take action in the areas that I have identified. I will not be prescriptive about how the money is used. Its use must reflect local circumstances, needs and priorities. I want to see imaginative plans that have an impact on our communities. There is an opportunity and a challenge to really make a difference. The package that we have put in place reflects the priorities of the Scottish people. I commend the statement to the Parliament.
I thank the minister for his courtesy in giving me an advance copy of his statement. It is a pity that of the 16 pages to which it ran, so much of it was just self-congratulatory twaddle.
We heard a lengthy justification of end-year flexibility. The SNP has no problem with the principle that underspends should be carried forward. However, we have a difficulty with the amount of the underspend—£643 million is hardly less than last year's record figure. That shows that the Executive lacks control and that it makes announcements for their public relations value before the ability exists to deliver on the promises.
The environment and rural affairs department's underspend is £136 million. What is that amount made up of? Given last year's situation, many of my constituents will be astonished that that department underspent by £136 million.
What does the minister mean by saying that water industry expenditure has been reprofiled? Does that mean, in ordinary people's language, that projects are being delayed? If so, which projects are affected? If not, what does the minister mean? Are private finance initiatives being cut and is a more economical route being taken? How much consideration was given to using the £100 million that has been returned to the minister to reduce water charges, which are at an all-time record level?
That was a rather grudging response. We have grown used to such responses in the months and years in which the SNP has been in opposition. Instead of giving a statement of "self-congratulatory twaddle", as the member put it, I talked about the fact—which I am sure that every member knows—that our communities want money to be spent on dealing with litter, graffiti, broken glass, street lighting, parks, community safety issues, roads and potholes. We listen to the people of Scotland and we deliver for the people of Scotland.
The purpose of EYF is to ensure that we do not spend our money unwisely just because we are near the end of the year; for example, by forcing money out of the door uneconomically to purchase goods at increased prices because suppliers know that we must purchase them. For good reasons, some projects cannot be carried forward, such as those to deal with foot-and-mouth disease. Some money is returned to the Executive by other public bodies, such as local authorities, and counts against the Executive's EYF. The SNP would have us splash the cash and get it out of the door with little value, little impact and no priorities.
The water industry money that I discussed is a large part of the rural affairs underspend and is reflected in the priorities that I have described. As I made clear in my statement, the five-year profile for investment will be delivered under the new organisation, Scottish Water. That is another benefit of Scottish Water. We are discussing not cash, but borrowing consent. The money that is involved could not and would not go to the consumer. Borrowing consent is against the Scottish Executive's budget, so there is no question of the money's going back into service. However, less borrowing consent for Scottish Water means that consumers pay less, because less money is spent on interest payments. That is good value for the Executive and the water customer. The priorities that we have set are the priorities of the Scottish people.
I thank the minister for his statement, although it was a bit late in arriving. Unlike Alasdair Morgan, I will not be mean-spirited. I congratulate the minister on one or two measures. He has listened to the Conservative party, because he has provided money for dealing with youth crime. We welcome his statement about the purchase of the HCI hospital. We also welcome the moneys for the housing stock transfer in Glasgow, which is a model that we hope can be rolled out in other parts of Scotland, so that people have the benefit of more control over the management of their houses.
The minister knows well that we go along with the principle of EYF. I have one little difficulty with the £250 million that he is rolling forward. I would like him to assure me that that is not part of a war chest that will be spent on glossy announcements as we roll up to the next election.
I am a wee bit concerned about the fact that only a small amount will be spent on tourism, which is Scotland's largest industry. Will the minister tell us a bit more about that?
The minister responded to Alasdair Morgan on the water benefits. We appreciate the efficiencies that have been made and we thank the Executive for listening to our comments on Scottish Water. Why has not the minister considered a scheme to equalise charges for Scotland? That subject fills most members' mailbags regularly. I heard the technical answer, but it is up to the minister to take a decision on that matter.
The minister mentioned a figure for higher and further education. Will he tell us what the figure is for and what the focus of the funding will be? I hope that it is not merely a sticking plaster for the structural deficits of the sector.
We welcome the money that is to go to local authorities. We hope that we will see potholes filled and litter removed. The minister said that he was not ring fencing that money, which was interesting. I suspect that that means that a new device will be used. Will the minister tell the chamber how he will ensure that the money will reach where he says it will?
David Davidson asked a number of questions and I hope to address them all. If I do not, I will correspond with him or I will respond when we are given another chance to discuss these matters.
I will address his last point first. The money that is to be made available to local authorities will be made through the revenue support grant. The money is based on correspondence between local councils and me; it is based upon trust. I trust the local authorities to undertake the task and I believe that they can rise to the challenge of doing so. The local authorities will deliver for us.
The minister responsible for further and higher education will outline a number of projects and initiatives under that spend. The money is not a sticking plaster; it is an investment in capital and equipment in our HE and FE sector. It will make a real difference to those involved.
Scottish Water and the water industry commissioner will have more to say about the equalisation of water charges. However, it is important to say that we are seeing a smaller increase in water charges than would have been the case. The water industry commissioner will set targets to ensure that the equalisation of water charges takes place in due course.
We do not have a war chest. Today's statement is about the good use of our resources to reflect the needs of the Scottish people. We are saying that we listen and that, when we listen, we act. The term "war chest" was an unfortunate one.
I am glad that David Davidson has the ability to rise to the occasion and welcome some of the announcements that have been made, albeit that he made his political point. Unlike other parties in the chamber, the Executive parties reflect on what is said to us. The First Minister said that he likes to take good ideas from across the chamber and we want to pursue that agenda. It would be good to see if members from across the chamber can get together sometime to discuss the issues more fully. We want to deliver for the Scottish people. That is what is important.
Unlike the SNP, I also want to thank the minister and welcome his statement today. I want to give a particular welcome to his announcement of the £95 million allocation to our local councils. Will the minister confirm that the money will not be ring fenced, and that local councils will be able to determine how best to make use of the additional funding?
Will the minister also confirm that youth crime is an issue of major concern to the Cabinet? Will he tell the chamber what representations he has received from his colleagues on the subject? Will he further confirm that the problem with the lack of the disposals available to children's panels results from the lack of resources for disposals? What are the alternatives that will reduce the amount of offending and divert young people from crime? I am thinking about alternatives that do not include the Conservatives' suggestion of locking people up.
The money is not ring fenced. We want to work together in partnership with local authorities in order to deliver for our communities. That agenda is one that is shared by the Executive and local authorities. I am sure that the local authorities will rise to the challenge.
Youth crime is an issue that affects every member in the chamber because it affects all our communities. Our mailbags are increasingly filled with letters on the subject. We want to address youth crime; we want to prevent it. We will spend resources to do that and that will result in a number of innovations. I agree whole-heartedly with the point that Iain Smith made about prevention being the best route to dealing with some of the problems. The money will be well spent to ensure that that is what happens.
Many members want to ask questions. I appeal for short and sharp exchanges so that we can get all of them in.
Will the minister confirm that the savings in the water industry are the result of efficient budgetary management? My question follows on from the work that was undertaken by the Transport and the Environment Committee, of which the minister was convener. The Executive took on board a series of recommendations that the committee proposed at that time. Will the minister confirm that prudent management is delivering results?
I accept that the minister does not want to ring fence the £95 million for local authorities, but it is important that the money be used for community-led empowerment. Communities should be fully involved in deciding how the money is spent and in the planning of its allocation.
With respect to Des McNulty's last point, I confirm that we are talking about empowering local authorities and about a level of trust. We are also talking about discussions that were held prior to the announcement being made about the potential that could be achieved by working in partnership to ensure that we deliver change for our communities.
Des McNulty is absolutely right about Scottish Water. Two aspects of the water portfolio are important. The first is the money that has been freed up, which I have referred to in some detail. The second is the better-than-expected performance of the water authorities prior to the change to Scottish Water. They collected much more income than they expected, by managing debtors better and ensuring that money was collected, and because, significantly, they did not lose as much business as we feared they would. That places greater confidence in the public sector model that the Executive has pursued, which is delivering for the Scottish people and Scottish Water customers. It is a success story. The old water authorities and the new one are working best in terms of efficiency, gain for the environment and best value for customers.
If it can find £37.5 million, half of it from end-year flexibility, for the purchase of the HCI hospital at Clydebank, will the Executive provide more resources to reduce waiting lists at other hospitals, such as Falkirk royal infirmary, bearing it in mind that, according to this week's Audit Scotland report, the Executive is failing to meet its targets on reducing waiting lists if we take into account the number of patients on deferred waiting lists?
The health budget has retained more than 100 per cent of what the health department wished to retain under EYF. That is the purpose of the system; the money is retained in the health portfolio. As Malcolm Chisholm pointed out, the purchase of the HCI hospital will have a positive impact on waiting times. Good progress is being made, but let us not forget that the larger sums of money that have historically been made available for health in Scotland by the chancellor will increasingly ensure that waiting lists come down and that performance is what we want and need it to be. I am absolutely certain that, through this afternoon's statement and through the work that we are doing at HCI and in the health department, we will continue to deliver on those targets.
Is the £95 million for local authorities only for this year or is it allocated on an on-going basis? A number of the proposals that the minister makes are not just capital proposals that require one-off money, but have long-term revenue consequences. He referred to making healthy choices easy by improving access to sport and leisure activities. That is an on-going programme. Closed-circuit television schemes will require revenue funding to keep them going, as will safety lighting in parks. Will he clarify whether he is announcing an increase in the baseline for local authorities, presumably on the basis of population or the standard formula?
One cannot spend EYF twice—it is for non-recurring items—although I know that the SNP has tried to do that on a few occasions. I remember the Borders case and I also remember Alasdair Morgan spending it many, many times over. However, I take Brian Adam's point on board. We will not spend that money more than once. It is EYF and local authorities understand the process for spending it. However, it will set in train changes in local communities that are positive for those communities. It will set up pilot projects that I am sure local authorities will all want to take on. With record levels of investment being put into local government, I am sure that many of those good projects will continue.
I welcome the moneys that have been directed towards youth crime and improving youth facilities. That shows an awareness of local priorities and reflects precisely an understanding that, in order to improve the quality of the lives of our young people, we must reduce youth disorder, from which young people themselves are usually the first to suffer. However, I ask the minister, when directing resources, to reflect on the concerns that have been expressed about how that money is distributed. I ask him to ensure that distribution is more sensitively and sensibly done than simply on a per capita basis. That is a key issue for my constituents and for Glasgow as a whole.
For Glasgow as a whole, we are awarding £12.5 million, which I am sure will be welcomed. A lot of the overall EYF allocation that was discussed today will clearly head towards Glasgow in many shapes and guises.
I am sure that Cathy Jamieson will be engaging positively with the issue of youth crime. We are all aware of Johann Lamont's knowledge of that and of the matters that are raised in her community, and I am sure that the money will go a long way towards addressing some of those problems. I am sure that the money will be spent wisely, following discussions in partnership with the relevant minister, Cathy Jamieson.
Water charges in northern Scotland have gone up recently far more than anywhere else. With the creation of Scottish Water and the welcome saving of £100 million, can consumers and businesses in the north expect a reasonable reduction in their water bills?
That is not my understanding of the charging situation in the north of Scotland. Scottish Water has delivered stability and perhaps less of an increase than there would have been under the old water structure in Scotland. It is delivering for the benefit of consumers throughout Scotland and for the north-east in particular.
I welcome the minister's statement. He spoke of individuals, communities and the local environment and I want to bring a Highland perspective to the matter. I have two questions. First, what consideration does he give to remote and rural areas such as the Highlands? Secondly, Peter Peacock will know as well as I do that the state of non-trunk roads is a big issue, so £95 million will be welcome. However, money that is directed at a local authority sometimes does not reach the targets that one hoped that it would. Will there be an audit, perhaps in a year, to find out where the money for local authorities has gone?
On the second point, I will meet the Convention of Scottish Local Authorities on Friday to make clear what we expect to obtain from the process. We will be interested in what it expects to obtain. We are in constant dialogue with local government. We work in partnership. As I said, I am sure that we will rise to the challenge and ensure that the money is spent wisely.
There is an additional £4.2 million for Highland Council. By allowing local leaders to lead locally, we have achieved the kind of priorities that Mr Stone mentions. Such priorities will be reflected in the spend. The issue concerns local decision making and local priorities and I am sure that the money will be to the benefit of all Mr Stone's constituents.
First, will the minister consider using some of the additional allocation for further and higher education to address structural deficits in colleges and universities? Secondly, will he find out whether it is now possible to bring forward the start of the upgrade of the A77? Thirdly, will he commission a study to consider what additional savings can be made over the next 20 years by getting rid of expensive public-private partnerships and private finance initiative schemes to fund public projects?
On the first two questions, Iain Gray is the minister responsible for such issues and will deal them in detail at a later date.
On the final question, it is sad that we are continuing an unfruitful dialogue. We provide value for money for the Scottish people through PPPs, the public sector comparator, which we use on every project, and value-for-money exercises that we undertake. We have also provided a step change in respect of schools and health facilities in Scotland that real people in real communities can use.
The SNP's philosophy and strategy is nothing today and nothing tomorrow, but we believe in delivering for the Scottish people. PPP locks away the maintenance of our facilities, as people should recognise. We must embark on renovation and reinvigoration of Scotland's infrastructure, as maintenance was not taken care of or considered in the past.
The SNP compares Public Works Loan Board work with PPP schemes, but that is not fair or accurate and is done for political purposes. Two entirely separate mechanisms are in question. The Executive takes value-for-money decisions. A project that is put before us must meet the strict criteria that we set. If it does not, it will be carried out through traditional funding.
As the minister knows, a significant issue in the Stirling constituency is the upgrade of non-trunk roads and bridges, so I warmly welcome his statement, as every member should. I hope that there will be a significant input in my area for such upgrades. When will the allocations be known? When will they be given to the local authorities?
The allocation to Stirling Council will be £1.5 million and will go straight into the RSG. The money will be available when we have agreed with the council how best to pursue matters. The Executive listens to communities. Recently, Peter Peacock held a budget road show in Stirling and the issue of local roads was vigorously pursued by those in attendance. We are giving local leaders the ability to make local decisions that will impact on local roads, for example. There is additional expenditure. There is the £70 million, the £20 million that we have added and the money that we are adding today to local authority budgets to identify and address the issues that the member raises.
I welcome the additional money for local authorities. The minister has said repeatedly today that the money for local authorities is at record levels. If that is the case, why do local authorities need an additional £95 million for the core local services, such as cleaning up graffiti, collecting litter collection and filling potholes?
That is an interesting view of local government. I have just received COSLA's press release, which praises what it calls the "listening Executive" and outlines
"local government's plans to continue working closely with First Minister Jack McConnell and his Cabinet team to make sure that local government issues remain to the fore and that real improvements continue to be made to the lives of Scotland's communities."
I respect the views of COSLA more than I respect the member's views on what we are doing in local government. We have achieved record levels of investment and we are working in partnership to ensure that we continue to deliver on the shared agenda of delivering local services for local people.
On a point of order, Presiding Officer. Will you investigate on behalf of the chamber when COSLA received a copy of the minister's statement?
Everything was public the minute the minister got up to make his statement. I saw the press release being handed to the minister just now.
I welcome the minister's statement and the additional money for local government. I am interested in the £17.5 million for higher and further education. Much of the evidence that the Enterprise and Lifelong Learning Committee has taken concerned barriers to learning. Will the minister target some of that funding towards tackling barriers to learning?
I do not want to pre-empt the announcement on those matters by the Minister for Enterprise, Transport and Lifelong Learning, which will come in concert with the further and higher education community. The money that we announced today is in addition to the £10 million that the minister previously announced for capital spend in further and higher education. I am sure that he will address the matters to which the member refers, but we must await further details from him in due course.
I apologise to those members who have not been called to speak, but we have gone over time and I must protect the business for the afternoon.
On a point of order, Presiding Officer. Did you consider the political balance of the range of questions that you took at the end of the minister's statement? I feel that you discriminated against members of the smaller parties who wanted to question the fact that in a country with child poverty at the current rate—
Order. Mr Sheridan, you get your fair share of being called to speak in the chamber. There are three independent members and, despite the fact that we had only a short time, I called one of the three members. That is balanced. You are not the only member who has not been called. The matter is at my discretion. If you wish to complain, come and see me afterwards, but do not waste time in the chamber. [Interruption.] It is not a point of order, Mr Sheridan. You must sit down. The matter is at my discretion and you are not the only member who has not been called. You are called perhaps more often than your position in the chamber warrants. Such complaints do not encourage me for the future.
Meeting closed at 15:08.