Scottish Budget
The next item of business is a statement by Angus MacKay on the Scottish budget.
I welcome the opportunity to make a statement that will show how we can both deliver a balanced budget and meet the ambitious policy objectives of the Scottish Executive. I will set out our plans against a background of the strength and stability of the UK public finances and the very substantial programme of UK public sector investment, which is now secured until 2004.
Our spending plans are informed by our determination to improve the focus, flexibility and effectiveness of public spending in Scotland, not just for the several hundred million pounds that I shall announce today, but so that, in the medium term, the entire Scottish Executive budget of £20 billion is better allocated, better scrutinised and better matched to the priorities of the Executive and the people of Scotland.
This statement sets out structural and management changes in the handling of Scotland's finances, spells out how we have reshaped the Scottish budget to match our policy priorities for this and the next two years and shows how we have put in place the funding to match our promise on free personal care for the elderly. It does so according to Scottish priorities agreed by Cabinet and taking account of the broad responsibilities of the Executive. Those responsibilities are, of course, to the people of Scotland.
The real significance of this statement is that it goes beyond the traditional inter-departmental numbers game of who is up and who is down and instead looks ahead to better management of Scottish public spending, with new focus, flexibility and effectiveness. In other words, it combines rigour with reward.
This budget statement signals the start of a new approach, in which the focus of our public finances must be on what the money does and not just on where it goes. That is why we have established the new finance and central services department. It will bring greater coherence and expertise to the challenge and to the support role of finance in government, helping ministers and departments to achieve the Executive's priorities, particularly in driving forward our agenda for social justice and the attack on poverty. We have also established a new ministerial-level working group on best value and budget review, which will ensure delivery of agreed outputs in return for investment and lead a series of strategic reviews with departments. Taken together, those initiatives mean that, over the next three years, public spending in Scotland will be more closely matched to our priorities, more accountable and more effective.
I now turn to the first set of results of the new approach. Today I am allocating the £200 million in new money from the recent UK budget announcement, as expected. In addition, as a result of sustained and detailed work with Cabinet colleagues over the past six months to realign existing expenditure, I can go further. I am pleased to inform the chamber that I am today announcing, on top of the £200 million of new money, a further £289 million as a result of that realignment work. That combination of new and realigned money gives us a total of £489 million to allocate today.
I will now set out how we are allocating those moneys across the departments to meet our policy priorities. We are directing £286 million of the £489 million total to spending on health. Of the £286 million health total, £200 million—£100 million next year and again the year after—is to fund the various recommendations of the care development group in its work on implementing free personal care for older people. The roll-out of that work will begin from April 2002. The remainder of the money for health will go on new health initiatives that the Minister for Health and Community Care will outline in due course.
We will direct £146 million of the £489 million to spending on education and children. There has been speculation that the money in the education budget would contribute to the cost of the Parliament. Let me make it clear: no such contribution will be made. Some £99 million is new money for the education budget. The balance has been realigned from within the Education budget. For example, over the next two years, £40 million within the education budget was scheduled for the implementation of broadband in schools. Instead, ministers have agreed that broadband will be paid for from the capital modernisation fund. That means that £40 million has been freed up for reallocation within the education budget and schools will still get their broadband connections.
Some of the money for education will go towards meeting the costs of the teachers' pay settlement in 2003-04, but most of the £99 million will be spent on new initiatives. The Minister for Education, Europe and External Affairs will outline those initiatives in due course.
The Administration is determined to continue to tackle Scotland's drugs problem. We have created the Scottish Drug Enforcement Agency and last year we announced £100 million extra in the fight against drugs. We are now committing £28 million to the justice department and Crown Office over three years to tackle criminals and support the victims of drugs.
In addition, £3 million will be directed to sport and culture to raise Scotland's profile around the world. I cannot give details of the package, but I am sure that golf and football fans will be pleased. We have committed £5 million to transport for key priorities such as making roads safer for our children. We will direct £9 million more to support higher and further education students in Scotland through the enterprise budget. Ministers, including Jackie Baillie, will announce shortly how that will extend access and help us to deliver social justice. In addition, £2 million will support creative industries.
Full details in table form of all the realignments—where money has come from and where it is going—have been lodged with the Scottish Parliament information centre.
I have one further announcement to round off the £489 million package that I have made available. The impact of foot-and-mouth disease has been felt widely throughout Scotland. That impact has been particularly heavy in farming communities, but it has also damaged our tourism economy. As a result of our efforts, I can announce a £10 million post foot-and-mouth disease recovery package, which will be directly targeted to help both farming and tourism. Ross Finnie will announce the full details of the package in due course.
Almost all the new money—£200 million—has been invested in new initiatives. Almost 90 per cent of the overall £489 million that we have made available—£432 million—is being allocated to our highest priorities of education and health. No money from the £200 million—or the £489 million—will go to the costs of building the new Parliament.
I have set out the start of a new process—an approach that will result in the better management of Scottish public finances. I have announced not only how we will spend £200 million of formula consequentials from UK public finances, but the realignment of a further £289 million to the Executive's priority policies.
It might take some members a little time to accept the new approach, but that approach—not the simplistic call for more constitutional change via the deficit route of fiscal autonomy—will make devolution work. The approach is one of fiscal delivery, not fiscal deficit. We are taking the responsibility that comes with devolution and getting down to the hard work of delivering for Scotland. We are making things add up while others are just making things up.
We have considered the £20 billion of our public expenditure in Scotland and started to make choices, which reprioritise that spend to match our policies. That realignment process is a blend of replacing lower-order priorities with emerging higher-order priorities and finding new funding streams for some existing plans. That will be an enduring feature of Scottish public finance. Our willingness to embrace it demonstrates a mature approach to finance and governance—it is rigour that brings reward.
We have balanced the budget and we have met our commitment on free personal care for older people. The biggest boosts will be for our key priorities of health and education. I commend that mature approach and this statement to the chamber
I thank the minister for the advance copy of his statement. I welcome the announcement on personal care, which is a victory for the Parliament. Needless to say, we will be watching to see that it is properly implemented.
As always, it is difficult to cut through the spin to get to the facts. When I heard that the budget was being balanced, I wondered how we could unbalance it, given that this Parliament has no power to borrow.
"Realignment" is a lovely word. The minister told us at great length, if not in great detail, who has been given money. He told us the good news. He said that he wanted to go beyond the game of what is up and what is down and of who is up and who is down. He has just told us who is up. Can he say, before we get all the detail that will be available in SPICe, who is down? Who will the losers be?
On education, can the minister say what the £40 million from the capital fund, which is now going to be spent on broadband, was going to be spent on? Will the school building programme suffer even more? Can any of the £99 million of new money that is going into the education budget be spent on buildings or are all our buildings going to be funded by private finance initiative? What was the gap in funding in relation to the McCrone recommendations at the beginning of the year? When will answers be available to all the questions on McCrone in the Education, Culture and Sport Committee section of the budget report that we debated this morning?
The minister said that some of the £10 million for foot-and-mouth disease will be targeted towards agriculture. Under previously announced schemes, farmers—other than those with slaughtered stock—have been excluded from getting cash aid because of the state-aid rules. Has a way around that been found?
I promised Alasdair Morgan before the debate that I would be relatively gentle with him because he is new to his portfolio, but he has raised one or two points that I must address head on.
It is somewhat ironic that the SNP should be demanding that the Executive parties say where the money will come from to pay for the spending. In the election campaign, our endless search for the truth on SNP budget finances showed that, unlike in "The X-Files", the truth is not out there where the SNP is concerned.
I have said that I do not want this process to be anything other than transparent—[Interruption.] I welcome noise from the Opposition because, when things are hurting, that is when they are making an impact.
We have put the tables that accompany this statement in SPICe. Those tables show where the allocations will go, which departments the savings will be taken from and the net changes.
Name them.
The former, or perhaps still current, finance spokesman for the SNP asks me to name them. I will do that.
In my statement, I talked about matching rigour with reward. Earlier this year, much noise was made, especially by the Opposition, about savings on trunk roads maintenance. Those savings—more than £30 million—are now available to us for reallocation to deliver on free personal care for the elderly, because we followed the rigour of making those savings to allow us to have the reward to invest in the Parliament's priorities. The key point is that we are identifying where the resource is coming from and how we will fund our priorities. The Opposition cannot and will not identify either.
Alasdair Morgan raised a couple of specific points. I am not going to go into detail today about how the spending will be rolled out; it is for other ministers to make those announcements in due course. However, I will address the point about the £40 million in the education budget. As I said, the budget contained £40 million to implement the roll-out of broadband to Scottish schools. We are now proposing to meet the costs of that implementation from the capital modernisation fund. As a result, that £40 million is freed up for reallocation elsewhere in the education budget. If SNP members are patient, they will find out where when the Minister for Education, Europe and External Affairs makes his announcements.
I thank the minister for prior sight of his statement. I would have had it earlier, but we will have to get our new whip into training so that he can get up the road a bit quicker.
In the debate this morning, several Labour members accused me of having an honesty fetish. I am deeply worried about the new central department that the minister mentioned. Will it be a new ministry for spin and recycling or will all members be able to access it and benefit from it?
The Conservatives welcome some parts of the minister's statement. As the chamber knows, our party was the first one officially to adopt the Sutherland proposals as a main line of policy and I am very pleased that the Parliament has managed collectively to deliver on that issue. However, we do not know exactly how the Executive has reached the figure that it has announced. As there has been a huge amount of speculation, the minister should be honest and tell us what the new money will deliver. We also welcome the money for the fight against drugs and the support for problems arising from foot-and-mouth.
However, I must be fairly frank and say that many of the minister's proposals will be funded through realignment of existing funds, not through new money. Realignment is nothing more than shuffling things around. However, if the minister is prepared to introduce a new policy of telling us what is being realigned as it happens, the Conservatives will welcome that. The minister also failed to tell us whether realignment will be used to balance the blank cheque for the Holyrood project, but we might receive an answer to that in due course.
On education, will this statement address the difficulties that rural councils face in funding teachers' pay settlements in full? The statement contains no reference to school fabric, which is in a terrible state of repair.
As for health, why has the minister not mentioned the fact that many health trusts in Scotland are in deficit and that there is a huge problem with bedblocking? Perhaps he will also tell us why the statement says nothing about compensating for the unfairness of the Arbuthnott package.
Finally, on the £10 million that the minister has allocated to the tourism industry after the foot-and-mouth crisis, how did the Executive arrive at such a small sum? What evidence was used to reach that figure? Is that money enough? Will the minister revisit the issue, especially as support for tourism is vital this year? If he compares the amount money that he has offered with what is being spent in Ireland and elsewhere, does he really think that he has fully addressed the problem?
I note from the questions asked by the SNP and Conservative spokespeople and from this morning's debate that neither party has made one proposal about how we should spend the money in these budgets over the next three years any differently. During this question session and in the Finance Committee's scrutiny process, neither of the Opposition parties has proposed shifting a penny. They are abdicating responsibility instead of engaging in the devolution process and standing up for Scotland. That is astonishing.
Someone more qualified than me recently said that the Conservatives would love to cut public services and so ruin our economic stability, whereas the SNP would choose to ruin our economic stability first and then cut public services. The questions from their spokespeople this morning have shown ample evidence of that. We have had po-faces from the SNP and a question from the Conservative member that began with an attack on his own whip. That leads me to believe that neither party has much to say about what is an excellent budget settlement for Scotland.
As I said, from next year £100 million will be given for free personal care. If I were to describe what that money was to be spent on, the Opposition parties would accuse me of prejudging the proposals of the care development group. We are more than content to allow those individuals, who are very well-qualified, to come to their conclusions in their own time and to tell us how the money that we have put on the table through our work can be used to deliver on the Parliament's commitment.
We have made the decision to identify the source of the finance to pay for free personal care. Every member supported the proposal to provide free personal care. It is time to put up or shut up, if members do not like what we are proposing. Neither the SNP nor the Tories are doing anything to tell us how they would pay for any of those commitments other than by what we are proposing today.
My colleague Susan Deacon has helpfully informed me that the national health service budget this year is within £400,000 of balance, compared with an overspend of £22 million last year. I am sure that David Davidson will be much cheered by that good news about the excellent state of the finances of the health budget—although I see that good news does not go down well in the Conservative party.
As I said, a number of announcements will be made in due course by a range of my colleagues who control the individual departmental budgets. They will make clear exactly what the spending priorities are to which they will allocate the £489 million that we are announcing today. The key point is that, now that we have balanced the budget and decided not simply to say, "Let's take £200 million in consequentials and decide how to spend it," but to be more ambitious and discover how we can free up existing resources to enable us to invest better and more wisely, substantially greater investment is being made in health and education than would have been the case if we had simply stuck to the figure of £200 million. I would have thought that the Opposition parties would welcome that.
My colleagues and I very much welcome the statement and the good work that is being done by the minister. I have in my hand a sheaf of press cuttings from the past six months, which say that the coalition will never deliver on free personal care and that the Liberal Democrats are a bunch of wimps and chancers who will not achieve anything. [Applause.] Why are members applauding? The Opposition parties have been saying things that are simply not true. We have delivered, and that is commendable. The minister is delivering and the coalition is delivering. If the whole Parliament supported us in that work, instead of constantly whining and sniping about the good will of the coalition partners, we might get somewhere. This is a success for devolution. We are doing things differently from what is happening in England, and that is something in which we should all take great pleasure and pride. The minister has delivered, so to say that the Executive will never deliver is a waste of time.
I have three questions for the minister, which may come under the heading of future ministerial announcements. First, in connection with free personal care, will the minister clarify whether and how residential accommodation for elderly people and others in the voluntary and commercial sectors is being funded? Secondly, the funding of the implementation of the McCrone recommendations is welcome, as we were told that that would never happen. Over the past year, schools have welcomed the money that was issued reasonably directly from the Executive to the councils to the schools, which has helped them to budget. Will that happen again, or will the new initiatives that the minister spoke about be different? Thirdly, will money for sport be allocated at the grass-roots level? There is a risk of our policy being too top-down and not sufficiently bottom-up. If money is allocated to sport at the grass roots, in due course we will produce champions.
The Convention of Scottish Local Authorities and the care sector are in deliberations at the moment and I do not want to impact on or prejudge the outcome of those discussions about what might be required to ensure that the sector is capable of continuing to deliver the care that is required. Donald Gorrie should rest assured that those discussions are continuing and that both parties are engaged willingly in trying to find a sensible solution.
Donald Gorrie asked a question about education. I must ask him to be patient a little longer until the Minister for Education, Europe and External Affairs, Jack McConnell, makes his announcement.
On funding sport at the grass-roots level, I am sure that the relevant ministers—Allan Wilson and, again, Jack McConnell—will have listened carefully to Donald Gorrie's words. I know that, in recent months, Jack McConnell has been working on ways to improve that aspect of the education system and I am sure that some policies will come to fruition as a result.
Mr Gorrie made the important point that Opposition members should not deride what has been announced. The fact is that the budget takes care of issues that are of great importance to every member of the Scottish Parliament and to the Scottish people. The reason why Opposition members laugh and guffaw is that they have little else to say. The SNP cannot make its policies add up, cannot say how our policies should add up differently, has a deficit that it cannot fill, an oil fund that will not fill up and public service trusts that will not work. It has John Swinney sitting in the Scottish Parliament as the leader of the official Opposition and Alex Salmond in London as the unofficial leader of the Opposition and it does not know which leader to follow. Either way, the SNP is leading itself up the garden path, as it is in coalition with Plaid Cymru, a party that does not even support independence. I understand that the Official Monster Raving Loony Party refused to join forces with the SNP because it deals only with serious parties.
I welcome the minister's statement, as will many of my constituents. The glum faces of the forces of darkness, represented in this chamber by the Tories and the Scottish nationalists, only add to my pleasure.
How can we reassure the patients and the professionals that the additional money for the health service will directly affect front-line services and will not end up in some black hole of bureaucracy?
That is an important point, which Duncan McNeil has raised with me previously. I intend to discuss with colleagues how we will roll out the detail of the spend that we are announcing today and, as I have said, ministers will make announcements in due course. It is important that the money gets to the front end of service delivery as quickly as possible. Those are the areas in which people in Scotland depend on the decisions that are announced in statements such as this one being translated into reality. That is what makes a substantial difference to the quality of services that they experience and the value that they attach to the Scottish Parliament. If people genuinely believe in devolution and the value of the Parliament, they should engage in that process rather than sitting on the sidelines, picking up MSPs' salaries but not engaging in the serious hard work of deciding how much money should be spent on what policy priorities.
The parties have all had their say but five members would like to be called. As we are running out of time, I propose that we take five brief questions together and allow the minister to give an omnibus reply.
What?
I did that yesterday. It went well and enabled everyone to be called. I hope that members approve.
Will the Executive give more priority to expenditure to help homeless people instead of defending a decision taken behind closed doors to hand out public money for a minister's second home?
Given what you said, Presiding Officer, I am tempted to say that we will have to wait until the recess to find out what the minister's reply to these questions will be, as we will have to wait until the recess to find out about all the spending commitments. Are the ministers really running from parliamentary scrutiny and accountability?
The minister is still the only finance minister who does not trust himself with the nation's finances. It seems that the people do, and I think that they might be correct to do so.
What we have heard today—and I ask Labour members to consider this—is the chancellor's statement from a few months ago and its consequentials, which we welcome. For the first time, the chamber has been given details of the reallocation of the underspend, which last year was announced in a press release, much to the chagrin of the Minister for Health and Community Care. Three months ago, the Executive published a budget document—
Order. I want a brief question, Mr Wilson.
The budget seems to have changed to the tune of £289 million. Is that evidence of the reallocation of the underspend? If it is, what happened to the rule that says that 75 per cent of the underspend should stay with departments? If it is not, what has changed since March? Is the Executive in such chaos at its heart that it has not noticed the change?
The minister has said that no money has been diverted to pay for Holyrood or the burgeoning cost of ministerial flats. In that case, where is the money coming from? As it must have come from front-line services, what front-line services are being cut to pay for Holyrood and the associated costs of ministers?
Can the minister say how the £10 million to assist farming and tourism that he has just announced will relate to the £10 million previously allocated to the Minister for Enterprise and Lifelong Learning? How much of that money has been allocated and how will the Minister for Finance and Local Government avoid confusion in the allocation of the additional money?
The minister will know that the Liberal Democrats are delighted that he has earmarked £100 million from next April for the implementation of free personal care. Can he confirm that the Executive, through the care development group, is now on schedule to make personal care free for elderly folk from next April? I know that the money is there, but I would like reassurance that the Executive is on schedule to deliver that from April 2002.
I repeat Alasdair Morgan's welcome of the statement, particularly the announcement on free personal care. I just wish that the Scottish Parliament had the power to realign the money wasted on nuclear weapons in the Clyde to front-line services in health and education.
Will the minister give a straightforward yes or no answer to whether the planned investment in school equipment and buildings will remain intact or even be increased? If it is to be increased, by how much? The minister mentioned a realignment of £30 million from trunk roads. What are the implications of that realignment?
I apologise to the minister—there were rather a lot of questions.
On a point of order, Presiding Officer. Is it in order for a member to ask a question and then not stay to listen to the reply?
Who has done that? [Members: "Andrew Wilson."] No, it is not in order. Thank you for drawing that to my attention.
On a point of order, Presiding Officer. Andrew Wilson had been paged and he has asked me to convey his apologies to the minister. I am in the process of writing a note to the minister to that effect.
I would not have called Mr Wilson if I had known that he would not be here to listen to the minister's answer. Nevertheless, let us have the answer.
I do not want to pass comment on that because we do not know why Andrew Wilson had to leave the chamber. That is a matter for you, Presiding Officer, rather than for me.
I will take the questions in reverse order. Alex Neil asked a question on education initiatives, but he will have to wait to hear what the Minister for Education, Europe and External Affairs announces on the range of education initiatives.
Mike Rumbles asked whether free personal care would begin by April 2002. My understanding is—and I do not have detailed knowledge of the matter—that the care development group is on schedule to make its recommendations within the timetable and that we will commence the roll-out of free personal care from April 2002. I hope that that satisfies Mike Rumbles.
On the astonishing set of inaccurate assertions and questions from Andrew Wilson, the money for the new Parliament building, whatever it may turn out to be, will be met from our reserve. Over the next two years, our reserve totals more than £100 million. No member is suggesting that any additional cost of the Parliament will amount to more than another £100 million. However, I make the observation that, when we set up our reserve and at various stages sustained it, the SNP—Andrew Wilson in particular—opposed the idea of carrying a reserve. If we followed the SNP's advice, we would end up cutting health, education and other budgets to pay for the new Parliament. The SNP must take some responsibility for its position.
Andrew Wilson asked a direct question: whether the change in the budget is a result of end-year flexibility or underspend. The answer is that it is neither EYF nor underspend. We will deal with that matter later in the year.
Andrew Wilson made another astonishing assertion, which was that I must be the only finance minister in the world who does not trust himself with more power. Well, Alasdair Morgan must be the only finance spokesperson of an independence party who is not trusted by his own party with the full finance brief. Andrew Wilson has walked off with half the brief, leaving Alasdair Morgan as spokesperson for nothing very much in particular. Perhaps Alasdair Morgan should engage in that discussion with Andrew Wilson.
Dennis Canavan raised a point about ministers' homes. I will treat that assertion with the contempt that it deserves.
What about the homeless people?
Order. That concludes the statement and questions.