Official Report 1054KB pdf
Deputy First Minister Responsibilities, Economy and Gaelic
Good afternoon. The first item of business is portfolio questions, and the first portfolio is Deputy First Minister responsibilities, economy and Gaelic. Members who wish to ask a supplementary question should press their request-to-speak buttons during the relevant question.
Question 1 has not been lodged.
Social Enterprises
To ask the Scottish Government how it is supporting social enterprises. (S6O-04577)
The Scottish Government fully recognises the importance of social enterprises and their valuable contribution to Scotland’s economy. Investing in social enterprise is crucial for our vision of progressing towards an economy that is fairer and greener, and which has inclusive growth at its heart. Funding for the sector has been protected at £6.2 million for next year.
Crafting Together, which is a social enterprise in my constituency of Clydebank and Milngavie, has done amazing work in providing employment opportunities for those with additional support needs, but more can still be done to improve the rates of employment. Can the cabinet secretary advise what action can be taken to improve employment rates for those with additional support needs? Would she be willing to come to Clydebank to meet Crafting Together to discuss what it has on offer?
Organisations such as Crafting Together, as Marie McNair has said, are doing great work in supporting those with additional support needs to find and stay in employment. I am sure that the Minister for Employment and Investment, as the lead minister on these matters, would be delighted to meet Crafting Together to hear more about its work.
We are committed to halving the disability employment gap and supporting disabled people and those with additional support needs into employment, and I commend Crafting Together for all that it does in that regard.
Economic Growth Opportunities (Tartan Week 2025)
To ask the Scottish Government what opportunities it has identified to grow Scotland’s economy, following tartan week 2025. (S6O-04578)
The First Minister’s visit to the United States for tartan week focused on supporting Scotland’s economic growth. The key opportunities that were identified included welcoming more US investment in financial services, technology and renewable energy; championing quality Scottish products against the backdrop of tariffs and volatility; and showcasing Scotland’s top-class cultural and higher education institutions. The First Minister’s visit achieved each one of those objectives.
The US is Scotland’s second largest export market for goods and services, after the European Union. Around 16.4 per cent of our exports go to the USA, totalling more than £5 billion, and engagement with the USA around economic opportunities is therefore absolutely vital.
I thank the Deputy First Minister for that full response. I was fortunate enough to attend tartan week celebrations to represent the Scottish Parliament, and I was struck by the warmth with which the Scottish culture, heritage and traditions, and our products and services, were met. The DFM correctly highlights the value of our export market, but what assessment has been made of the specific economic value not only of celebrations such as tartan week, but of promoting brand Scotland to the US and other global markets more widely?
I confess to being slightly jealous of Michelle Thomson’s trip over that period. The Scottish Government, alongside other brand Scotland partners, uses moments such as tartan week to showcase Scotland’s innovation and culture through events and media promotion.
With regard to the economic analysis that is done, we look at a number of different sources, always looking at how we can improve the data work that we do; I know that Michelle Thomson has a long-standing interest in that. That type of work has helped to maintain Scotland as the second highest area for inward investment in the United Kingdom, after London, in nine of the past 10 years according to EY. The EY data is helpfully granular with regard to where those investors originate and the confidence that they have in Scotland.
The Scottish tourist sector is excited at the prospects for the future, because some people who may have planned to travel to the United States are now reluctant to do so, which provides opportunities for tourism here. At the business in the Parliament conference that both the Deputy First Minister and I were at on Friday, people who are involved in tourism raised concerns that they have about the handicaps that the sector faces around taxation, business rates, short-term let licensing and the visitor levy. Although the tourism sector is optimistic about increased visitor numbers, hospitality margins are extremely tight. What specific help will the Scottish Government provide to those in that sector that are looking to expand?
In this year’s budget, we allocated an additional £2 million to VisitScotland in order to ensure that, first, there is increased footfall in terms of visitor numbers, and that visitors from new markets come to Scotland so that we can maintain international competitiveness. Secondly, that money will also support efforts to encourage visitors to spread their travel across Scotland, rather than concentrating on some of the most-visited destinations, so that the whole country can benefit from the economic value that comes from tourism.
I will call Mr Whittle to as question 4, despite the fact that he has just arrived in the chamber. There are colleagues who want to ask supplementaries to it.
Ayrshire Growth Deal
I apologise to the chamber for my tardiness.
To ask the Scottish Government whether it will provide an update on the delivery of the Ayrshire growth deal. (S6O-04579)
Scottish Government investment of more than £100 million in the Ayrshire growth deal, matched by United Kingdom Government funding, is expected to unlock private investment of around £300 million and deliver around 7,000 new jobs, transforming the local economy for the benefit of all our people and places. Construction has just begun on phase one of the £14 million great harbour project. Governments have approved outline business cases for the £23 million Ayrshire manufacturing investment corridor and the £9 million marine tourism programme, enabling those important projects to progress to the next stage, and work is continuing at pace on new projects that will support the aerospace sector at Prestwick, which I know is of interest to Mr Whittle.
As the cabinet secretary will know, last week, I facilitated a meeting at the Prestwick aerospace cluster to discuss the potential of the Ayrshire growth deal to deliver at least 1,500 well-paid, highly skilled jobs in Ayrshire, in addition to the 3,500 proposed jobs from XLCC in North Ayrshire. Securing the skilled workforces that those businesses need will be a key factor in ensuring that those major international companies commit to investing millions of pounds in Ayrshire, which is why everyone who was at the meeting was so concerned to hear that Ayrshire College is not only facing funding cuts but that its potential to support economic growth in Ayrshire is apparently being overlooked in favour of Scotland’s cities.
Can the cabinet secretary explain why Ayrshire College, and indeed Ayrshire more widely, continually seems to be an afterthought for the Scottish Government? How does she propose to ensure that the Ayrshire growth deal moves forward at pace in order to secure that vital inward investment?
I believe that Ayrshire is the vanguard and is at the forefront of delivering economic opportunity, particularly in and around clusters such as the Prestwick cluster. I was sorry that I could not attend Mr Whittle’s meeting on 23 April, which I had communicated to the member in advance. However, I, too, have meetings in the diary and will be engaging with some of the businesses that were in attendance in order to make it clear that the Scottish Government supports the Prestwick cluster and the opportunities in aerospace and other sectors.
Ayrshire College is key, and I have had the privilege of visiting it before. Time and again, skills are identified as one of the major challenges to achieving business opportunities in the area. I am keen to work with the college and the sector more generally to ensure that we realise those opportunities, and that there are no impediments to doing that.
Over the next five years, Ayrshire will have a once-in-a-generation opportunity to consolidate and grow its globally competitive manufacturing footprint through XLCC in Hunterston and our aerospace industry at Prestwick, boosting Scotland’s wider supply chain. A highly skilled and motivated workforce will be key to the delivery of those objectives. How will the Scottish Government ensure that we have the skilled workforce that is essential to ensuring that those ambitions are realised in the numbers that are required?
The member is absolutely right, and, a couple of weeks ago in the United Arab Emirates, I had the privilege of supporting XLCC as it pitched and showcased what it is trying to achieve, which demonstrates the international interest in the progress that it is making. We also talked about aerospace there.
The workers are critically important. Having met a number of apprentices, I know that there is significant interest in working in those jobs. There is huge demand, and we are committed to working with Skills Development Scotland, which oversees the apprenticeship programmes and administers funding, to ensure that Ayrshire College can play a key role in meeting the demand and ensuring that there is a pipeline in place.
I recently sent a letter to the Ayrshire councils seeking an update on the deal’s delivery. The response acknowledged that progress on delivery had not been as originally envisaged and noted that, at the halfway point of the programme’s lifetime, only a small percentage of available investment had been realised. It also noted that, in response to delays, partners, in consultation with the Government, had undertaken a review of the programme.
Can the Government advise when the decision to review was made and what the outcome of the review was, to ensure that my constituents can see the potential and the benefits of economic growth?
As the member knows, part of the reason for the situation that she outlines is that a number of projects did not proceed as originally envisaged. However, we are all keen to ensure that information about the new projects can be communicated clearly and quickly. Late last year, both Governments approved the trajectory of a number of changes across the Ayrshire deal capital programme that should pave the way for a greater pace of delivery. We are working with Ayrshire Council, and, in the past few months, I have personally convened a meeting with the Secretary of State for Scotland and senior representatives from the council in order to accelerate the pace of delivery.
Infrastructure Support (South-west Scotland)
To ask the Scottish Government what funding will be available to help infrastructure projects in south-west Scotland. (S6O-04580)
Each year, the Scottish Government provides funding for local government to deliver infrastructure to best meet councils’ needs. Additionally, through the borderlands deal, we will invest £85 million to drive regional economic growth. In the south-west, that includes £16 million for the redevelopment of the Stranraer marina, £4 million for the dairy innovation centre and £20 million for the deal’s place programme to improve places to live and work across the region.
We are also investing significant funding through the £2 billion learning estate investment programme, which will support the delivery of projects such as the new Dumfries high school.
Regrettably, the amount of money that is spent on transport infrastructure in the south-west corner has been non-existent in comparison with other areas, and is reported to be as little as 0.5 per cent of the total Scottish infrastructure spend.
As the minister will be aware, the century-old concrete bridge in my home town of Kirkcudbright has been ruled unsafe, leaving the town effectively split in two. I previously pressed the First Minister for additional funding to allow a new bridge to be constructed, but my plea fell on deaf ears, despite the Scottish Government providing £40 million of funding to open the Destiny bridge in the First Minister’s constituency, as well as £33 million towards the Kessock bridge over the Beauly Firth and £12.5 million to build a bridge at Markle in East Lothian to replace the level crossing. Does the minister agree with my constituents in what is now regarded as not the forgotten part of Scotland but the ignored part of Scotland that that stinks horribly of double standards and further dismissal of the needs of the people of the south-west of Scotland?
Despite the political points that he makes, the member raises serious concerns about the Kirkcudbright bridge. However, his stance is ironic, given the list of investments that I read out in my initial remarks. It is unfortunate that he has taken that stance, given the many exciting investments that are taking place in the south of Scotland.
The member mentioned the First Minister. Of course, the First Minister recently replied to the member in relation to his concerns about the Kirkcudbright bridge, and was pleased to point out that Dumfries and Galloway Council’s website states:
“The Kirkcudbright Bridge project has been confirmed within the council’s capital investment programme for financial year 2025/26.”
Clearly, the Scottish budget delivered additional capital expenditure for many parts of Scotland. The issues are being addressed to the best of our ability, and I hope that the council is able to take that project forward sooner rather than later.
The recent visit by the Cabinet Secretary for Transport to the south-west to hear from the campaigns seeking upgrades to the A75 and A77 was welcome. How will the cabinet secretary continue to ensure that the south-west gets the infrastructure and investment that it needs, including, if possible, support for the Kirkcudbright bridge, and engage with stakeholders across Dumfries and Galloway to fully maximise the economic potential of the south-west, as the Scottish Government has done through its hugely welcome funding for the Stranraer Millennium Centre? I invite the minister or the Deputy First Minister to come and see the difference that the funding has made for the community.
I welcome the Cabinet Secretary for Transport’s recent visit to the south-west and her commitment to on-going engagement with all stakeholders who are keen to see improvements to the roads mentioned.
On wider investment planning, the Scottish Government must wait for the outcome of the United Kingdom Government spending review in June to understand what the impacts will be for Scotland. Thereafter, we will publish a reset of our infrastructure investment pipeline, which will set out investment plans for the coming years.
In relation to Emma Harper’s invite, I regularly visit the south of Scotland, as do my colleagues. If she wishes to write to us, we will, I hope, respond positively to the invitation.
Infrastructure investment is vital to economic growth in the south-west of Scotland and across the whole country, but we know that cost overruns are one of the significant barriers to that. A recent Boston Consulting Group report on the cost of infrastructure across the UK highlighted that rail in the UK costs three times as much per kilometre as it does in France, and road costs almost twice as much.
What analysis is the Scottish Government doing of why infrastructure costs more in Scotland, and how can we tackle that to deliver more infrastructure to deliver growth across Scotland?
The Scottish budget sets out more than £7 billion of capital spending to tackle issues ranging from child poverty to improved infrastructure across the country. Whether by the Scottish Futures Trust or other organisations in Scotland, a lot of work is undertaken to ensure that there is value for money.
There are always external factors that are outwith our control that can influence costs. We have recently seen the inflation crisis and the energy crisis, and there are other factors that can make costs rise unexpectedly for many infrastructure projects, which has serious implications for the rest of our budgets as a Government. I assure the member that a lot of attention is given to the issue.
“Quarterly Economic Indicator”
To ask the Scottish Government what its response is to the latest “Quarterly Economic Indicator” from the Scottish Chambers of Commerce and the Fraser of Allander Institute, which reportedly shows a business landscape that is characterised by flatlining demand, stalling investment and labour cost pressures. (S6O-04581)
The Scottish economy is resilient, with gross domestic product strengthening in the three months to January, low unemployment and strong earnings growth. However, we are already seeing the challenging impacts on businesses of the United Kingdom Government’s decision to increase employer national insurance contributions. The recent sharp rise in global economic uncertainty and volatility is, as we would all expect, further weighing on the economic outlook.
In responding to those challenges, we continue to work closely with Scottish businesses to ensure that they are well positioned for investment to create jobs and grow the economy.
I thank the minister for his response, but it is a landscape of flatlining demand and things are going in reverse. The latest “Quarterly Economic Indicator” found that business confidence has declined in all sectors in comparison with last year, taxation is the number 1 concern for businesses and labour costs are leading to pressures on operating costs. It also highlighted that Scotland is losing out on major UK contracts and investment opportunities because we simply do not have the workforce to deliver them. That position was backed up by the Confederation of British Industry Scotland, which is requesting that the Scottish Government commits to avoiding further tax divergence from the rest of the UK and to doing more on the Scottish skills shortage.
Does the minister agree with the assessment by the Scottish Chambers of Commerce, the Fraser of Allander Institute and CBI Scotland of the business landscape? What steps will be taken to support Scotland’s businesses?
I agree with the member that businesses in Scotland and the wider Scottish economy face many challenges at the moment. As I indicated in my previous answer, global uncertainty and other factors are certainly playing a role in that.
The Fraser of Allander Institute’s “Scottish Business Monitor” for quarter 1 of this year says that, in response to the increase in national insurance contributions, almost half of businesses surveyed have increased prices to pass on higher costs to customers, and almost half have reduced hiring or scaled back plans to increase employee headcount.
The member is right that taxation is a big issue, and increases to NI contributions introduced by the UK Government are causing a real headache for the Scottish business community. We also have higher energy costs and other issues.
As outlined in the recent budget that was passed by the Parliament, there are a lot of measures to help the business community in Scotland, not least more than £300 million for enterprise companies. There will be more opportunities for Parliament to have its say on those measures in the coming weeks.
The minister is keen to deflect responsibility for the flatlining of the economy on to others rather than accept his own responsibility. For example, housing policy—including in relation to home energy grants—has resulted in a massive decline in investment. What discussions has the minister had with his colleagues in other departments to make sure that they change their ways to encourage investment?
As the member may be aware, in recent weeks, there has been a lot more positive feedback from the Scottish housing sector in response to the changes that have been made by the Scottish Government. We take the issue very seriously. Having a good housing supply in the country is vitally important for the future of our economy, which includes the business community. Many parts of Scotland need more houses to ensure that they can attract skilled workers and that those workers will have somewhere to live. A lot of developments are now under way and there is more positivity in the sector, notwithstanding some of the wider pressures that are facing the economy, which were referred to in previous answers.
Green Industrial Strategy (Extended Producer Responsibility)
To ask the Scottish Government, regarding the implementation of its green industrial strategy, what discussions it has had with the United Kingdom Government regarding the introduction of extended producer responsibility. (S6O-04582)
We have been engaging with the UK Government and with the other devolved Governments to improve the UK-wide scheme, while also exploring new stewardship measures through our circular economy strategy and waste route map.
Last week, I convened a meeting with industry stakeholders as part of the cross-party group on beer and pubs. They fear that EPR is fast becoming a £1.1 billion tax and regulatory burden that brings risks to a range of sectors, including the glass industry, soft drinks, distilling, hospitality and retail, and that it will ultimately hit consumers and result in increased inflation. There is still no clarity as to how much the producers will ultimately have to pay for EPR waste, the fees for which are vastly more expensive than in other countries such as Ireland, nor how councils will secure the revenues that are generated by it. Will the minister work urgently with other Scottish ministers in the Scottish Government, which forms part of the four-nation working group on EPR, to ensure that those real concerns are heard by the Department for Environment, Food and Rural Affairs and the scheme administrators?
I am happy to make that commitment to the member and to the stakeholders that he referenced. We will listen carefully to the comments that they make and we will ensure that they are fed back to the UK Government. Craig Hoy has asked a number of portfolio questions in recent weeks on EPR schemes. However, I would be more than happy to look closely at all the specific issues and see what progress can be made on each particular element.
Acting in line with the polluter pays principle is a key part of enabling a just transition for communities across Scotland through effective waste management and reduction. Will the Deputy First Minister say any more about the Scottish Government’s work to achieve that in partnership with Zero Waste Scotland?
Be as brief as possible, Deputy First Minister.
The polluter pays principle is all about ensuring that producers take greater responsibility for the waste that they create. The introduction of EPR for packaging is intended to shift costs from local authorities to producers, which will generate an estimated £160 million every year. However, we have to make sure that we take people with us and we will consult and listen carefully to stakeholders while raising those issues with the UK Government, as I committed to doing in my earlier answer.
Tall Ships Races Aberdeen 2025
To ask the Scottish Government what engagement it has had with stakeholders regarding the tall ships races Aberdeen 2025. (S6O-04583)
I am delighted that the Scottish Government, with financial support via VisitScotland, was able to provide the tall ships races Aberdeen 2025 with an award of almost £160,000 to support event delivery costs. VisitScotland staff are represented on the various stakeholder groups that were established to plan and organise the event, including the local organising committee and event co-ordination group. The tall ships races event features prominently in VisitScotland’s current and on-going marketing campaign activity.
The tall ships races event is set to be a major event for Aberdeen and the north-east, with projections of around 400,000 visitors and an estimated £30 million boost to the local economy. The event will support businesses across the hospitality, retail and tourism sectors and it will support wider community engagement, such as sail training for young people. Hosting the tall ships will also enhance Aberdeen’s international reputation as a vibrant, welcoming city and help to secure a lasting legacy for major events.
Will the minister further outline how the Scottish Government is promoting Scotland’s reputation as a leading events destination, maximising the opportunities that are presented by events such as the tall ships races that will ensure a lasting positive impact on the region and across Scotland?
The member outlines well the massive benefits for Aberdeen and the north-east from this really exciting event, and I pay tribute to all the people who have played a role in working towards making it such a success. Of course, it brings a big economic benefit to the area as well.
As a minister, I want to play a role in maintaining Scotland’s position as a leading events destination. We do a lot to enhance Scotland’s reputation as the perfect stage for events, working alongside partners to implement the refreshed national events strategy.
Scotland is the place to be in the coming years. We have the tall ships event in Aberdeen and the Orkney international island games in 2025, the Commonwealth games in 2026, the Tour de France grand depart in 2027 and the Union of European Football Associations European football championship in 2028. The next three years will be really exciting for the whole country, including the exciting event in Aberdeen.
That concludes portfolio questions on Deputy First Minister responsibilities, economy and Gaelic. There will be a brief pause before we move to the next item to allow for a changeover of front-bench members.
Finance and Local Government
Private Finance Initiative Contracts (East Dunbartonshire Council)
To ask the Scottish Government how much East Dunbartonshire Council has spent on PFI contracts in the last year. (S6O-04584)
In 2024-25, East Dunbartonshire Council paid £19.6 million in unitary charges for its schools PFI contract. The contract’s procurement began in 2005. The capital value of the project was £134 million. However, by the time that the PFI contract concludes in 2038-39, the council will have paid more than £550 million on it.
Does the minister agree that Labour’s PFI legacies and the employer national insurance hike attacks on jobs are placing a burden on councils throughout Scotland?
Yes, of course I do. That is why, in this year’s budget, to help to lessen the burden, we provided local government with one of the largest increases in funding in recent times.
We have always made clear that PFI has not delivered best value for the taxpayer, and that is why we brought it to an end. However, we are, of course, still paying for the legacy of Labour’s mistakes.
Those members on the Scottish National Party benches who are so keen to point out their contentions with the PFI contracts stay conveniently quiet about their party’s repeated historical use of non-profit distributing contracts. Audit Scotland has found that those NPD contracts, which are a type of PFI scheme, turn out to be significantly more expensive to taxpayers than using traditional forms of Government project financing.
What is the current financial burden of NPD contracts to councils across my West Scotland region?
Pam Gosal is absolutely right: the cheapest way to fund projects is for Governments to borrow. Of course, Scotland has strict limits on how much it can borrow due to the policies of the United Kingdom Government. Were we a normal, independent country, we would be able to borrow at lower rates to fund capital projects.
On the non-profit distributing programme, the key difference between those programmes and traditional PFIs, which were championed by the Conservative and Labour parties, is that NPD programmes are profit capped and are profit sharing. Those contracts provide greater transparency and more flexibility than PFI and are considerably cheaper.
Question 2 is from Maggie Chapman, who joins us remotely.
Aberdeenshire Council (Finances)
To ask the Scottish Government what discussions it has had with Aberdeenshire Council regarding the reported financial pressures that it is experiencing. (S6O-04585)
Ministers and officials regularly meet the Convention of Scottish Local Authorities and individual local authorities to ensure that local government has the capacity and resources that are required to continue to provide communities across Scotland with the high-quality front-line services that they expect and deserve.
Tomorrow, people will gather in Fraserburgh to discuss how to prevent proposed council cuts at day centres for disabled people. The proposals would result in provision of day care being limited to severely disabled people, after the council has redefined what counts as severely disabled to reduce eligibility. Transport provision and funding for disabled people to physically get to day care centres might be cut, too, and fees for day care centre places might be increased.
The proposals, and too many others like them, will have devastating effects on the lives of disabled people and their carers. Other services, including the stretched national health service, will have to pick up the pieces. What assurances can the cabinet secretary give to disabled people, their carers and others who are concerned about the proposals, as well as those who will be left to pick up the pieces?
I first say that I understand Maggie Chapman’s concern and appreciate the value of day centres and other services for disabled people. Those are proposals by Aberdeenshire Council, but I urge it to listen to the representations that Maggie Chapman has described. We have ensured that Aberdeenshire Council is receiving an extra £42 million, or an additional 7.2 per cent, compared with 2024-25. Taken together with its increase in council tax, that is an additional £58.1 million to support front-line services in 2025-26. I therefore certainly hope that, as Maggie Chapman has alluded to, the council will listen to those local representations.
I welcome the fact that this year’s Scottish budget provides an increase of more than 7 per cent in funding for Aberdeenshire Council. Will the minister outline how that additional funding should help to alleviate financial pressures for the local authority and provide additional opportunities so that it can improve our communities as a result?
Councils and their employees play a vital role in communities across Scotland, which is why the Scottish Government has made available record funding this year. Although I recognise that significant challenges remain across the public sector, I expect that the additional funding will allow Aberdeenshire Council and other councils to invest in effective, efficient and sustainable local services.
Visitor Levy (Scotland) Act 2024
To ask the Scottish Government whether it will provide an update on any discussions it has had with the tourism sector and other stakeholders regarding amending the Visitor Levy (Scotland) Act 2024. (S6O-04586)
The Scottish Government receives regular input from the tourism sector regarding the visitor levy, and we are well aware of the sector’s concerns with regard to particular aspects of the levy. In March this year, both I and the First Minister spoke and answered questions at the Scottish Tourism Alliance business breakfast, at which the visitor levy was a subject of discussion. In the next couple of weeks, I will meet representatives of the Scottish Tourism Alliance and the Association of Scotland’s Self-Caterers to discuss those matters further.
While the Scottish Government continues to prevaricate, councils across Scotland are pushing ahead with consultations on implementing the new tax. However, if Scottish ministers are engaging in good faith with tourism stakeholders and genuinely considering amending the visitor levy, that means that people are being asked to have their say on a levy when they have no idea what the final form might be.
If the Scottish National Party is committed to pushing ahead with the new tax, which many of us continue to oppose, will the minister at least consider calls from the tourism sector, including the Scottish Tourism Alliance, for implementation to be paused for at least six months to allow better time to engage with the sector on potential improvements, such as introducing a flat fee and reducing further burdens on tourism businesses by removing their role in collecting the new tax?
As I said, we continue to engage with the sector on the visitor levy, but it is important to recognise that the levy will potentially raise significant amounts of money for local government and certain councils in particular. On the one hand, members on the Conservative benches complain that local government does not have enough funds, but they then complain when we take forward proposals to increase that funding, which does not really stack up. As I said, we are engaging in good faith with the sector to explore how we can take forward the visitor levy and address some of the challenges that the sector has brought before us.
Will the minister please outline what positive conversations the Scottish Government has had with local authorities that plan to introduce a visitor levy in the near future and how it will encourage local authorities to reinvest revenue from the levy in their visitor economies?
The Scottish Government has had and is having a range of discussions with stakeholders on the implementation of the Visitor Levy (Scotland) Act 2024, which requires that a visitor levy scheme’s objectives
“must relate to developing, supporting or sustaining facilities or services which are substantially for or used by persons visiting the scheme area”.
That measure is welcomed not only by local authorities but by the business community. Although it is for local authorities to determine what they might reinvest the additional revenue in, the act requires them to measure and report on the achievement of the scheme’s objectives and publish an annual report, which should set out how much revenue has been collected and how it has been used to support, in particular, the visitor economy.
Will the minister clarify whether the Government is considering delaying the visitor levy’s introduction? Would that include a change to the regulations?
The visitor levy is moving forward, and Daniel Johnson will know that steps are well advanced in Edinburgh to start the implementation of a levy in the middle part of next year. To understand the challenges that the levy is putting on the sector, we are having discussions with a range of stakeholders, and we are keen to explore what actions could be taken to mitigate the challenges wherever possible. Discussions continue with a range of local authorities as well.
Edinburgh City Plan 2040
To ask the Scottish Government what recent discussions it has had with the City of Edinburgh Council regarding the progress of the Edinburgh city plan 2040. (S6O-04588)
Edinburgh city plan 2040 will be the City of Edinburgh Council’s next local development plan, which is at a very early stage in its preparation. We have not discussed it with the council.
On 25 March, I met Edinburgh council’s planning convener and its head of planning to discuss matters that are linked to the current city plan, which is Edinburgh city plan 2030. At that meeting, we discussed guidance on developer contributions, an infrastructure levy and future housing delivery in Granton and west Edinburgh.
Many community organisations across the city, such as Wester Hailes Community Trust in my constituency of Edinburgh Pentlands, have produced local place plans for the deadline of August this year, at the cost of great time and expense. What responsibility lies with the local authority to take into consideration those local place plans, which are the aspirations of local communities?
Local place plans are a positive way for communities to have a stronger voice in how they want their areas to develop. I commend the communities in Gordon MacDonald’s constituency for producing those local place plans.
Planning authorities are required by law to take into account any registered local place plan when they are preparing a local development plan. It is for planning authorities to determine what weight and consideration to give to elements of a local place plan, but I encourage them to do so. I am happy to provide Gordon MacDonald and other members with a link to the guidance that is published for communities and planning authorities on local development planning and local place plans, which provides further helpful information.
Question 6 is from Jackie Baillie, who joins us remotely.
Integration Joint Boards (Finances)
To ask the Scottish Government what discussions the finance secretary has had with ministerial colleagues regarding a different model for allocating funding to integration joint boards, in light of a recent Accounts Commission report highlighting the unsustainable gaps in their finances. (S6O-04589)
We are sympathetic to the fact that the social care sector faces pressures, and we are working to understand the current financial viability picture.
Health and social care services are formally integrated under the Public Bodies (Joint Working) (Scotland) Act 2014, which sets in law the requirement for local authorities and health boards to work together and create a health and social care partnership to deliver services. IJBs must receive their delegated budgets via those partners, as direct allocations to IJBs are not possible under the 2014 act. Under current legislation, a different funding model is not possible.
The Accounts Commission reported a £560 million deficit in IJB budgets, which is having a hugely damaging impact on some of the most vulnerable people who need social care. Across Scotland, cuts are being made. In my constituency, community link workers are being removed and the work connect project, which provides training and work opportunities for people with learning disabilities, is being closed. Money from IJB reserves was clawed back by the Scottish National Party Government, so IJBs are no longer able to fund critical projects. What comfort can the minister offer to the most vulnerable people in our society who are losing their social care support because of the actions of his Government?
As Jackie Baillie knows fine well, and as I said in my earlier answer, IJBs are funded directly through health boards and local government in partnership. That is the whole point of the integration of health and social care services under the 2014 act. As she also knows well, the Government has provided health boards and local government with record funding this year to enable them, in turn, to fund IJBs, so that they can provide the services that she talked about. We will continue to engage with partners to understand how the Government can continue to support IJB funding through health boards and local government, as the 2014 act requires.
There is a lot of interest in asking supplementary questions. I will try to get everybody in, but questions and answers will need to be brief.
How much has the Scottish Government increased investment in health and social care integration since 2021-22?
The 2025-26 budget includes almost £2.2 billion for social care integration. That means that, since 2021-22, the Scottish Government has increased social care investment by almost £1.2 billion, thereby exceeding our commitment to increase funding by 25 per cent by more than £350 million.
IJBs in Scotland clearly face a cash crisis. Yesterday, in evidence to the Finance and Public Administration Committee, the Scottish Fiscal Commission warned of a health and social care budget time bomb, given Scotland’s demographics. It warned that an ageing population means that a higher number of people are eligible for care under the current criteria, that those people require more care and that more public spending is therefore needed. Similarly, the SFC’s “Fiscal Sustainability Report” warns:
“The growth in health spending shown in our projections is likely to be unsustainable.”
Taken alongside a record projected increase in welfare spending, that shows that the Government’s whole budget appears to be unsustainable. What is the Government’s solution to the sustainability challenge that it faces?
Wow—I do not know where to start with that question. The Tories want us to cut tax and have less money available to spend, but they are also complaining because health spending is projected to increase. We have kept pace with increases in health spending by providing health boards and local authorities with record funding, so that they, in turn, can fund IJBs. We have done all that while continuing to balance our budget.
There are, of course, longer-term challenges, which we are addressing through our fiscal sustainability delivery plan and our public service reform activity. The Government will continue to provide record funding for health and social care while balancing our budget.
The Government has been blowing hot and cold on this issue. Today, we have heard very little recognition of the human impact that cuts to IJB funding are having, and Neil Gray has brushed off any suggestion that the Government has a responsibility in that regard.
However, just last month, during First Minister’s question time, the First Minister said:
“There will need to be a wider conversation between the Government and the integration joint board to address the concerns that have been properly put to me by members today.”—[Official Report, 27 March 2025; c 18-19.]
His tone was very open. Does the Government recognise that there would be a broad cross-party welcome if the Government were to accept responsibility for taking forward the wider conversation that the First Minister promised? Will that happen?
I will let Patrick Harvie know the activity that is taking place in that regard. The Government is very much engaged in such discussions. In February, the Cabinet Secretary for Health and Social Care, along with representatives from the Convention of Scottish Local Authorities, invited the Society of Local Authority Chief Executives and Senior Managers, Scottish Care and the Coalition of Care and Support Providers in Scotland to a round-table meeting to discuss the very issue that he talks about—the financial viability of the social care sector. Through that meeting, a response group for financial viability was commissioned to further explore the risks to the sector as well as potential mitigations.
In April, the Minister for Social Care, Mental Wellbeing and Sport met chairs, chief officers and chief financial officers from all IJBs in Scotland to discuss the financial challenges. That followed a meeting that she had in March. We continue to engage with the sector, and we understand the challenges that it faces, as I outlined in my previous answer.
As I said, we recognise that the funding routes are through health boards and local authorities, which, in turn, have received record funding. However, we also recognise the impact that IJB performance has on local communities and we will continue to engage proactively with the sector and others to be able to address those challenges.
Very briefly, Willie Rennie.
The Government loves round tables and response groups as a response to any particular crisis—and this is a crisis, as people in Fife are desperate for social care but services were slashed and people suffered because of Fife’s £37 million overspend last year. When will the Government get a grip of the problem, which is happening year after year?
As I indicated, we are providing record funding to health boards and local authorities, which in turn have a responsibility to fund IJBs.
As I said, we are also engaging with the sector. Mr Rennie can call it what he likes, but I call it engagement, and at the end of the day, that engagement is hugely important. If we were not engaging, I am sure that he would be one of the first to complain that we were not having those round tables and other discussions to move the challenge forward.
We are having that engagement and we are constructively working with partners to resolve the issue. However, as I said, we have also provided record funding to health boards and local government, which in turn fund IJBs.
City of Edinburgh Council (Budget)
To ask the Scottish Government what engagement it has had with the City of Edinburgh Council regarding its allocated budget. (S6O-04590)
The Scottish Government routinely engages with the Convention of Scottish Local Authorities and individual local authorities to cover a range of topics, including current and future budgets.
Thank you for that succinct answer.
Last week, at Edinburgh’s housing, homelessness and fair work committee, housing allocations were frozen and now only people with gold priority will be considered for a new council home. All others looking to move home within the city will need to wait even longer.
Edinburgh receives a share of around 6 per cent of the affordable housing budget, using a COSLA-based formula that disadvantages the capital. Meanwhile, the acquisitions budget is allocated based on need, which means that Edinburgh receives more than a third. Will the cabinet secretary urgently review the funding formula to ensure that Edinburgh gets its fair and needed share of moneys?
As other local authorities have done, the City of Edinburgh Council has received an extra £60 million, or an additional 5.9 per cent of funding, compared to 2024-25, and it will receive £73.9 million—an extra £8.1 million—in capital funding.
Sue Webber, in many ways, answered the question herself, because she described the funding formula as being COSLA based. That funding formula is a needs-based formula that is agreed with COSLA on behalf of 32 local authorities each year. If I were to step in and disregard the COSLA agreement, which it arrived at on behalf of 32 local authorities, people would be popping up across the chamber to criticise me for doing so.
I point out to Sue Webber that she cannot support £1 billion of unfunded tax cuts at the same time as calling for more money for the City of Edinburgh Council or anyone else.
Very briefly, Sarah Boyack.
Is the cabinet secretary aware of the cuts that are being made to dozens of vital charities by the Edinburgh integration joint board, which means that the City of Edinburgh Council must now step in to fund those organisations—given the massive pressures that NHS Lothian is under and our growing population—to keep people well and healthy?
I say to Sarah Boyack that, of course, we understand the pressures on public services, which are felt across these islands because of the demographic challenges that we all understand. However, the Government has given record levels of investment—more than £15 billion—to local government and £21 billion to the national health service and social care. Those are record levels of funding. We expect councils and the health service to ensure that they are adequately funding local services and third sector organisations, which do a very important job.
Employer National Insurance Contributions Increase (Impact on Public Finances)
To ask the Scottish Government whether it will provide an update on the potential impact on Scotland’s public finances as a result of the United Kingdom Government increasing employer national insurance contributions. (S6O-04591)
The Labour UK Government’s hike in employer national insurance contributions adds more than £700 million in costs to the delivery of public services such as the national health service, schools, local government, universities, social care providers and a wide range of third sector organisations.
Despite our calls for full reimbursement, it is clear that the support from the UK Government to meet those costs will fall more than £400 million short of what is required.
I am sure that the cabinet secretary will share my concerns that Labour’s brutal employer national insurance contributions increase may risk the financial viability of some businesses and, in doing so, compound the impact on Scotland’s public finances. Does she agree that the UK Government must take responsibility for that and appropriately support businesses across Scotland, which are facing very specific UK-created pressures?
Absolutely. In recognition of the damaging implications of that increase for businesses, public services and communities, the Scottish Government has called on the UK Government to reverse it. The increase will, of course, lead to opportunity costs in terms of money that could otherwise have provided the additional funding that Sarah Boyack was calling for, or additional funding for local authorities or the health service. Those opportunity costs are resulting in money for public services going straight back to the Treasury, and that is totally unacceptable.
That concludes portfolio questions on finance and local government. There will be a brief pause before we move to the next item of business to allow front-bench teams to change.