Chamber and committees

In my old world of consultancy, I would also be adding up the hours that are spent on the toing and froing, because it seems extraordinarily inefficient. All that complexity is, in effect, a waste of public funds.

I have a daft wee question that goes back to the Scottish Fiscal Commission and the committee’s comment under point 49 that it

“accepts that there may always be a degree of ‘political spin’ about how the level of UK Government funding affects the Scottish Budget.”

You have come back and made the point that there is no difference between the totality of funding in the Scottish budget document and the Scottish Fiscal Commission one, but that the issue centres around comparison with previous years. You also make the point that the Scottish Fiscal Commission uses estimates of 2021 funding.

My simple question is: given the complexity in those late figures emerging, surely it is better to compare actuals, because the only time that a budget is accurate is when it contains actuals? Will you share some reflections on that? It seems that we are trying to spin plates—and that is not assisting our job. I would appreciate a bit more flavour on that.

I have one final wee question. You talked about prudent assessment of the potential scale of additional funds. That term “prudent” has a particular meaning. What do you regard as prudent? What margin of error have you built in?

When I was an MP, I sat on a Finance Bill committee and on the Business, Energy and Industrial Strategy Select Committee, and my entry in the register of members’ interests shows that I remain an ambassador for the all-party parliamentary group for fair business banking. In those roles, I dealt directly with UK Treasury ministers, so it is a pleasure to join this Parliament and to deal with such a competent finance and economy team.

However, the greatest contrast is not at the personal level, but at the level of the powers and constraints imposed on the budget-setting process.

We face major supply-side shocks caused by Brexit and the pandemic as well as significant climate issues requiring sustained action towards our net zero ambitions. Those three challenges have one element in common: the need for significant investment in Scotland’s infrastructure and economic development. To that end, I commend the provision of significant support for the three economic development agencies, with spending at its highest level since 2010 despite the wider financial challenges of setting this budget.

However, the constraints on the Scottish Government mean that we do not have sufficient powers to borrow to invest on the scale that is required.

Perhaps after I make this point. That is not just my view but also that of Nigel Wilson, the chief executive of Legal and General. At the recent launch of Legal and General’s latest version of the rebuilding Britain index, he called for a massive investment boom and for increased borrowing powers for the devolved Administrations.

The political narrative thus far from the Tories is to ask Scotland to give thanks for their largesse, but they fail to mention the ways in which the Scottish people have, for generations, bankrolled the UK Government.

According to the UK Debt Management Office, UK Government borrowing currently stands at more than £2 trillion. Most of that is funded through the issuance of gilts, with purchases made by pension funds, investment trusts and some individuals. That is just one of the ways in which Scots lend money to the UK Government.

Not at the moment.

There is another route whereby we Scots, in return, show our largesse. Some of the more mature members of the Parliament may hold premium bonds, which provide cheap borrowing for the UK Government, given that only about 1 per cent per annum is distributed through winnings. At the moment, the total value of UK premium bonds is £114 billion, which represents about 5 per cent of UK Government debt. We can therefore estimate that, through that relatively small financial vehicle alone, Scots are currently lending the UK Government almost £9.5 billion.

If we consider that in another way, we can see that, through premium bonds alone, Scots have on loan to the UK Government twice as much as the Scottish Government is allowed to borrow in total for capital and revenue combined. The borrowing limits represent a quite ridiculous constraint on the Scottish Government and they are dwarfed by the amount that ordinary Scots lend to the UK Government.

When they ask me, I will be delighted. I thank the member for suggesting that.

Another area where the Scottish Government is denied the power to act is financial crime. Stopping institutional crime is predominantly the preserve of UK authorities such as Companies House and HMRC, which do a poor job of preventing abuse of the financial system. Only this week, Lord Agnew, who was a Treasury and Cabinet Office minister, resigned over the UK Government’s lamentable track record on Covid fraud, stating that the Treasury shows no interest in tackling the issue.

On the same day, Spotlight on Corruption published a report estimating that financial crime costs the UK economy £290 billion per year. The UK Government has consistently failed to act on multiple calls over years to tackle large-scale financial corruption, as I know only too well from my work with the APPG that I mentioned. To put that figure another way, I note that the UK Government is failing to act on financial crime that costs approximately 276 times the annual borrowing powers of the Scottish Government.

Presiding Officer, excuse my frustration about being boxed into a system in which our people in Scotland lend to an incompetent Tory Government that shields large-scale financial corruption, denies our Scottish Government access to proper borrowing powers and subjects our budget to constant cuts.

That is why I remain passionately ambitious for change in Scotland. We seek powers for a purpose. Scotland is our business and the SNP means business. Only by having the normal financial powers of an independent country can we better fund the Scottish National Investment Bank, invest more in our infrastructure and increase our support for new developments such as hydrogen technologies.

On the contrast between the two Governments, I would be interested to hear whether any Tory member is prepared to condemn the fact that, under the regulation of the Tory Government, £290 billion is lost to financial crime every year. That has a direct consequence for the money that is available to the Scottish Government and, in turn, to councils. Will Mr Fraser condemn the UK Government’s lack of action on that?

Of course I am not saying that. I am saying that I do not have the paucity of ambition that means I would go cap in hand, asking for money. We are a wealthy country and a wealthy society, and I want to see a lot more ambition in this Parliament for betterment.

Yes. You have accurately depicted the wider environment in regard to rules—you mentioned the WTO and so on—but I am asking about the general concept of mandation to effect change in the market, including with regard to the net zero aspect.

I also want to pick up on the issue of procurement, but with regard to the Finance and Public Administration Committee report that was mentioned, I should say that I am a member of that committee and I note that the Scottish Fiscal Commission expects the Scottish labour participation rate to decline by around 0.2 percentage points per year relative to the rest of the UK. As a result, the figure is even less than you suggested earlier, minister.

I have a couple of questions about procurement. Some businesses have asked about the possibility of more pipeline visibility. I think that you mentioned that many businesses will create a component product as an offering in order to make a bid, and that sort of approach would give them time to do so.

My second question is around the use of mandation to help to develop supply chains and further target net zero. We have seen comments about that from the Construction Scotland Innovation Centre.