Chamber and committees

It is great privilege to be able to contribute to the debate on the cost of living crisis, which is undoubtedly the single most important issue that millions of families across the country face.

With Ofgem’s announcement today that the energy price cap is set to rise by 54 per cent—meaning that families could be hammered with an extra £700 on top of their existing energy bills—we have to consider that this is actually an emergency debate, because people are desperately worried. They are worried about their income, their job security and their ever-increasing bills that will suffocate and snuff out what little disposable income they have left. They are concerned about putting the heating on, putting food on the table and ensuring that they can keep a roof over their families’ heads. Frankly, they are baffled by just how little people in positions of power are doing to help them through what is likely to be the worst cost of living crisis in living memory.

Although the lack of action from Government at all levels is unforgivable, it is nothing when compared with deliberate and calculated actions such as cutting the universal credit uplift at this time, and placing on unemployed people ridiculous four-week deadlines to secure a job. That callousness will push millions into more poverty and destitution. In Glasgow alone, more than 80,000 people are in receipt of universal credit. To put that into context, that number could have filled Celtic park last night with 20,000 people still left outside it. We should be in no doubt that families will suffer tremendous hardship because of that single decision.

As someone with lived experience of being on universal credit, I find it sickening and cowardly that the richest man ever to have sat in the House of Commons—the Chancellor of the Exchequer, Rishi Sunak—thinks that the decision is in some way acceptable. Already one in four children in Scotland lives in poverty. Are we really going to stand here and tell ourselves that those decisions will not make that intolerable situation worse?

We know that the price of energy is skyrocketing, but so, too, are the costs of other necessities. Just last week, the Daily Record reported an increase of nearly 20 per cent on the price of a weekly food shop from the price in January last year. Nationally, food and drink prices were 4.2 per cent higher in the year to December 2021.

How do we fix the situation? I have no doubt that we will hear the usual musings from Conservative members about a strong economy and low taxation stimulating growth, and about how getting people into work is their best route out of poverty. However, when we look at the reality, rather than listen to the rhetoric, we see that what they say would be outrageous, were it not so risible.

We saw that yesterday, in the debate on the Scottish rate resolution. We continually heard Conservative MSPs talking about how Scotland is the highest-taxed part of the UK, while the Conservatives are simultaneously hiking national insurance and putting more pressure on hard-working families. That hike in national insurance will raise an estimated £12 billion. Is not it ironic that that will not even cover the £10 billion that has been wasted on personal protective equipment and the £4 billion-worth of fraudulent applications for public funds that have been written off by the Treasury in recent weeks?

Fundamentally, we need to ask what we can do to help people right now. Labour’s motion outlines what we believe would alleviate some of the pressures on families. On energy costs, we would cut VAT for 12 months and we would implement a windfall tax on companies that are seeing increased oil and gas profits. That would offset virtually all the increase in energy prices that it is speculated will come this year, and it would help 9 million families across the UK. The chancellor has offered just £150 in October and a £200 loan, which will not help at all because it will have to be paid back. Today, Shell reported its highest quarterly profits in eight years, so a windfall tax seems to be a small price for it to pay. That windfall tax would allow the Government to save families around £200 on their energy costs alone.

We need to go much further. I like to think that our approach is something that all members in the chamber could support as a baseline. I am confident that we all agree that we need to help people now. We cannot continue along the same track, pushing people further into poverty because the Government is simply too scared to put its money where its mouth is.

To ask the Scottish Government how it will support the fishing industry to grow to meet any increased capacity within the catching and processing sectors. (S6O-00709)

In Glasgow, the recently published transport plan described how the effort to set up a franchising scheme would rely on untested legislation, cost the local transport authority £4 million to £15 million to build a business case and take at least seven years to implement. I was rather disappointed to hear that lack of ambition from Glasgow City Council officers. Would the minister like to engage with Glasgow City Council and other stakeholders, including parliamentarians in the city, to ensure that we can achieve a franchising system for greater Glasgow without those rather unambitious timescales?

I am pleased to close for Labour—as I always am—in this important debate on the Scottish income tax rate resolution for the financial year 2022-23.

As was the case last year, the debate comes at a slightly unusual time in the budget process, but I appreciate and understand why the Government has acted in the way that it has, and I welcome the certainty that it will bring to families and businesses as we move forward.

Labour will not oppose the rate resolution tonight, but I caution the Government against taking that as Labour wholly endorsing the budget proposals or, indeed, the income tax proposals that are contained in the resolution. We have concerns about the rates and, in particular, the disproportionate impact that they will have on lower earners compared with higher earners.

According to the Scottish Parliament information centre, people who earn less than £25,000 a year will pay only 65p less tax in 2022-23 than they did the previous year. In contrast, those who earn more than £25,000 a year will pay £4.57 less tax than they did in the previous year. As my colleague Daniel Johnson pointed out, the inflection point here is around £28,000. Even those who are under the threshold of £27,850 will make an annual saving of only £21, relative to those on the equivalent rate in the rest of the UK. We are talking about a very marginal saving and one that is pretty inconsequential, given the alarming rise in the cost of living across the UK. Therefore, although it is technically true that Scotland is somehow the most progressively taxed part of the UK, that claim is marginal and the proposed level of taxation will not make a meaningful impact on the average household.

We face a cost-of-living crisis. With the price of necessities such as energy, food and petrol rising across the board, inflation looks to be on course to hit 6 per cent over the year. That brings with it the prospect of the Bank of England’s monetary policy committee increasing interest rates. In that context, it seems rather bizarre that the Conservatives are griping about Scotland being the highest-taxed part of the UK when their colleagues in the UK Government are proposing to hike national insurance contributions. That is a regressive measure, which will disproportionately hammer those on the lowest incomes.

I note the fiscal effects that the pandemic has had, but I recall that, during the election campaign that was fought in 2019, the Conservatives committed to investing in improving social care and the national health service and providing a care service that was fit for purpose while making a commitment not to raise taxes—those improvements were to be funded through borrowing. With borrowing at such low rates—the current rates of interest are negligible—that would seem to be a very worthwhile investment to make instead of hammering the lowest-income households. The Conservatives’ proposed policy of national insurance increases is fiscally regressive and I regard it as indefensible.

On that basis, I think that it is fair that the Government in Scotland is choosing to keep rates broadly in line with where they were last year. However, that should not preclude us from having a serious conversation across civic Scotland about how we view taxation and the priorities for the next few years.

It is evident from the Scottish Fiscal Commission’s December update that the Scottish economy faces several challenges. However, the most pertinent of those is the likelihood of a £190 million black hole in income tax revenues in the coming financial year and a potential £417 million funding gap in the financial year 2026-27. Although I accept that right now—in the midst of a pandemic and the cost-of-living crisis—may not be the time to have a full and frank conversation about tax rates more generally, we will need to do that in the near future, before that potential funding gap hits us. We already see the impact of timid tax policies and unambitious Government fiscal policy. It leads to a £250 million cut to local authority budgets in the coming financial year, cuts to skills and education budgets and a curtailing of investment in public services and infrastructure. We therefore need to have that mature conversation in the coming months and years.

This Government promised to replace the regressive and inefficient council tax in 2007, but it is now encouraging the use of council tax-raising powers to offset the disproportionate cuts that it has imposed on local authorities. The people who are suffering most in all of this are our constituents, many of whom are vulnerable and unsure about how they will navigate the next few years. These income tax proposals will do very little to alleviate their concerns. I urge the Government to bring forward proposals for how we can shift the tax burden away from hard-working families and towards multinational corporations, the top 1 per cent of earners and the owners of large, rent-seeking assets such as land. We should also look towards future technological disruptions, with the transition to electric highways, the move away from internal combustion engines and petrol, and the development of local heat networks, which will move utility ownership to a more local level.

Today is not necessarily the time or place for those detailed discussions, but it is clear that timid and income-centric policies will not result in the revenue that is required to see Scotland prosper. It is therefore a conversation that needs to be had. For the purposes of today, Labour will not oppose the resolution. However, I again urge the Government to avoid taking that as any kind of endorsement of its policies more generally.

I thank the member for his intervention and note the commitment of the Greens to protecting local government funding and increasing it in real terms every year of this session of Parliament, although that has obviously not been achieved.

As for how we address the tax gap and increase revenues, we have presented creative ideas. In fact, there was a cross-party commission, including the member’s former colleague Andy Wightman, that suggested introducing a land value tax that would have raised an additional £12 billion in revenues for Scotland. We could be introducing and pushing such ideas now.

Where is the sense of urgency coming out of the pandemic? Where is the idea of fundamental renewal? The local government settlement that was achieved in 1996 has fundamentally failed and we need a root-and-branch review of local government. Devolution has failed to address that in two decades. I hope that we can all agree that that needs to happen sooner rather than later.

The impact on funding is evident to citizens across the country, and nowhere more so than in Glasgow. We have seen communities having to picket their libraries, week in and week out, to protect the most fundamental services. We have seen facilities such as the iconic People’s Palace lying empty. If Labour had done that when it was in administration, we would have been hounded relentlessly by the SNP on a weekly basis yet, when the SNP does it, it passes without comment. Facilities in Dennistoun such as the Whitehill pool are on the brink of collapse because of repair backlogs. The city’s cleansing department is falling apart.

Our councils deserve better, workers deserve better and, quite frankly, Scotland deserves better. It is for that fundamental reason that Labour cannot possibly support the budget at stage 1, given its severity and the civic vandalism that it proposes. I urge members to support our reasoned amendment, in an effort to salvage the budget before it is too late.

Today has been a frustrating experience for many members. As colleagues have outlined, this is meant to be a recovery budget and a bold statement of intent for the country. Instead, it fails to address the lasting impact of Covid, fails our local authorities and public sector workers and risks compounding the financial challenges that households across Scotland face.

As my friend Jackie Baillie has said, the 48p pay increase for social care workers is unacceptable, given the tireless work that they have put in as part of the national effort to tackle the virus. The Government should treat fair pay for workers as an urgent priority and commit to an immediate £12 an hour settlement, moving towards a £15 an hour baseline as soon as possible, which would be in line with our aspirations for the national minimum wage. If only all health consequentials had been protected, that would have been a mechanism to deliver the measure—it would have driven wealth back into the lowest-paid sectors of the economy.

I thank my Glasgow colleague Pam Duncan-Glancy for her strong case for further increasing the Scottish child payment if we are to have a hope of coming close to the target of reducing child poverty to 10 per cent in relative terms by 2030 from our current situation of 25 per cent and flatlining or potentially getting worse in the coming year. The Fraser of Allander Institute’s modelling has said that Scotland could meet its child poverty targets. Under all three of the published policy models, we would succeed in meeting the targets, and all three of them include a significant increase to the Scottish child payment.

The payment might well be game-changing, as the Child Poverty Action Group has said, but I am afraid that the Scottish Government is playing that game very badly indeed. In the face of the cost of living crisis, a commitment from Government to further doubling the payment is therefore even more pertinent, and we wish to see that happen in the current financial year.

It makes sound economic sense to do that. Think about the tax base underperforming that of the UK. Surely, the lowest income households need every penny, because every penny will be spent in the economy, creating a multiplier effect that will repay itself in due course and increase the tax base in time. That is what we call a virtuous cycle rather than a vicious cycle, and if there were more economists rather than accountants in Government, perhaps we would have that sort of thinking at the heart of what is going on in the budget.

I turn to the cuts that local authorities face. Since 2013, the Scottish Government’s revenue fiscal resource budget limit has increased by 3.1 per cent. Despite that, the funding that it has allocated to councils has decreased by 2.4 per cent. Today’s starting point was therefore a cut of £371 million to councils across Scotland. It has been ameliorated by the announcement of an additional £121 million that has been pulled out of the bag. Councillors across Scotland might be grateful for that, but I doubt it, because it is cold comfort when it leaves them with £250 million more to cut.

How will they do that? They face an invidious choice. This is a one-year patch-up job in a year when there are council elections. The Government has put local authorities in an impossible situation in which they will have to consider making cuts to local services and increasing the price of accessing local amenities when people already face a cost of living crisis, or hiking the regressive and obsolete council tax, which the Government pledged to axe in 2007 to make up for that critical and fundamental lack of funding.

Glasgow City Council’s draft budget options for the next financial year include horrific proposals to offset a funding gap of £33.9 million by axing a holiday scheme for children who are eligible for free food, withdrawing services for dyslexic pupils, increasing crematorium charges for bereaved families and cutting teaching staff. That effect might well be reduced marginally by what was announced today, but it certainly will not take away the pain completely. In fact, it will address only one third of the potential cuts that are faced by local government. The bulk of the pain remains, and it is disingenuous and cowardly of the Government to force councillors to wield the knife in this way.

On 17 February, Glasgow councillors will be asked to agree that budget, which is simply about how to slice a much smaller cake. The fact that there will be severe cuts is a fait accompli decided by a Government that controls 80 per cent of Glasgow City Council’s annual budget allocation.

In light of the green ports project, what key industrial capabilities will be developed to ensure that we build up a wind turbine manufacturing base in Scotland?

I am sure that Elena Whitham is aware of Built Environment Forum Scotland’s tenement maintenance working group and its concerns about the pace at which legislation is being brought through, particularly with the capacity issues for the Scottish Law Commission. Looking at potential legislation is really problematic. Could we look at how we can accelerate that effort to get the legislation through as quickly as possible?

I want to press the First Minister on my constituents who have been affected by the closure of theatres in Glasgow. They have gone a month without wages and they need direct assurance from the First Minister that they will be helped. That is a serious financial imposition at this time, so I ask the First Minister to take direct oversight of the issue. Up to 150 workers are affected. Can they please get a clear solution from the First Minister? I am happy to follow up the matter with the First Minister, if necessary.