Chamber and committees

There is a finite time for having to put up with the nonsense that we get from the Scottish Conservatives. I simply reiterate that the Government will apply full transparency to all the deliberations that we have with Orkney Islands Council.

It is nice to see that Mr Halcro Johnston is able to summon up a really warm welcome for the Government’s dialogue with Orkney Islands Council. [Interruption.] It really is another further descent into the miserableism of the Scottish Conservative and Unionist Party. There is an abundance of miserableism on the Scottish Conservative benches on a constant basis.

Will the member give way?

I think that Stephen Kerr has demonstrated that he does not have a single clue about how the public finances of Scotland work. I am not going to explain it again; he will have to go and read the Official Report, because I have just given the explanation. He has demonstrated that he is singularly unfit to contribute to today’s debate. It is absolutely appalling. The same explanation applies to Mark Griffin’s point about the £550 million for local government.

In the course of the debate, Kenneth Gibson made the fair point that, where alternative choices are suggested, there must be a funding source for them.

I will marshal what the Conservatives have said. They have said that they want more money for housing—Miles Briggs said that. They want more money for city deals—Douglas Lumsden said that. They want more money for local government—Miles Briggs and Douglas Lumsden said that. They want more money for business rates—Douglas Lumsden and Liz Smith said that. They oppose the tax increases. I point out, for the sake of completeness, that if we did not make the tax increases, we would have less money available to us. Stephen Kerr wants education to get more money and Miles Briggs wants health to get more money.

I simply say to Parliament that that is economic illiteracy of the highest order, because no source has been identified for those funding resources. [Interruption.] I would give way, but the Presiding Officer wishes me to close my remarks.

I will happily engage with Mr Rennie and anyone else who wants to talk about which area of the budget we can take money from to allocate to another to support priorities, but it is not helpful to the dialogue and the discourse in Parliament to put forward proposals that play to a gallery or a lobby, but which do not have a hope of ever being delivered, because the money does not exist—

In his speech to Parliament this afternoon, the convener of the Finance and Public Administration Committee asked me to provide an update on the current financial year and the degree to which I am wrestling with securing a path to balance. For completeness, I say to the convener that, at this stage—a very advanced stage—of the financial year, I am still wrestling with an estimated overspend of approximately £100 million. We are still working to secure balance despite the steps that we have taken in the course of the year to reallocate public expenditure, which will be reflected in the spring budget revisions that I put to Parliament and to the committee for scrutiny.

I thank Willie Rennie for his constructive contribution to the debate and assure him that I will follow up the points of dialogue that he raised in today’s discussions. He raised serious issues about the mental health budget and long Covid, and I agree with his reflections on the energy market and the significant opportunity for windfall taxation that has arisen out of the ludicrous profits that energy companies are making at a time when our constituents are facing such hardship. I very much welcome Willie Rennie’s constructive contribution, and we will try to build on that.

I obviously value the support that our partners in the Green Party are giving to the budget—Ross Greer referred to this budget as “progressive”—and I welcome the party’s contribution to ensuring that the issues of taxation are properly considered in the budget process and result in our being able to afford our priorities. That would not have been the case had we not taken those decisions, so the Green Party’s input into the discussions has been welcome.

It is not the first time in life that Kenneth Gibson has found himself in some controversy, but let me try, as always, to be the peacemaker in Parliament. [Laughter.] Murdo Fraser took great exception to the contribution of my colleague and friend Kenneth Gibson and asked whether members of the committee supported the reflections that Mr Gibson was putting on the record. I want to put on the record the words that I was met with when I went to the Finance and Public Administration Committee on 4 October 2022, in the aftermath of the disastrous and catastrophic Kwarteng budget. I was met with:

“Good morning, Deputy First Minister”,

which is always a nice warm welcome, from my friend Liz Smith. She then said:

“I put it on record that I understand and accept that your job is much more difficult because of the difficulties that have been introduced by the Westminster Government, particularly with regard to the forecast.”—[Official Report, Finance and Public Administration Committee, 4 October 2022; c 8.]

It is important that Murdo Fraser’s bravado is disarmed by the calm and realistic contribution of Liz Smith to the Finance and Public Administration Committee debate, which I appreciated, because she was right: at that moment, I was wrestling with significant difficulties, and I continue to do so. I am, of course, delighted to hear more from Liz Smith.

I might wish to pursue that discussion with Mr Mountain in due course. My feeling would be that what we publish in relation to the carbon assessment should fit his requirements, but if it does not, I am happy to explore that further, because the issue has to be resolved. I think that we are doing enough in that respect, but I will happily explore the matter further.

Clare Adamson made an important point about the relationship between the amount of money that is spent on cultural investment and the disproportionate impact that that has on our society and wellbeing. If I did not know that point already, I would not have been listening to Fiona Hyslop, who for many years, as the longest-serving culture secretary in the Parliament, used to beat me into submission in budget agreements with that very argument. I pay warm tribute to her for that. It is an important point, and I assure Parliament of my sympathy with that view. I reiterate that I want to ensure that we do all that we can to support investment in our cultural sector, recognising that, in the tough times that we are living in, people need to enjoy and appreciate the importance of investment in the culture that makes us who we are as a society.

Today’s debate is an important part of the Parliament’s scrutiny of the Scottish budget, and I appreciate the engagement across the committees in preparation for the debate.

It has been a particularly challenging budget to develop. The war in Ukraine, the surge in the inflation rate and the damage to the public finances that was done by the mini-budget in September have created an exceptionally difficult landscape in which to develop and bring forward the Scottish budget. As a Government, we have had to make difficult choices, and the Parliament will have to consider and determine those choices in the course of the next few weeks.

A balance must be struck between the funding that is available and what it can deliver for the people of Scotland. We have actively chosen to increase the funding that is available to the Scottish budget through our fair and progressive approach to taxation. We have brought to the Parliament a budget that sets a different path for Scotland, which prioritises the elimination of child poverty, the transition to net zero and the sustainability and effectiveness of our public services.

The Finance and Public Administration Committee’s report recognises the nature and scale of the financial challenges that we continue to grapple with in the current financial year and that set a challenging context for the year ahead. As I made clear in my evidence to the committee earlier this month, I take seriously the points that the committee’s convener made in his speech and in the report about the undesirability of there not being a path to balance the budget at this stage in the year. I assure the Parliament that that is not for want of trying and that it is a measure of the scale of the challenge that we face because of the factors that I recounted earlier in my speech. I further assure the Parliament that we are working to address the issues in the time that is available to us.

We have limited fiscal powers, so we have had no option but to reduce our spending in order to meet the pressures on our budget, not least the £700 million of additional funding that we have allocated for public sector pay, which makes a substantial contribution to assisting public sector employees to deal with the cost of living crisis that we face.

We recognise that public sector pay is an important issue to the Parliament. I explained in my budget statement that I was not publishing a public sector pay policy because of the uncertainty about the outlook for inflation and the need to conclude some pay deals in the current year. We can still make progress on pay discussions for 2023-24. Indeed, the Scottish Government continues to engage on pay issues with trade unions and public sector employers. Along with the Cabinet Secretary for Health and Social Care, I have been actively involved in negotiations relating to the agenda for change groupings that we are trying to resolve for 2023-24.

I appreciate that there is a wide range of views across the chamber on what the budget should support, and the debate offers an opportunity for a wider conversation. I look forward with interest to hearing the perspective from a range of committees in members’ contributions to the debate.

I thank the Finance and Public Administration Committee for its pre-budget scrutiny report and stage 1 report and for its acknowledgment of the wide-ranging challenges that the Scottish budget faces. I will carefully consider the recommendations in the report and will reply to the committee in writing in due course.

For the 2023-24 Scottish budget, I have carefully balanced the growing asks against the funding that is available. The budget recognises that we must take action now to enable us to overcome the even greater fiscal challenges that lie ahead. Our approach is set out in our medium-term financial strategy, and we continue to take steps to improve that each year in response to the challenges that we face. Further updates in relation to the implications of the current environment and the different environment to which the convener referred will be set out by the Government in due course—that is likely to be in the medium-term financial strategy.

Critical for the Scottish Government is our continued commitment to ensuring that our public services provide the support that people and communities need, improving outcomes and reducing inequalities while remaining fiscally sustainable. The UK Government’s financial plans will make that incredibly challenging, with the funding outlook for the later years of its spending review period looking increasingly bleak. For those and other reasons, I have taken decisions to increase the higher and top rates of taxation in the next year in order to boost the revenue that is available to the Scottish Government and the Scottish Parliament to address those questions.

Reform of our public services is vital to ensure their sustainability. We have already pursued those issues with public bodies and set out our approach, which is built on joining up service delivery to direct resources towards more person-centred services and, in doing so, make better use of resources.

Secondly, we will undertake a rigorous review of the public body landscape, the work that public bodies do and how resources are used to improve outcomes. That work is not easy and will involve a whole-system approach, which we know will take time to deliver the results that we require.

Thirdly, we are expanding the utilisation of digital technology in the delivery of our public services.

Finally, we will carefully manage public sector employment, in dialogue with public bodies and with our trade union partners, who must be at the heart of dialogue on all such questions.

Change happens when we all buy into and contribute to a vision of effective, sustainable and person-centred services that is both achievable and ambitious, and that will be the focus of the public service reform work that the Government undertakes.

I place on record my thanks to all the committees for their scrutiny work on the budget. In the time that is available to me, I will reflect on a number of the issues that they raised, although I will come back to that in my closing speech, when I have heard from committees about some of the issues that we can further address.

The Economy and Fair Work Committee acknowledged the current challenging economic circumstances and expressed interest in the financial support that we intend to provide for a range of economic and business areas, including enterprise agencies, tourism and the hospitality sector. The 2023-24 Scottish budget maximises the support that we can deliver for businesses through the budget directly and through non-domestic rate support mechanisms.

The Health, Social Care and Sport Committee acknowledged that the scale of the financial and operational challenge across the health and social care sector is unprecedented. That is why the 2023-24 Scottish budget will provide more than £19 billion of investment in health and social care. That is an increase of more than £1 billion, which has been made possible due to the additional revenue that we have raised through our fair and progressive taxation system. As a result, we are exceeding our commitment to pass on all the health and social care resource consequentials to the health and social care system.

The Social Justice and Social Security Committee offered views on a range of social justice and poverty issues. The Scottish Government takes those issues seriously, and I hope that our response in the budget to those significant issues is commensurate with the seriousness of the issues that the committee put to us.

We have taken exceptional steps to support Scotland through the cost crisis and, by the end of March 2023, we will have invested about £3 billion in a range of measures to support households. In addition, we are investing £442 million in delivering the Scottish child payment, which is the most ambitious child poverty reduction measure in the UK. We hope that that measure, along with the uprating in April 2023 of all other Scottish benefits by the September consumer prices index figure, demonstrates that we are providing a comprehensive package that will help us to eliminate child poverty in Scotland.

The Education, Children and Young People Committee raised the important issues of colleges, universities and early learning and childcare. The education and skills resource budget for next year will increase by £132 million, to more than £3 billion, to enable us to address many of those issues.

The Local Government, Housing and Planning Committee focused its pre-budget scrutiny on affordable housing. The Government has put in place investment to support the continuation of the long-term affordable housing programme—next year, we will make available more than £750 million for affordable housing. The local government settlement has been enhanced through a cash increase of £570 million, or 4.5 per cent, which represents a real-terms increase of 1.3 per cent.

The Net Zero, Energy and Transport Committee sought evidence on topics including the fair fares review and bus support, heat in buildings and the joint budget review. We have set out a range of measures, including the investment over the course of the parliamentary session of more than £1.8 billion in heat and energy efficiency, to enable us to properly address the challenges that the committee put to us. In addition, as we have set out on previous occasions, we are expanding the fuel insecurity fund.

In conclusion, I highlight the work that we have taken forward with our recent announcement of the islands deal. We have set out commitments to support our rural and island communities, and the rural affairs budget reflects those challenges.

I look forward to hearing responses from committees and will reflect on those issues in my closing speech. I stress the importance of ensuring that we set a budget that utilises the resources that are available to us, but I make it clear that some very difficult choices had to be made to get us to the position that we are in. I look forward to hearing the views of committees as we take forward our constructive engagement on the Scottish budget.

May I first take a moment to reflect on Mr Beattie’s point? It is an important one, but I cannot say much about it because it concerns a parliamentary matter. However, the unusual subject matter that Mr Beattie has had to raise is one that the Parliament needs to reflect on. It is a matter not for the Government but for the Parliament, and it is one that it needs to take very seriously indeed.

Very briefly.