Chamber and committees

I am keen to take forward that approach, as is the social justice secretary, who is sitting beside me. We have embarked on such discussions with local authorities and we look forward to developing that work into the new fiscal framework. Local authorities have other tax-varying powers, such as those in relation to empty property relief. In due course in this parliamentary session, we will legislate on a visitor levy. Local authorities have at their disposal other measures, but they can rely on a £570 million increase in their budget that they were not expecting.

Despite the spectacularly difficult current fiscal context, the Scottish Government has increased the resources available to local government next year by over £570 million. I have also invited council leaders to work with us and other partners to design our services around the needs and interests of the people and communities of Scotland. That is how we will deliver sustainable public services in partnership.

In addition to funding from the Scottish Government, local authorities enjoy a range of revenue-raising powers that are not available to other public services, including newly devolved powers over empty property rates relief.

No. The budget has been designed to create sustainable public services, with an increase of £570 million in the local government budget that was not expected. I have offered local authorities the opportunity to be partners in how we take forward the reform of the public sector. That was exactly what I did when we designed the Covid recovery strategy, which was agreed with local government. I look forward to building on that as we take forward the local government settlement, which I stress is £570 million higher than local authorities expected it to be.

The proper comparison of budgets that Parliament expects of me, as the acting finance minister, is between one budget and the next budget. From last year’s budget to this year’s budget, the local government finance settlement has increased by £570 million.

In the dialogue that I had before the budget statement, local government asked me for an increase of £1 billion in its budget allocation. I was clear with local government that £1 billion could not be delivered in the current fiscal context. Local government was expecting a flat cash settlement; it expected no more money next year in comparison with this year, because that is what it was encouraged to believe from the resource spending review, but in fact, I have delivered £570 million more. That is a welcome settlement for local government.

The focus of the budget is on eradicating child poverty, on making practical and possible the transition of the economy to net zero, and on ensuring that we have sustainable public services. That is the approach that I have put into the budget, to ensure that the delivery challenge that Daniel Johnson puts to me can be addressed.

On public sector pay, as Mr Johnson knows—he and I have rehearsed the issue a few times—we ministers have spent much time over the past few months trying to get to a position whereby we secure deals that increase the pay of public sector workers, and we have made significant progress. At First Minister’s question time, the First Minister made the point that, today, there is industrial action in the national health service in every other part of the United Kingdom. That is not happening in Scotland, because of the dialogue that we have taken forward.

I welcome very much the trade union support for the pay deals that we have put forward. Each of those deals—whether for local government or for the health service—has been specifically focused and targeted on improving the position on low pay. Those on lower pay have had higher increases than those who are on higher pay. Those investments and priorities of the Government are designed to strengthen the position of people who are on low pay.

Daniel Johnson talked about delayed discharge. The Government accepts the undesirability of delayed discharge. The Cabinet Secretary for Health and Social Care and I, and other ministers, spend a huge amount of time working with local government and partners to secure reductions in that. However, we keep being told that the key thing is the challenge of being able to recruit staff. The challenge of recruiting staff is about the folly of Brexit and the loss of the freedom of movement of the population. Through our work to improve pay, we are taking the necessary steps to overcome that disadvantage.

Mr Johnson asked me about wage growth in the Scottish economy. He will not have had time to see what is in the Scottish Fiscal Commission report today. It says that the commission predicts

“a period of catch-up in Scottish earnings over the next five years”

relative to the rest of the United Kingdom. I hope that that gives Mr Johnson some reassurance. That will be driven by the implementation and delivery of the national strategy for economic transformation, which was set out earlier this year by the Cabinet Secretary for Finance and the Economy and is now being taken forward in order to deliver that improvement in economic performance.

We come to the question of tax. I have never in my puff heard such an equivocal explanation of the Labour Party’s position on tax. Throughout his question to me, Daniel Johnson was sat well and truly on top of the fence on the issue of taxation. The Labour Party must decide whose side it is on—is it on the side of investing in public services or on the side of trying to have it both ways, which is what Daniel Johnson tried to do today?

Research work undertaken by the Government earlier this year indicated that, if the UK Government had reversed its measures to restrict benefits, it would have put £780 million into the pockets of people in Scotland. That is a measure of the scale of the erosion of the financial support that is available for people on low incomes.

The Scottish Government has brought forward measures that substantively address some of those issues, in addition to the measures that we have already brought forward to, for example, mitigate the effects of the bedroom tax. We are doing as much as we possibly can do to address those issues, within the resources that we have and the powers that are available to us, but the scale of the challenge gets greater as a result of the negative actions of the UK Government.

That was a very confused contribution from Liz Smith. Let me work my way through it.

Just a few months ago, Liz Smith wanted me to follow the budget of Kwasi Kwarteng and cut tax immediately. Look at the carnage that that has created in the UK economy. At the weekend, Kwasi Kwarteng told us that they all got carried away. They blew it. Well, that lot over there on the Conservative benches wanted me to follow their stupid and foolish example. Thank goodness I never did it.

When I look at some of the points that Liz Smith put to me, I note that, on business support, she did not welcome the fact that I have frozen business rates, despite the fact that 16 business organisations asked me to do that. That might have merited a welcome. She said that we have not put in place support for business. We have the best small business scheme in the United Kingdom.

When it comes to the tax forecasts, Liz Smith will be able to read the Scottish Fiscal Commission’s report. It has given us projections about growth in income tax on earnings in the years to come as the Scottish economy strengthens. That is another thing that Liz Smith might get round to welcoming.

Then we come to education consequentials. How on earth am I supposed to boost the budget of local government, which provides education in our country, if I do not use the consequentials that are set out for that purpose?

Lastly, on the obsession that Liz Smith has with the £20 million for the independence referendum—[Interruption.] She is absolutely and completely obsessed by the whole thing. [Interruption.]

The steps that have been taken in the budget are designed to ensure that we take a very focused approach to the delivery of new employment in the green economy and the journey to net zero. It will take place across a range of programmes; indeed, as I said in my statement, we need to see the interrelationship of public services, the journey to net zero and the attack on child poverty as part of a journey in which all these different themes are joined together to ensure that we are creating employment opportunities that help families get out of poverty.

The measures in the budget with regard to the investment in our colleges and universities and the investment in employability programmes such as no one left behind and fair start Scotland are all designed to support that journey for individuals, and the investment funds for the low-carbon economy will support companies in creating those new opportunities as our economy changes. Through that combination of effort, I am confident that we will be able to stimulate employment in the green economy.

I can tell Miles Briggs what is driving the housing crisis: the increases in interest rates that have been fuelled by the economic mismanagement of the United Kingdom Government.

The Scottish Government is supporting sustained investment in our housing infrastructure over the long term. Very good progress has been made—indeed, in previous sessions of Parliament, the Scottish Government has delivered on all of our housing targets. We are determined to ensure that we do that. I have been candid with Parliament about the challenges in our capital programme. Capital projects and anything that relies on input prices will be more difficult in terms of cost because of the energy crisis, energy prices, the rise in interest rates and the effect of inflation. Those are all substantive issues that have been fuelled by the actions of the United Kingdom Government.

The figure that I can give Mr Greer is that, in the next financial year, the combined effect of all of the tax changes that have been made over the past few years will be to increase the resources that are available to us to the tune of £1 billion. That is the consequence of opting for the progressive measures that we have put in place. That money has been generated to the advantage of Scottish public finances as a consequence of our dialogue.