Chamber and committees

Mr Lumsden needs to work out what he is actually arguing for. I assume from what he said that he wants me to replicate in its entirety what the UK Government has set out. If I did that, I would be taking decisions to reward the already very, very wealthy with significant tax cuts. That is the reality of what Mr Lumsden is asking me to do. [Interruption.] I hear Mr Lumsden saying from a sedentary position that that is not what he asked for, but I have read numerous comments from the Conservatives demanding that I just get on and do what the United Kingdom Government has done.

I will consider all the issues carefully, which is why I will take the necessary time to do it, why I am going to draw together an expert panel to provide advice to the Government, and why I will engage with business and trade union interests.

None of us should underestimate the scale of disruption and damage that was done by the announcements on Friday—they were very damaging. I have to take a careful and prudential approach to managing Scotland’s public finances, and that is what I am going to do. Mr Lumsden and his colleagues can engage in soundbites, but I will place a wager in front of Parliament that, at the same time as Mr Lumsden is arguing for tax cuts, colleagues of his will come to the chamber demanding that I increase public expenditure on other things. Those two things cannot be done at the same time in the fiscal envelope that is provided by the United Kingdom Government.

I find myself in the rather unusual position of actually agreeing with most of what Mr Cole-Hamilton said, which is a slightly discombobulating situation. He raises serious issues, however. Future generations are being lumbered with colossal costs of borrowing because a windfall tax has not been applied to energy companies. Various very wealthy people are being given even more money, when people are facing destitution in our society.

I therefore entirely support the call for the United Kingdom Parliament to reconvene immediately in order to rectify those matters. We are already seeing the damage to individuals—there will be very disappointed people who expected to be able to acquire properties and get on the first step on the property ladder, but who will have had that taken away from them by the recklessness of the decisions on Friday. I therefore hope that Mr Cole-Hamilton’s call for the recall of the United Kingdom Parliament is acceded to, and I would support it.

The Chancellor of the Exchequer’s statement provided little respite for many families who already face a winter being unable to afford essentials, such as buying food and heating their homes. The United Kingdom Government needed to use its reserved powers to provide support for those who need it most. Instead, we got tax cuts for the rich and not much for anyone else.

The chancellor is taking a huge gamble with public finances and the health of our economy, and the markets have reacted strongly. The pound fell to record lows on Monday, the cost of Government borrowing has risen to its highest level in more than a decade, and investor confidence is plummeting. Many householders will now face much higher mortgage costs as a consequence of the decisions that were made.

We are doing everything within our power to support people, public services and the economy, but our efforts are under threat from the UK Government beginning a new and dangerous race to the bottom. We are not willing to run that race. We will not replicate the Tories’ reckless tax cuts but will consider carefully the correct measures for Scotland.

I intend to seek advice from an expert panel that will be convened specifically to consider the implications of the mini budget. I will also embark on discussions with business and trade union interests. The Scottish Fiscal Commission will incorporate the impact of any changes in its next forecasts. I intend to report to Parliament on those issues as part of the emergency budget review in the week commencing 24 October.

The damaging impact of the UK Government’s decisions on Friday demonstrate why Scotland needs the full range of financial powers to avoid living at the mercy of bad decisions that are taken at Westminster.

I do not think that that should be the case. The UK Government is pinning all its hopes on a discredited approach of trickle-down economics that benefits high earners as opposed to people who are most in need now. Supporting those people who are most in need should be the UK Government’s priority.

Against a backdrop of political instability at UK level, we will continue to take a responsible approach to tax policy by building on our fair and progressive approach to taxation, which has protected low earners while raising additional revenue for public services. I can assure the chamber that the Scottish Government will take sensible and careful decisions that are about helping people who need assistance the most.

Mr Simpson asks what I have been doing since the points were put to me. I have been asking the permanent secretary of the Scottish Government to raise the issues with Audit Scotland, thereby enabling Audit Scotland to consider them. Audit Scotland has, of course, already undertaken audit work in relation to the Ferguson’s procurement process and will establish whether any further inquiry is required. That would enable independent scrutiny of the procurement process, which is something that Audit Scotland does on countless other issues and has already done on the Ferguson’s contract.

That is what I have been doing, because I thought that Parliament would want an independent assessment process that allows the issues to be properly considered, so that any appropriate action can be taken as a consequence.

As I set out in my answer to Rhoda Grant, the Government published a huge volume of material in 2019, which covered all aspects of the procurement process. Obviously, specific points have been raised with us about information to which Ferguson’s had access, which ministers did not previously know was the case. That is why we have taken the steps that we have taken in raising the issues with Audit Scotland today to enable it to make a judgment about the issues that are raised in the BBC documentary.

The Government wants to make sure that any question that is raised in this regard is properly and fully considered as part of the analysis that should properly be undertaken on the awarding of a contract, if concerns of this type are raised.

First, I am delighted to hear that the home of my dear, beloved late grandmother is thriving so well in population terms. I am pleased to hear that news.

I should also say that I spent a bus journey from St Giles cathedral to Parliament with the convener of Orkney Islands Council, Councillor Graham Bevan, who did not miss his opportunity to bend my ear about his council’s financial arrangements. Mr McArthur can be assured that his local authority colleagues are using every available opportunity to advance their arguments.

The funding settlement for Orkney Islands Council is a product of many variables, which are agreed in general with local government. Mr McArthur will be familiar with the fact that such questions are negotiated with the Convention of Scottish Local Authorities. Of course, there are specific elements that relate to islands’ expenditure, such as the special islands needs allowance. Councillor Stockan, whom I also met, and Councillor Bevan both made points to me about such questions. I will reflect on those points as we take forward discussions with local government about the funding arrangements for the next financial year.

I have indicated in a number of responses to members this afternoon the challenges that we face, which I set out openly to Parliament two weeks ago. The effect of inflation on our budget is to undermine its value to the tune of £1.7 billion. That means that there is intense pressure on the ability to deliver public services and to afford the increases in public sector pay that are significantly higher than those that were envisaged at the time of setting the budget.

That is why I, along with my colleagues in Wales and Northern Ireland, have appealed to the UK Government to have an approach to the fiscal event on Friday that meets the needs of these days and addresses the risk that, unless specific action is taken, increasing inequality and a damaging impact on the poorest in our society will be the consequence of the UK Government’s actions.

I am perfectly happy to explore those questions, although I think that the question on the issue of sub-sovereign debt would be outwith the competence of the Scottish Parliament. However, I am happy to explore that question with Mr Sweeney if he writes to me with his thoughts about how that might be done.

I welcome Mr Sweeney’s question, however, because it highlights the need to recognise the limitations of the current range of responsibilities and powers that we have to deal with the crisis that we face. Parliament as a whole needs to engage with the fact that, as we are in a situation in which during a financial year we largely have a fixed budget, unless the UK Government decides to expand public expenditure in England, we have no ability to deal with inflationary pressures or changes in dynamics other than to take money from one area of policy and apply it to another. I wrestle with that dilemma every day of the week just now, and I will have to come back to Parliament about it in the course of the next few weeks.

Although negotiations on local authority budgets are conducted between the Scottish Government and the Convention of Scottish Local Authorities on behalf of its member councils, a range of portfolio cabinet secretaries, ministers and officials have regular contact on key shared priorities with individual local authorities, including Orkney Islands Council. That has included a number of cabinet secretaries and ministers visiting Orkney over the summer, when some met Orkney Islands Council leaders and officials to discuss a range of issues. I also had extensive discussions with the leader of Orkney Islands Council on this matter and others when I recently met the leaders of the three island authorities.