Chamber and committees

That is helpful, cabinet secretary. The committee will want evidence that Scottish Government policy changes will, in fact, benefit the tax take, because that is the really serious issue for Scotland in the future.

Thank you for that very full answer. I will respond to a couple of points. One relates to a question that the convener asked you. The relationship between the Scottish Government and the Westminster Government has not been great in terms of each knowing what is and is not on the table. It is the same with the Scottish Government and local government. The convener asked whether you feel that a case is to be made for longer-term budgets instead of yearly budgets. In the stage 1 debate last week, several colleagues pointed to the fact that every year we have exactly the same argument.

In your opinion, would it help if we had projections for, perhaps, three years rather than one year, especially in certain areas? University finance is a good example; research cannot be done on a one-year basis, so universities need to understand for how long there will be funding.

Yesterday, every MSP received a letter from the Cabinet Secretary for Finance and the Economy detailing some of the allocated spending for business support for omicron that was part of the £375 million package that was announced by the First Minister. This morning, the cabinet secretary confirmed to the Finance and Public Administration Committee that £103 million is still as yet unallocated. When will that allocation take place? Crucially, will it include the £2 million that was desperately sought—again, in a letter that was sent to all MSPs—by the outdoor education sector, which is desperate for support in the pandemic?

I do not disagree with some of the comments that Fiona Hyslop has made, and I particularly echo some of the issues that were raised at the Finance and Public Administration Committee, but does she accept that John Swinney signed the fiscal framework along with the UK Government in 2016? It is not just a question of Scotland being able to decide; both the SNP and UK Governments agreed on that.

I am suggesting that that is a very substantial increase in the core block grant. That is extremely important, as a backdrop to the budget.

I will deal first with business—specifically, the sector’s very strong feedback about the future of the Scottish economy, which is backed up by extensive statistical analysis from economic forecast groups. They all tell us that although, as we saw yesterday, there is little cause for optimism in the next few months, the longer-term prospects are particularly grim for the Scottish economy. For quite some time they have been warning successive cabinet secretaries about the inherent structural weaknesses in the Scottish economy, which were present long before Covid and Brexit, and which this budget should be addressing as a priority.

The Scottish Fiscal Commission, Scottish Chambers of Commerce, the Scottish Council for Development and Industry and the Fraser of Allander Institute have all warned the Scottish Government about the demographic issues that are reducing labour market participation, and about slower growth in earnings and employment, relative to the rest of the UK. All of those have important implications for tax revenues and the Scottish budget.

The Fiscal Commission has told us that Scottish income tax revenues are growing more slowly than the income tax block grant adjustment, which means that there is a net negative position of £190 million for the coming year, which will possibly rise to £417 million by 2026-27. It also noted concerns that the scaling down of the oil and gas industry, with its highly skilled workforce, will exacerbate those problems. Those are serious statistics; so, too, are the statistics about weaker productivity and economic growth. It is our contention that the budget should be responding to them.

I warmly welcome the actions that have been taken by the UK Government to assist with the budget.

I will start with a few points of consensus. First, I acknowledge that the backdrop to the budget is particularly challenging: a lengthy Covid pandemic, which, although the signs are improving, is by no means over; worldwide economic trends, which, due to major issues with supply chains and energy costs, plus the political dangers of aggression by Russia against Ukraine, are creating serious inflationary pressures; labour markets having to cope with the post-Covid and post-Brexit landscapes; and increasing issues in relation to forecasting errors and timings.

The cabinet secretary will be pleased to know that we do not believe that any of those are within her control, so we understand why she has been keen to describe the budget as being one of “difficult choices”. It is. I certainly know that we cannot commit to absolutely everything that we would like to do.

Secondly—to pursue the consensus for a little bit longer, although it will not last—we agree with the cabinet secretary on some key commitments, including the doubling of the Scottish child payment, investment in employability schemes, additional funding to tackle the attainment gap—which is ever widening, as we know—and maintaining landfill tax in line with UK rates.

I am afraid, however, that that is where the consensus has to stop, because we are very clear that the Scottish Government has created many more problems in this budget than it has solved, despite its having received a £3.9 billion increase in core block grant funding from the UK Government.

I am just coming to that. Business is saying that one of the most important things is the skills gap. Policies to address what we can do to ensure greater productivity and economic growth are also important. There are two things that we can concentrate on. We said in our manifesto that we would commit to 100,000 lifelong learning accounts specifically being spent on training, qualifications and longer-term, more flexible and demand-led apprenticeships, which are a big ask from the business community.

We also know from business that there are serious concerns about our town centres. They were already in trouble before the pandemic; that is why we are so keen to see business rates relief being extended to relief for the whole year, and not just the three months to which the SNP has committed.

That brings me to local government. Notwithstanding the announcement today, in a debate last week, the Conservatives, along with Labour and the Liberal Democrats—although notably not the Greens, who, not so long ago, with Andy Wightman in their ranks, would have agreed with us—exposed the full extent of the SNP attack on local government. The Convention of Scottish Local Authorities, every council group leader—including the SNP’s own—and various groups, including care workers, who are on the front line of delivering council services, have all said that they see really big cuts coming. In her budget statement on 9 December, Kate Forbes said that she felt that the budget “deepens” the relationship between the Scottish Government and local government, but that is clearly not what local government thinks.

I will not. I need to make progress.

The SNP has rightly asked where we would find the money. Before I say more, I say that we would definitely not be devoting millions of pounds to a second referendum, preparing for independence or doubling up on external affairs. That money would be far better spent supporting business and local government.

Like many people in local government across the political spectrum, we Conservatives are concerned about the controversial setting up of a national care service, which has all the signs of being an extremely costly reorganisation of care services. Many people in local government feel that it will not work. Indeed, we think that it is the last thing that care workers need right now. Today’s Audit Scotland report into social care spells out some of the biggest concerns.

No one believes that setting budgets is easy, but Kate Forbes has had at her disposal the largest UK budget settlement and extensive additional money for Covid recovery from UK Barnett consequentials. She has asked for a rational approach from the Opposition parties for her spending plans; we will continue to take that approach. However, she cannot, in the same breath, explain why, although it is Scotland’s oil, the SNP will walk away from that sector. She cannot say what currency the SNP would adopt if Scotland were to become independent, and nor can she explain why she has been so harsh to local government at the very time when she claims that it is central to delivery of more efficient public services.

The budget does nothing to properly secure Scotland’s economic future or to safeguard essential local services, so we will oppose it at stage 1.

I move amendment S6M-02949.1, to insert at end:

“, but, in so doing, regrets that, despite a £3.9 billion increase in core block grant funding from the UK Government, the Scottish Government is delivering a cut of £371 million to local government budgets, which will have serious implications for the delivery of front line services and local businesses.”

Will the member take an intervention?

Is Michelle Thomson really saying that the announcement that has come from the UK Government today is not welcome?