Meeting of the Parliament

Meeting date: Thursday, February 6, 2020

Official Report 1100KB pdf

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Budget 2020-21

The next item of business is a statement by Kate Forbes on the Scottish budget for 2020-21. The minister will take questions at the end of her statement.

Today, I present the Scottish budget for 2020-21. This is a budget that offers vision and leadership at a crucial moment for our country. Last week, the United Kingdom formally left the European Union and entered the transition period that is intended to last until December. That was not an outcome of Scotland’s choosing, but, until Scotland has the opportunity to choose a different path, we must deliver the best possible outcomes for the people we represent. This budget provides an early opportunity for us to do that. It sets out a bold and ambitious programme, which we believe will have widespread public support and, as a result, should command the support of this chamber.

We will confirm today significant investment in our response to the global climate emergency and in strengthening our economy and improving our public services, because it is a budget that has wellbeing and fairness at its very heart. It is a progressive budget, and it will provide extra help to those who need it most, tackling inequalities and poverty, especially child poverty. Our wellbeing approach to the budget prioritises actions that have the greatest impact in improving lives across Scotland now and creating the conditions that are required to ensure the wellbeing of future generations.

However, it is also a budget that is presented in the context of the UK Government’s decision to defer its budget last November. That decision has obliged us to make significant changes to this year’s budget process. With support from the Finance and Constitution Committee, we have a bespoke budget process this year. The late UK budget has required the Scottish Government to present tax and spending plans for Scotland without certainty of our fiscal position next year. The timetable that has been agreed with the Finance and Constitution Committee should see the budget bill passed on 5 March—the week before the UK budget, on 11 March. We will have passed into law our spending plans, doing what we can to provide certainty and stability on behalf of the people of Scotland.

However, the financial and economic risk will not end there. The UK budget will still present a significant risk to the Scottish budget. This budget contains our best-estimate, minimum level of funding that will be available to the Scottish Government in 2020-21. Updated economic forecasts and block grant adjustments will be available only when the UK budget is published. That requires the Scottish Government to use provisional forecasts as the basis for setting budgets, in line with the up-to-date forecasts of devolved tax income and social security expenditure that have been undertaken by the Scottish Fiscal Commission.

We have had to make assumptions about the Barnett consequentials that will be added to the Scottish block as a result of the UK budget, and we have had to take decisions about devolved tax policy without knowledge of future UK policy. That position is not of our choosing, and it creates unnecessary challenges for public bodies, businesses and taxpayers right across Scotland.

The current timetable provides for royal assent by 30 March. Delaying the Scottish budget further would have undermined parliamentary scrutiny, increasing the risk that we would run out of time to pass the budget bill. Such an outcome would be in nobody’s interest. Today’s budget aims to provide as much certainty as possible to taxpayers, to public bodies and, above all, to local authorities, which urgently need to set their budgets for the year ahead.

It is hoped that all members of Parliament will unite behind our tax and spending plans. The Scottish Government is, of course, open to discussion with all parties about how we can best achieve that, but the clock is ticking.

A focus on fairness and our collective wellbeing underpins the measures that we are taking to drive an inclusive economy, tackle poverty and respond to climate change through a just transition. That focus also drives our approach to Scotland’s public services. The budget will protect and improve those services, as part of our strong social contract with the people of Scotland.

In total, the budget provides—for the first time ever—funding of more than £15 billion for our health and care services. We are providing the capital for our programme of elective care centres; we are investing more than £9.4 billion in health and social care partnerships; we are investing £117 million in mental health; and we are delivering an increase of nearly 60 per cent in funding to reduce harm from alcohol and drugs, including support for the work of the new drug deaths task force.

We are also providing a real-terms increase in local government revenue support, as part of an overall funding package that delivers our key commitment on early learning and childcare; funds a fair pay deal for our teachers; and invests more than £120 million in closing the attainment gap, with an additional £62 million provided outwith the settlement through the attainment Scotland fund.

To maintain low levels of reported crime and keep our communities safe, we are providing an additional £37 million for the Scottish Police Authority resource budget. That is well above the real-terms increase that we had promised, and it will ensure that Police Scotland has the money that it requires to maintain officer numbers at the current levels. That is coupled with an extra £6.5 million for community justice interventions, as part of our efforts to reduce reoffending rates. The budget provides capital funding of nearly £70 million for the prison estate, including a replacement for HMP Barlinnie and investment in the female estate.

The budget and the economy are, of course, inextricably linked—and both are being impacted by EU exit. Last week, the Bank of England downgraded its projections for the UK economy. The Scottish Fiscal Commission’s forecasts for the Scottish economy, which were published today, again confirm not only that uncertainty about leaving the EU has held back growth over recent years but that EU exit will continue to be bad for our economy, holding back growth in trade and productivity.

Despite those challenging economic conditions, the economy continues to grow. We have a strong labour market with high employment and low unemployment, and with earnings growth that is outperforming previous forecasts. However, we must remember that the economic and fiscal forecasts that underpin the budget assume that a sensible agreement will be reached between the UK and the EU. Should that not be the case, we may be forced to reconsider our spending plans across all portfolios in order to mitigate, as much as we can, the unnecessary harm that will be caused if no agreement is reached.

The economic outlook has informed the progressive approach to tax that is taken in the budget. We already have the most progressive, fair and balanced income tax system in the UK, which raises additional revenue from those who can most afford it and protects public spending. That helps us to make Scotland the kind of country that we want it to be. It funds our public services, supports our economic infrastructure and helps those who are most in need.

In 2017, in the interests of providing certainty, the Scottish Government made a commitment that Scotland’s income tax structure was settled for at least the duration of this parliamentary session. Today, we are keeping that promise. There will be no increase this year to any of the rates of income tax. No Scottish income tax payer will pay more income tax in 2021 on their current income than they do this year.

To cement the progressivity of our tax system, we will increase the basic and intermediate rate thresholds by the level of inflation, to protect our lowest and middle-earning taxpayers. The higher and top rate thresholds will be frozen. That will ensure that 56 per cent of Scottish taxpayers will pay less than they would if they lived elsewhere in the UK. Scotland will continue to be the lowest-taxed part of the UK for the majority of income tax payers.

The independent Scottish Fiscal Commission has forecast that our decision to freeze the higher rate threshold will raise an additional £51 million in 2020-21, compared to an assumed inflationary increase. The commission’s forecasts show that, in total, Scottish income tax will raise more than £12 billion in 2020-21, partly driven by continued growth in earnings.

On land and buildings transaction tax, we are proposing to introduce a new 2 per cent band for non-residential leases only, which will apply to transactions in which the net present value of rental income over the period of the lease is more than £2 million. The move to a three-band structure will ensure that our tax system continues to be seen as progressive and fair, in keeping with the Scottish approach to taxation. Legislation will be introduced to the Scottish Parliament to enable the change to come into effect from 7 February 2020, but it will not apply if the contract for a transaction was entered into prior to 6 February 2020. There will be no further changes to LBTT, which will provide certainty to taxpayers who purchase land and property.

We will use the resources that are raised through the tax decisions in this budget to support our public services and meet our ambitious targets on child poverty, including through initiatives such as the Scottish child payment. This Government believes that that is the right decision for Scotland.

On the basis of previous commitments in the UK Government’s autumn budget 2018, we do not expect income tax divergence between Scotland and the rest of the UK to increase in 2020-21. If there is any divergence, it will not be because of decisions that are made here; it will be because the UK Government is yet again cutting taxes for high earners.

I turn to the further spending commitments that are announced in this budget. Last year, the First Minister led the way in acknowledging the climate emergency. Across the world, we are seeing an increasingly unified response to what is a fundamental issue for us all and for future generations. We promised that this would be a budget that steps up the delivery of our ambition to tackle climate change, and today we are delivering on that promise.

Scotland’s transition to net zero emissions is a national endeavour, and changes are needed across the whole of society. We will all share in the opportunities that our commitment to delivering a green new deal and securing a just transition will bring. This budget confirms that the Scottish Government will play its part, guided by the expert advice of the Committee on Climate Change and the climate emergency response group.

I can therefore announce that we are meeting our pledge to increase the proportion of investment that is directed towards low-carbon infrastructure each year, with £1.8 billion of capital investment in specific projects to reduce emissions. That is an increase in low-carbon investment of over £500 million compared with last year. The budget provides additional funding in the key areas of transport, agriculture, heat and energy. Promoting a greater shift to public transport will be key to our success, and we are increasing overall funding for rail and bus services, including concessionary travel, by £286 million to a total of £1.55 billion in 2020-21. Investment in active travel will increase to over £85 million, promoting cycling, walking and more sustainable transport.

The £83 million future transport fund will see us invest in low-carbon and other transformational initiatives, including low-emission and electric buses, bus prioritisation, electric vehicle charging point infrastructure and the switched on towns and cities programme. We are providing £5 million to help with the shift to electric vehicles in the justice sector, and we are increasing to £35 million the low-carbon transport loan fund, supporting those who need to drive to transition to low-emission vehicles.

Emissions from agriculture and other land uses need to reduce as part of our climate plan, but we need to work in partnership with farmers and other land managers to achieve that. We are providing an initial £40 million investment in the agricultural transformation programme to help to develop the tools and techniques that are needed. We are also increasing our investment in forestry from £59 million to over £64 million in 2020-21 as part of our response to the Committee on Climate Change’s recommendation that we need to move towards planting 15,000 hectares per year as soon as we can.

We confirm today a new £120 million heat transition deal, which recognises the need to boost the scale and pace of growth in decarbonising our homes and buildings. That will ensure that we seize the huge economic opportunity that renewable heat will present as part of a just transition, delivering thousands of new green jobs. The heat deal will include a £50 million heat networks early adopter challenge fund for local authorities and a £10 million fund to support hydrogen heat demonstrator projects. The budget also secures an increase to £151 million in capital funding for energy efficiency measures.

Those measures alone represent a substantial plan of action for the year ahead, but we must—and we will—go further. The climate emergency demands immediate action, but it also requires genuine long-term commitment if we are to deliver against our statutory emissions reduction targets. I have three further announcements to make that underline the depth of this Government’s longer-term commitment.

First, we will incentivise local authorities to use the assets and levers at their disposal to reduce emissions and boost the economy, by unlocking up to £200 million of revenue-financed investment in projects across Scotland through our green growth accelerator.

Secondly, we commit now that we will ring fence an additional £2 billion of transformational infrastructure investment over the next session of Parliament for measures to support the delivery of the climate change plan. Let nobody doubt that this Government will prioritise multiyear investment in low-carbon measures at the scale that is required to help to tackle the climate emergency. Those measures will build on the recommendations of the infrastructure commission, with further detail to be provided in the infrastructure investment plan later this year.

Thirdly, all the evidence suggests that one of the most effective ways of locking in carbon is to restore our peatland. That offers a clear nature-based solution to the climate crisis. The Committee on Climate Change has shown that every £1 that is spent on peatland restoration brings £4 of social benefit through reduced emissions, improved water quality and flood mitigation.

Not only will we increase investment in peatland restoration to £20 million next year—an increase of £6 million compared with this year—we will go further. Today, this Government commits to investing more than a quarter of a billion pounds in peatland restoration over the next 10 years. That will enable the development of large-scale restoration projects: enhancing biodiversity in some of the most important habitats in Europe, supporting jobs in the rural economy and, based on initial estimates, delivering greenhouse gas emission reductions of up to 0.8 million tonnes a year by 2032.

The move to net zero will have many impacts, including on our economy, as consumption patterns change and ways of doing business adapt. There will be challenges, but there are also new opportunities. This Government is committed to helping Scotland’s economy adjust, at a time when we must also work hard to mitigate the impacts of EU exit, drive productivity and ensure that we are globally competitive.

Infrastructure investment remains key to our success. Overall, today’s budget, backed with increased capital borrowing, will boost infrastructure investment by nearly £1 billion in the first year of our national infrastructure mission to increase annual investment between 2019-20 and 2025-26 by one per cent of gross domestic product. That includes further investment in sustainable transport, in digital through the reaching 100 per cent programme, and more than £800 million of investment in affordable housing, as we continue to progress our target of 50,000 affordable homes.

The coming year will also bring important progress in our network of support for Scotland’s businesses. We are establishing the Scottish national investment bank, with £220 million of direct investment in 2020-21 by the Scottish Government. South of Scotland enterprise will receive £28 million of funding, to provide targeted support for businesses in that area. Our approach will reach across Scotland, as we provide £201 million funding for city region and growth deals, including provision for new deals in Stirling and Clackmannanshire, Tay cities, Ayrshire and the borderlands.

We are pleased to maintain the most competitive business rates regime in the UK, with the lowest poundage anywhere in the UK, and we will implement a new lower intermediate property rate for properties that have a rateable value of between £51,000 and £95,000.

Taken together, those decisions will halve the number of properties that are liable for the higher property rate, and will ensure that over 95 per cent of properties pay a lower poundage than they would in other parts of the UK.

The budget maintains a generous package of reliefs that will benefit over 150,000 properties, including the small business bonus scheme and business growth accelerator—reliefs that are worth an estimated £744 million in 2020-21.

We are pleased that sense has prevailed and that the Parliament has supported the Scottish Government, the business community and the Convention of Scottish Local Authorities in approving the Non-Domestic Rates (Scotland) Bill, which delivers on agreed measures from the Barclay review. The bill supports growth, improves the administration of the system and increases fairness for ratepayers.

This budget delivers a range of other measures that will support growth in our economy. We are providing an additional £16 million of support for the national manufacturing institute Scotland, and we are increasing the trade and investment budget by a quarter.

We are also investing in the fundamentals of our future economy, through increased resources for Skills Development Scotland and real terms increases for our world-class universities and colleges, with total investment of more than £2 billion, helping to ensure that we have the skills and research base that our economy needs.

In total, this budget provides a multibillion pound package of support for the economy, using all the levers at our disposal, just when it needs it most. At a time when the UK Government seems to have cast our economy aside in favour of Brexit, the Scottish Government will work tirelessly to bring certainty and inclusive growth to the economy of Scotland.

We must also build a wellbeing economy—one that values growth but also strives to be inclusive and fair. We know that challenges in our economy often have the greatest impact on those who are already vulnerable. That is why we are announcing a progressive budget that targets support at those on lower incomes and most in need of support. It is also one of the reasons why we fought hard to win greater control over social security. This coming year will be truly transformational, for two reasons.

First, we will see an uplift of nearly £3 billion in the total value of social security expenditure under our control as we administer the attendance allowance, disability living allowance, industrial injuries disablement allowance, personal independence payment and severe disablement allowance for the first time.

Secondly, we will provide £21 million of funding for the game-changing new Scottish child payment of £10 per week, with initial roll-out commencing later this year. It is estimated that at full roll-out in 2022 that will lift 30,000 children out of poverty. When powers rest in Scotland’s hands, rather than under Westminster’s control, we will use them wisely and decisively to build a fairer, country.

We are also providing wider support to tackle poverty and to help with progress towards the target to halve child poverty by 2030. We will continue to invest from the £50 million tackling child poverty fund and we will increase the Scottish welfare fund by more than 7 per cent to provide more support to people hit by Tory welfare cuts.

Through our public sector pay policy, we will provide a 3 per cent increase in basic pay for people earning up to £80,000, with additional support for those on lower incomes through an underpin of £750 for those earning £25,000 or less, and we will continue to pay and promote the real living wage.

We will provide additional funding to help the most disadvantaged to access further and higher education, and we will invest £645 million in our radical expansion of early learning and childcare. From August this year, we will provide 1,140 hours of high-quality childcare that will boost the education of children at a crucial time in their development and reduce the financial burden of childcare costs on young families.

In total, based on previous estimates, we expect to spend no less than £1.4 billion in 2020-21 on supporting low-income households, before taking into account the remaining devolution of social security benefits. The impacts of austerity continue to be felt and we face an uncertain future due to Brexit, but rest assured that this Government can be relied upon to act with compassion, investing in the fairer and more equal society that we would all like to see.

In a Parliament of minorities, good governance demands compromise and pragmatism on all sides. This budget speaks to the priorities of the country. I am sure that every party can find a reason to agree with it, but those who wish to find partisan reasons to oppose it should understand the devastating consequences of doing so.

The emergency provisions enshrined in the Public Finance and Accountability (Scotland) Act 2000 are wholly inadequate for the Parliament of a modern economy. If no budget is passed, the law mandates that public expenditure should be capped at the level of the previous year. There would be no £1 billion increase to our health and care service, nor the additional £500 million for local authorities, and our police, universities and colleges would all be denied a real-terms increase in their budgets. Worst of all, as a consequence of the further devolution of social security payments nearly £3 billion of vital support would be denied to those people in our society who need it most.

Now is not the time for brinkmanship. At a time when Westminster is far from representing Scotland’s interests, it is time for Holyrood to demonstrate clearly and with purpose that we are willing and able to act in the national interest.

In order to achieve that, the Government will be willing to compromise, but we want to be clear on the parameters of that compromise. This is a budget that fully allocates the resources at our disposal and addresses the priorities of the nation. It reflects our ambition for our country and our determination to eliminate child poverty, accelerate the transition to a net zero economy and improve the collective wellbeing of our society through first-class public services and a social security system that is built with human dignity at its core.

In allocating those resources, we have used every fiscal lever that we have to the fullest extent. Every penny is accounted for, including the £100 million in the reserve, which is held to ensure that we can manage future tax reconciliations and any volatility in social security expenditure. Any party in the chamber that seeks spending increases, or tax cuts, or both, as some parties do, will need to be clear with the Scottish people about not just what it wants but how it will be paid for.

In presenting its budget to the Parliament today, the Scottish Government has made an assessment of the promises that have been made to the people of Scotland by the UK Government. This budget relies on the UK Government fulfilling its commitments. We have had little choice but to take the Tories’ promises at face value—after all, their majority at Westminster was won on the back of a promise to end austerity. We have heard those promises before, yet the crippling reality of Tory austerity continues to bite. Just last week, there were widespread reports that all UK Government departments were being ordered to identify savings of 5 per cent. That order was issued by none other than Boris Johnson and Sajid Javid. It seems that old habits die hard for the Tories.

If the UK Government does not live up to its promises, we will have to take the unprecedented step of returning to the chamber with budget revisions that make cuts to the spending plans that I have outlined today. If that happens, the responsibility will lie clearly at the door of the UK Government.

As a Parliament, we face a choice. Time is of the essence, and we must choose soon. We propose a budget that delivers for our public services, invests in the path to net zero emissions, boosts our economy and, through the new child payment, delivers a game changer in the fight against child poverty. This Scottish Government’s choice is clear—this budget delivers for the people of Scotland, and I commend it to the chamber. [Applause.]

The minister will now take questions on the budget statement.

I thank the minister for providing advance sight of her statement, and I congratulate her on her delivery of it in circumstances that none of us wanted to see. As an aside, I believe that this is the first time that the Scottish budget has been delivered by a woman and by an England-qualified chartered accountant.

The backdrop to this budget is a substantial increase in the block grant, thanks to extra spending at Westminster. The Scottish Government is benefiting from a Boris bonus that is worth at least £1.1 billion in real terms. What is essential is that that money is not squandered but used to the benefit of the Scottish people. Against the background of that budget increase, there can be no case for additional tax rises or for any further cuts in our vital front-line services.

Our priorities for this budget are for it to provide measures that will help to grow the Scottish economy and support vital public services. When it comes to tax, we have made it very clear that there must be no further divergence between personal taxation in Scotland and that payable elsewhere in the United Kingdom. What the minister announced on tax thresholds will widen the tax differential, and we could not support that.

Thanks to the Fraser of Allander institute, we know that the tax changes that were introduced by the former finance secretary, egged on by the Greens, which made Scotland the highest taxed part of the United Kingdom, have not raised any additional revenue for the Scottish public services; all that they have done is fill the black hole that has been created by the fact that the Scottish economy is growing more slowly than that of the rest of the UK under the Scottish National Party’s stewardship.

We know that, over the past year, the Scottish economy has grown at less than half the UK rate, and I expect that the Scottish Fiscal Commission will tell us today that that trend will continue. No additional taxes would therefore be appropriate, which is why in this budget, we need to see action to support business. The announcement on reducing the large business supplement is welcome, but it does not go far enough for us, or for business, particularly for the large retailers that are suffering at the moment.

We welcome the extra money for health that was made possible only because of additional spending by the UK Government.

When it comes to local government, which has borne the brunt of cuts in previous budgets, we have been clear that that cannot be the case this year. Councils are key to initiatives to tackle climate change, but when their budgets are cut, they cannot progress those. We will therefore scrutinise closely the additional commitments put upon councils to ensure that they are fully funded, with no hidden cuts to the core grant, as in previous years.

I have two specific questions for the finance minister. First, she has told us that every penny at her disposal has been accounted for. Of course, we have heard that exact line from her former boss, year on year. However, miraculously in the three to four weeks after producing his budget, he would suddenly find a few hundred million pounds extra from down the back of his sofa to lubricate his budget negotiations. Perhaps the finance minister can save us all a bit of time by telling us today exactly how much money is hidden away, in addition to what is in the budget before us. That would make forward budget discussions much easier. We will give the budget serious consideration, and we are prepared to engage seriously with the Scottish Government on whether we can support it.

Finally, will the finance minister accept that all the additional spending that Scotland benefits from is supported by the union dividend, which is now worth almost £2,000 for every man, woman and child in Scotland? We learnt this week that, without it, Scotland would be facing a deficit of over £10 billion, or up to 7.3 per cent of GDP. Will she acknowledge that it is Scotland’s place in the United Kingdom, coupled with this year’s Boris bonus, that supports this budget and public services in Scotland?

Rather than pretending that there is a Boris bonus, the Tories should have started off by apologising for the decade of austerity that they have subjected this country to.

The Tories talk about extra money, but we have not seen a single penny of that. If the UK Government was so confident of investing more in the Scottish Government’s budget, why has it introduced so much uncertainty by delaying its budget?

On taxation, Murdo Fraser knows that his position on tax is not sustainable. For the majority of people, this is the lowest taxed part of the UK, but for everybody, it is the fairest. We can invest in our public services because the fundamentals of our economy are strong and we have mitigated the impact of Tory austerity with our tax decisions.

On the first of Murdo Fraser’s two questions, I confirm that every penny has been deployed. The uncertainty caused by the UK Government’s budget delay means that we are not playing games; this is not the time for brinksmanship. We have deployed every penny through the bill. This is an honest presentation of what the Scottish Government believes the priorities should be for the people of Scotland.

If the union dividend is the austerity that has hit our public services for 10 years, and a Brexit that we did not want that has hit our economy, I am not sure that it is a great selling point for the UK Government.

I welcome Kate Forbes to her role in delivering the budget statement today, and thank her for a copy of the statement.

Despite the additional powers and financial levers that have come to the Scottish Parliament over the past decade, the SNP Government has failed to maximise their use, leaving our economy, our people and our essential services worse off. It has endeavoured to hide that using smoke and mirrors, and that is the case again today.

The Government tries to avoid scrutiny, but it must come clean with the Scottish people and tell them what choices it is making on their behalf. Scottish Labour wants transformational change. We want investment for the future.

We know that we cannot reverse 13 years of mismanagement in one budget. Acknowledging that, we have asked the Scottish Government to take a step in the right direction and a step towards real change in this year’s budget. We asked that it invest in the future by tackling climate change and prioritise getting our young people on to buses.

Scottish Labour delivered free bus travel for older people, which was transformational. We must now do the same for our younger people, the under-25s, and give them a choice that will follow them into adulthood. Doing so will benefit the whole country by encouraging everyone out of their cars and on to public transport.

Scottish Labour is sick of hearing about people being trapped in hospital when they should be at home. It is costing a fortune and holding people hostage. We want to see a step change in local government funding, to allow it to invest in services that people need to help them escape from hospital into the comfort of their own homes.

We want to boost our economy by investing in the education and skills that our country needs—not only for young people, but for everyone—and equipping people for the future of automation and digitalisation. In further and higher education, we used to lead the world: let us aspire to be world leaders again. Let our communities thrive again, let us push for excellence in health and social care services, and let us reverse austerity and change the future.

The budget is a disappointment, and what is worse, it lets down the Scottish people. It is a time for investment. Will the minister please tell me exactly how the Government’s spending plans will meet our ambitions to invest in the future for all of Scotland? Will it actually tackle climate change? Will it allow young people freedom and independence to get to work and play? Will it educate our young people and workforce for the challenges ahead? Will it equip our councils to protect our communities? Will it once and for all put an end to delayed discharge?

For a party that claims to be about mitigating austerity, it is disappointing that last year, the Labour Party voted against a budget that contained £1.4 billion that was directly linked to mitigating austerity for our most vulnerable, including measures that directly mitigated UK welfare decisions.

In this year’s budget, the Labour Party has a choice: will it vote for or against a commitment to deliver the first child payments, which, by 2022, will take 30,000 children out of poverty? That is the choice that Labour faces. I am proud to be presenting this budget today, because it delivers in the national interest. It delivers an additional £1 billion for health, an additional £0.5 billion for local government, and real-terms increases for colleges and universities.

The question for Labour is this: if it has good ideas—and I am willing to listen and to compromise—will it tell us how much they will cost, and if they cost more than the overall allocation that we have, what will it cut in order to deliver on them?

Kate Forbes has, in a very short timescale, taken on a difficult task in stepping into the breach to lead a budget process, with no finance secretary in the Cabinet. All political parties have a responsibility to be constructive in the process, but Kate Forbes is also going to have to be constructive with us, in trying to build political agreement such as has not been built prior to the introduction of the budget.

There is much talk of the climate emergency in the document, as there was in Kate Forbes’s statement to Parliament. The area in which Scotland is clearly failing the climate is transport. Emissions are going up, not down, which is due largely to long-standing Government policies. The transport strategy that was announced yesterday contains little sign of the substantial changes that are needed if we are to make the progress that we need to make.

In the budget, I can find no evidence of a shift away from the damaging traffic-inducing transport projects that the Government has been supporting until now. That shift would free up resources to invest in reversing the decades-long trend towards ever more expensive public transport. The widely supported policy of free bus travel for young people, which the Greens and the Labour Party have been advocating for months, would be a substantial step in that direction.

Given the tight timescales that are involved, can Kate Forbes give a clear assurance that she will look with an open mind at all the options that the Greens and others are putting forward for transformational change, and an assurance that the budget is not being presented on a “Take it or leave it” basis?

I thank Patrick Harvie for that question.

I am happy to confirm to Parliament and to all parties that I am willing to be constructive. I hope that the same goes for them, when it comes to engaging on the budget.

The budget recognises our responsibility to tackle climate change and it delivers on the climate. As of today, the Government will spend 1 per cent of GDP on tackling climate change through capital on infrastructure projects, which Patrick Harvie mentioned. That does not include other measures that we are taking, including significant increases in resource expenditure on peatland and the green growth accelerator. We want the trends to be the proportion of spend on low-carbon infrastructure going up and the proportion of spend on high-carbon infrastructure going down. In today’s budget, we have made a step change, but—as always—my door is open and I am happy to listen to all parties.

I thank the minister for advance copy of the statement.

The budget includes measures that we support. However, does the minister not think that there should have been references to all the projects across Scotland that are overspent to the tune of hundreds of millions of pounds, including the Aberdeen western peripheral route, the sick kids hospital, the ferries and the hospitals in Aberdeen that we have found out about today?

Councils have been given only half of what they need. Does the minister accept that that will hit local services, including in respect of the promises that the Government has made on their behalf?

Forgive me for being sceptical but, when it comes to budget negotiations, ministers always say that they have no spare money, before they reveal secret pots of money. Does the budget allow for any spending on independence?

I agree with the minister on Brexit. We could agree with the minister on the budget, too, if she would clear the pathway in order to make that happen. Is that her objective?

I sometimes worry that the Lib Dems are more obsessed with independence than I am. In the past few budgets, the Lib Dems prioritised the union over support for increased spending on mental health, education, infrastructure and all our other commitments. With this budget, the Lib Dems have the choice to get involved, to participate and to be willing to compromise and work with us to deliver the budget.

We have provided a cash increase of almost £0.5 billion to local authorities. The settlement provides for our commitments on early learning and childcare, and on teachers’ pay and pensions. In real terms, as well as cash increases, local authorities will see their resource budgets going up. If Willie Rennie believes strongly in a particular area of spend, my door will be open, and I look forward to speaking with him.

A large number of members wish to ask questions. If we keep questions and answers concise, we will get through them all.

I welcome the announcement that, for the first time, health and social care partnerships will receive more than £9.4 billion, in spite of the fact that, over the past decade, Scotland’s annual budget has fallen in real terms by £1.5 billion. Can the minister expand on how that funding will be distributed?

Our budget prioritises investment in front-line services and takes funding for front-line national health service boards to £11.3 billion. That is an additional investment of £454 million—an increase of 4.2 per cent. I hope that all parties will welcome that.

Our budget goes above and beyond the level of funding demand that we recognised in the medium-term financial framework. Through that approach, we will build on our record level of front-line health spending in Scotland, which is £136 per person higher than it is in England. We will deliver a shift in the balance of care towards mental health services and towards primary, social and community care. Next year, we will invest more than £9.4 billion in health and social care partnerships. We will also make available an additional £12.7 million to tackle the harm that is associated with the use of illicit drugs and alcohol.

In her opening statement, the minister said that if any party wants to see spending increases or tax cuts or both, they need to explain how they will be paid for. The answer is simple. We need to grow the economy and reverse the decline of the past 13 years. Yesterday, the SNP confirmed that the Scottish economy had grown by 5 per cent less in the past 13 years than the UK economy. Today, the SFC is forecasting another five years of low growth and low wages in Scotland.

Let us be clear that this is not about Brexit, because the rest of the UK’s economy is now growing at more than twice the rate of Scotland’s. This is a piecemeal budget, full of window dressing, from a tired Government. When will the minister start listening to us and take real action to restore economic growth to Scotland?

Listening to the Tories would require me to do something impossible—to give tax cuts and spending increases. That is, in accounting terms, completely impossible.

On growing our tax take and the economy, it is very clear in the evidence that we have seen—business is very clear about this, as well—that what is harming the economy right now is the uncertainty that is caused by Brexit. The thing that would grow our economy fastest would be our being able to allow people with talent and skills to come into this country for population growth. However, those levers lie with Westminster, which is refusing to allow that.

First, I congratulate the minister on her excellent delivery of the budget statement. I will not make any criticism; I will simply ask a simple question about a very specific matter.

Will the minister look at the impact of water charges on small businesses and, in particular, will she review the policies and practices of Business Stream, which insists on charging some small businesses for water that they do not use? That is having an adverse impact on quite a number of small businesses the length and breadth of Scotland.

I say briefly that I am happy to agree to consider the issue that Alex Neil has asked about. The Government is committed to supporting our small businesses, which are the backbone of our economy.

We know that, in 2020-21, our councils will have to deliver nearly £500 million-worth of new Scottish Government commitments. Will the minister guarantee that the Scottish Government will fully fund those new commitments in addition to their core budgets, rather than at their expense? Will she also tell us what new money is being allocated to local authorities to address the damaging impact of previous SNP budget cuts, and to address the growing pressures that our communities face?

I am delighted to announce today that local government will get—in cash terms—almost half a billion pounds to spend on delivering the services that the people of Scotland need. As I confirmed earlier, the settlement also provides for our commitments on early learning and childcare, and on teachers’ pay and pensions.

I have said it before, and I will say it again: over the course of the next few weeks, within the constraints of having only a short time, we have the opportunity to work collaboratively with any party in Parliament. That includes the Labour Party. If it can make clear what its priorities are, and how it will cost and fund them, we will be more than delighted to discuss them.

As someone who represents a constituency where a just transition away from high-carbon jobs is an acute challenge, but a necessity, I welcome the announcement of the green growth accelerator to support local authorities to invest in measures that will reduce emissions and support new green jobs. Will the minister join me in urging all local authorities—particularly those such as Aberdeenshire Council—to bring forward proposals to ensure that the potential of the green growth accelerator is maximised?

I agree with Gillian Martin that local authorities have a critical role to play in responding to the climate emergency. We need them to deploy the key levers—capital budgets or other resources—that they have at their disposal.

Local authorities’ ownership of land and assets and their responsibility for local planning and regulatory frameworks are key. As Gillian Martin suggested, the green growth accelerator is designed to support local authorities to use those levers, in concert with other local authorities and public sector partners, to drive the transformative change that we want and need.

I welcome the minister to her position in what will probably be the longest job interview in history.

Despite the biggest cash injection in the history of the NHS, why has the Scottish Government failed to end the underfunding of health boards, including NHS Highland, which is in her area, and failed to reverse cuts to rehabilitation beds?

I am glad that Miles Briggs welcomes the record funding for health. I hope that, throughout the year, he continues that theme of welcoming the Government’s investment in and prioritisation of the health service.

On the first issue that the member mentioned, I note that the Tories have discussed at length the NRAC—NHS Scotland resource allocation committee—formula and have provided costings in that regard. However, I do not think that those costings are strictly accurate, unless the Tories intend to cut other budgets to deliver those proposals.

On the important issue of rehab beds, when it comes to such complex problems we need complex solutions, and we need new solutions. There is no simple solution. That is why we have increased by nearly 60 per cent the funding for reducing harm from alcohol and drugs. That funding will be focused on supporting reduction in drug deaths to allow our new drug deaths task force to support innovative projects that work and to test new approaches.

I welcome this well-presented budget and the feisty answering of questions so far.

Can the minister confirm that the rail services budget will increase by a thumping 27.3 per cent to more than £1.25 billion and that ferry services will see a 9.5 per cent increase to £255.1 million, which is almost triple the figure when the Government came to office, plus almost £50 million for Ferguson Marine Engineering?

I can confirm all of the above. As an MSP who represents a constituency that relies on our ferries, I am particularly delighted with the increase in support for our lifeline ferry services.

The minister talked about the importance of Governments keeping promises. This Government promised to end delayed discharge, but that promise remains unfulfilled. What assessment has been carried out of the minister’s spending plans to establish whether they will fully meet the need that exists? When does the Government expect to see an end to delayed discharge?

As Monica Lennon will see, there is increased spend throughout the budget and we are ensuring that there is an increase in front-line spend in our health service in particular in order to deal with the challenging issues that she has identified. The budget continues to shift the balance of care. We focus on our twin approaches of increased investment and reform, and the Cabinet Secretary for Health and Sport is doing a fantastic job in ensuring that that is happening.

How much is the Scottish Government providing to support capitalisation of the Scottish national investment bank and how will that boost economic growth in Scotland?

In order to continue our progress towards our commitment to provide £2 billion over 10 years to fund the national investment bank, in this year’s budget we have direct investment available of £220 million. That is in addition to the existing £150 million building Scotland fund. The bank, which enjoys cross-party support, will help to support and positively impact on Scotland’s economy through the provision of mission-based investment and will develop its own pipelines for investment to ensure that we are investing in the Scottish economy not just for next year but for generations to come.

On page 120 of the budget document, the Government states that it will

“maintain at least 116,000 full-time equivalent college places”.

However, I cannot see anything about the maintenance of part-time places, which are obviously crucial to the economy. Can the minister give us any detail about what resources will be available for part-time college places?

It is a full-time equivalent figure, so in that sense the budget continues to commit to funding college places. I hope that Liz Smith welcomes the commitment in the budget to deliver a real-terms increase for higher and further education.

I think that I am correct in saying that in 2019-20 the maximum by which councils could increase council tax was 4.79 per cent and only 12 councils took it to that level, so the average increase was 3.6 per cent. What are the equivalent percentages for this year?

If councils take up the full flexibility to increase their council tax levels by up to 3 per cent in real terms next year, it would generate an additional £135 million to support council services.

In light of the climate emergency, I welcome some commitments from the Scottish Government, while needing reassurance that it is indeed new money. What methodology did the Scottish Government use to assess the budget, to be sure that it will deliver rapid and transformational change with just transitions for Scotland across all portfolios, given that the results of the just transition commission’s review on capital expenditure and emissions are not yet in place?

I remember giving evidence to the member’s committee on the issue of methodology and ensuring that our budget delivers our aspirations and ambitions on climate change. As she knows, that builds on the Climate Change (Emissions Reduction Targets) (Scotland) Act 2019 and this year’s programme for government to deliver on the elements that I mentioned in my opening remarks.

We are proud of the significant increase in investment in our climate change aspirations in the budget. In one sense, this is just the start, so although there is significant investment, we look forward to continuing to build on that, not just this year but in the years to come. We see that most clearly when it comes to peatland restoration, where there is a commitment of £20 million this year but a commitment of £250 million over the next period.

Can the minister provide a guarantee that the new budget line for Ferguson Marine in Port Glasgow will ensure that jobs will be safeguarded and the economy in my community will be protected, and that that budget line will be protected when she has discussions with the other parties in the chamber?

As Stuart McMillan will see, the 2020-21 Scottish budget includes almost £50 million to fund the delivery of vessels 801 and 802 in line with the revised schedule and the costs presented to Parliament by the Cabinet Secretary for Finance, Economy and Fair Work. The Scottish Government is committed to funding the completion of the two ferries that are currently under construction at the yard.

Last week, the Fraser of Allander institute told the Finance and Constitution Committee that no additional revenues had been raised by the SNP’s income tax hikes because of weak growth in the Scottish tax base. What specific policies are contained in the budget to grow the Scottish tax base?

Our investment in this year’s budget has been significantly helped by our decisions on tax policy. I am delighted that, over the past year, there has been an additional £500 million to invest that would not have been there if the Tories had had their way.

The budget significantly invests in our economy and it protects our reliefs, which the Tories were putting at risk as recently as last week. It ensures that we have the most competitive relief scheme anywhere in the UK, with a lower than inflation rise in the poundage and a lower poundage rate for 95 per cent of businesses in Scotland compared with the rest of the UK. Perhaps most important, the budget also invests significantly in infrastructure, which is a key way to boost the economy.

The report published on 27 January by the Infrastructure Commission for Scotland states that we must have

“a presumption in favour of investment to future proof existing road infrastructure and to make it safer, resilient and more reliable.”

Given that, can the minister outline how much the Scottish Government has committed in its budget to improving road infrastructure, especially for roads in the south-west of Scotland?

We are committed to delivering transport projects that will help us to create the conditions for an inclusive and net zero emissions economy. The Government is increasing its budget for trunk road and structural repairs to more than £123 million next year and, through the operating companies, will continue to safely maintain and operate the trunk road network.

In the south-west, we will continue to progress the construction of the A77 bypass, with completion expected in summer 2021. Consideration of further improvements to the A75 and A77 will form part of the strategic transport projects review.

Bus passenger numbers have plummeted by a staggering 108 million journeys under the Scottish National Party. When Labour introduced the free bus pass for older people, it resulted in the biggest increase in bus passenger numbers since devolution. Does the minister accept that the measures in the budget will not begin to reverse the decline in bus usage, but that if free bus travel was extended to young people, we could start to halt the dismantling of our bus network that is currently taking place in every community under the Scottish Government?

I am sure that the member welcomes the commitment in the budget to increase overall funding for rail and bus services, including concessionary travel, by £286 million, to a total of £1.15 billion next year.

The member mentioned free bus travel for under-25s. I do not think that that is necessarily a bad idea—I just want the Labour Party to tell me how much that would cost.

The minister has outlined significant additional investment to complete the expansion of early learning and childcare. How much is that expected to save families each year?

The Scottish Government will save families up to £4,500 per child per year.

From her statement, the minister seems unaware that crime has risen for the past two years, and that violent crime has risen for the past four years. The chief constable says that without more cash and officers there will be a crisis in policing and some crimes will not be investigated. The chief constable also says that he cannot afford to lose more officers and that a budget of less than £50 million means that he will have to. With this budget, is the minister saying that the chief constable is wrong and can the chief constable take that as statutory consent from the minister that the SPA can add to the deficit?

With this budget, I am saying something quite simple: the overall SPA budget will increase by 3.6 per cent next year, which is an additional £42.2 million. Given that the member takes an active interest in such things, I hope that he will welcome the priority that we have given to the police force by ensuring that the figures in the budget protect our police officers and invest in the estate.

The minister announced an extra £1 billion in infrastructure investment. Can she set out what is included in that funding and how many jobs in Scotland it will support?

It is estimated that the £6.2 billion of investment will support more than 40,000 full-time equivalent jobs in 2020-21. The budget includes funding for an array of infrastructure to support our long-term ambitions for inclusive economic growth, building sustainable places and responding to the climate emergency. It includes more than £200 million of funding for our city region and growth deals, £120 million for the expansion of early learning and childcare places, support for progress on our elective care health centres and funding required to meet our commitment to deliver 50,000 affordable homes.

The minister has spoken several times about a rise in higher education funding. However, the rise is half of what Universities Scotland says that it needs and amounts to less than a tenth of the cuts that it has suffered in recent years. Is the budget not just continuing to sell that critical sector short?

I have already confirmed that the budget provides a real-terms increase in funding for higher education and further education. The question for the Labour Party members is whether they will vote against that real-terms increase or not.

I am sure that fellow members of the Justice Committee—perhaps with the exclusion of Liam Kerr—will welcome the additional £37 million for the police budget. Will the Scottish Government continue to press the UK Treasury to pay back the £125 million in VAT that was paid by Police Scotland to the UK Treasury between 2013 and 2018?

We will continue to press the UK Government on those matters. Considering how many spending asks the Tories have, I think that it would be nice if, once in a while, they would direct some spending asks to their own UK Government. That is over £300 million of waste. I appreciate the advice that the minister is getting from the Deputy First Minister.

Despite the minister’s warm words about improving transport and infrastructure, the detail in the budget paints a different picture. To answer Emma Harper’s question, there is an £85 million drop in funding for motorways and trunk roads, there are flatlined budgets to support councils with cycling and walking programmes, and there are cuts to regional transport partnerships, smart car roll-out and support for bus services. Given that the Green Party has placed a budget demand on the SNP that it backtrack on its existing commitments to improve Scotland’s roads, is today’s draft budget a worrying sign that the Scottish Government is capitulating to that ridiculous demand?

Interestingly enough, I do not recall additional spending on roads being one of the Tories’ asks. I wonder whether that is a new ask to add to their already undercosted list of demands.

On transport, I have already mentioned that we have increased overall spending for rail and bus services, increased investment in active travel and invested in the future transport fund to help support modal shift. There is significant investment in transport in this budget. If Jamie Greene cannot find it in himself to welcome that, there is not much hope for the general spend on transport.

We know that we need to repeat and extend the success of renewable electricity generation to renewable heat. Will the minister expand on the measures that are outlined in the budget that will deliver on that ambition?

Yes. The £120 million heat transition deal that is announced today is an ambitious and broad package of capital investment that will ensure that we make demonstrable progress towards decarbonising our homes and buildings. The deal complements and further strengthens our policy framework for renewable heat.

We will shortly introduce a heat networks bill, which will help to de-risk investment in heat networks and, later this year, we will set out further detail in our heat decarbonisation policy statement on the steps that we will take to reduce emissions from the heating of Scotland’s homes and buildings.

Through Kate Forbes’s constituency work, she will know the importance of investing in energy efficiency in our homes, which is one of the most transformational tools that we have in tackling the climate emergency and fuel poverty. It is also a prerequisite for the investment on heat that she has just described. The Greens, the climate emergency response group and Citizens Advice Scotland have all called for the budget for that to be doubled, yet there is only a marginal increase for it in this budget. How will the Government meet its own fuel poverty and climate targets with that scale of investment? Is Kate Forbes prepared to bring a spirit of compromise and pragmatism to negotiations on the issue?

I confirm to Mark Ruskell that I have a great spirit of compromise, and I am more than happy to talk to him further about those issues. We recognise that, in order to meet our climate change ambitions, we will have to consider our investment in every area of infrastructure. Although this budget demonstrates a significant increase in the spend on green infrastructure, we are also increasing our spend on energy efficiency.

Addiction and drug deaths are a major blight on the communities that I serve. How will the budget support services for those who are addicted and, ultimately, how will it help them into recovery, including by enhancing the provision of rehabilitation beds and improving the recovery pathway more widely?

I confirm that the significant increase in funding to reduce harm from alcohol and drugs that we committed to today will look at different innovative ways and projects to achieve that. Ultimately, we all want a reduction in the number of drug deaths.

If all councils increase council tax by the maximum amount, will any still have to make spending cuts?

We ensure that we work in partnership with local authorities. As I have said repeatedly, we are ensuring that there is a cash increase to local authorities of just short of £500 million. It will be for local authorities, which have complete autonomy over 92 per cent of their budgets, to decide how to spend that.

The minister has not said anything about cutting waste in the budget. Does she have anything to say about paying an extra £62 million for a botched fixed-price contract for the Aberdeen western peripheral route, wasting more than £200 million on ferries that CalMac does not want and wasting £40 million on an airport that has made losses every year for the past 10 years?

Frankly, I find it offensive if the member thinks that investing £200 million in ferries that my constituents and other constituents across the country need is a waste. He might find that his constituents find it questionable that he thinks that spending on the AWPR was also a waste. We will continue to invest in infrastructure and transport projects, as we intend to do through this budget.

As I am the MSP for the Cowdenbeath constituency, can the minister highlight for me the key benefits of the budget as far as the good people of Fife are concerned?

I can confirm to the member that the budget delivers for the people of her constituency, as it does for people across the country. The budget provides certainty for ratepayers, it invests in our economy, it steps up our commitment to tackling climate change and it tackles the challenges of child poverty. Those are all measures that every person in Scotland will welcome.

It is not unusual to support elements of the budget without supporting it in its entirety; indeed, SNP groups in local authorities do that all the time. In that vein, therefore, I welcome the fact that page 50 of the budget document shows that the Government has accepted my proposal for a £1 million fund to help mesh-injured women, which will be warmly welcomed. Can the minister bring forward the scheme as quickly as possible to allow women to claim from that fund?

I thank Neil Findlay for the spirit in which he made his remarks and asked that question, and I am glad that he welcomes our commitment. I am sure that, in collaboration with the health secretary, we can look at those issues.

I declare an interest. [Interruption.]

Order, please.

They would likely complain if I did not declare an interest, Presiding Officer.

The minister made much in her statement of how we all know how important the environment is, but I see that agri-environment scheme payments are down again, for the third year in a row. That is hardly looking after the environment.

We recognise that we need to work in partnership with our farmers and land managers to meet our commitments on climate change. That is why I hope that the member welcomes the initial £40 million of investment in the agricultural transformation programme, which will develop pilot schemes to reduce greenhouse gas emissions and invest in on-farm renewables and tree planting, among other measures. We are committed to supporting the agriculture industry to make that shift and we want to do it in collaboration with the industry.

I have been reading the carbon assessment of the budget proposals, which has lots of good news. Page 4 of the budget document outlines that spending to mitigate emissions has increased, but is the Government doing anything else in that area? Can she give us further information as to how spending will be targeted specifically at carbon?

What is interesting about the budget is not only the high-level figures for our investment in peatland restoration, the heat transition deal, the future transport fund and our priorities but the significant investment in how we work with people to deliver on our commitments on climate change. I have already mentioned the investment in the agricultural transformation programme, but we are also developing, for example, the £50 million heat networks early adopter challenge fund for local authorities and a £10 million fund to support hydrogen heat demonstrator projects. Not only do we want to be at the forefront when it comes to our climate change commitments, we want to pioneer solutions that the rest of the world can adopt.

Page 145 of the budget says that the legal aid budget

“funds criminal defence and redress when rights are not being upheld”.

Why has the budget been frozen at £137 million? Why is no additional money being provided for that crucial fund this year?

I would be happy to speak to the member more generally after the statement. We remain committed, as is demonstrated by the figures before him, to investing in that important area of our budget.