Meeting of the Parliament

Meeting date: Wednesday, February 21, 2018

Official Report 909KB pdf

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Budget (Scotland) (No 2) Bill: Stage 3

The next item of business is a debate on motion S5M-10518, in the name of Derek Mackay, on stage 3 of the Budget (Scotland) (No 2) Bill.

As members are aware, at this stage of the proceedings I am required to give a determination on whether any provision in the bill relates to a protected subject matter—in other words, whether it modifies the electoral system and franchise for Scottish parliamentary elections. In the case of this bill, it is my view that no provision of the budget relates to a protected subject matter and therefore the bill does not require a super-majority in order to be passed at stage 3.

We turn to the budget. I call the Cabinet Secretary for Finance and the Constitution, Derek Mackay, to speak to and move the motion in his name.

14:54  

That is a great relief to me, as I am sure it is to the rest of the chamber. I am delighted to lead this debate on the Budget (Scotland) (No 2) Bill for 2018-19.

First, I would like to confirm that I have responded formally to the Finance and Constitution Committee report on the budget. I thank the Finance and Constitution Committee and the subject committees for their constructive approach, particularly in light of the scrutiny period, and I look forward to continuing to work with Parliament to ensure that our future processes are fit for our new powers.

The bill is of huge importance to Scotland. The decisions that we make today will support our commitment to inclusive growth and provide support to our public services, to those that deliver those services, and to communities and individuals across Scotland. The bill that is before us today seeks Parliament’s approval for more than £1.2 billion of additional expenditure to build a fairer, more prosperous country and to put the progressive values of this Government into action. It is a bill that reflects our status as a Parliament of minorities.

Does the cabinet secretary think that it is progressive that, as a result of the budget, members of the Scottish Parliament will pay only an additional 29p a week in tax?

James Kelly is simply wrong. The budget proposes to raise taxation in a fair and proportionate way that will deliver hundreds of millions of pounds more for Scotland’s public services. During the next financial year, the tax decisions that we have taken over the past two years and the post-block grant adjustments that have been made amount to more than £400 million of additional resources for Scotland’s public services. Surely the Labour Party, at this 11th hour, can welcome that investment in Scotland’s public services.

I have had to reach out to find consensus on the bill in Parliament, and to compromise as well. That was necessary to reach agreement on a package of measures and support for our public services. We have worked hard to secure the passage of the bill in order to deliver on our commitments, which protect Scotland’s much-valued social contract. I once again thank those who have engaged constructively in those discussions.

The most successful economies in Europe are built upon the firm foundation of strong public services and inclusive societies. Equally, those foundations require a strong economy to generate the necessary resources to fund them.

On the basis of requiring strong foundations, can the cabinet secretary explain why 28,000 jobs have been taken out of local government in the past few years under his Government?

The scaremongering of the Labour Party as it relates to local government continues. This budget proposes to give a real-terms increase to local government in the next financial year, and local authorities will also have the ability to raise the council tax. The difficulty for members of the Labour Party is that in voting—as I suspect they will—with the Tories tonight, they will vote against that extra money for local government and against the extra £1.2 billion for Scotland’s public services. That is the reality of what the Labour Party will do this evening.

Will the minister give way on that point?

I would like to make more progress.

The Scottish Fiscal Commission has highlighted some economic challenges around Brexit uncertainty and the declining working-age population. However, it is important to recognise that Scotland’s economic performance has remained resilient. It is encouraging that the latest Bank of Scotland Purchasing Managers’ Index reported that business optimism in Scotland is at a three-year high, but we will not be complacent and we will build on those strong fundamentals through the measures in the bill to stimulate economic activity and improve productivity.

The cabinet secretary talks about the resilience of the Scottish economy. Does he agree with the Fraser of Allander institute’s analysis that Scotland’s economy is facing the longest period of weak economic growth for 60 years?

The Tories really cannot abdicate their responsibility for macroeconomic policy in Scotland.

In the budget, this Government will invest almost £2.4 billion in enterprise and skills through higher and further education and our enterprise agencies. There will be a 64 per cent increase in the economy, jobs and fair work portfolio. We will allocate £18 million for the new national manufacturing institute and £10 million for the new south of Scotland development agency. We will double to £122 million the funding allocated to the city region deals. This Government is investing in economic growth in the teeth of Tory cuts and Tory opposition.

On business rates, we will offer the most attractive package of non-domestic rates relief anywhere in the United Kingdom, amounting to more than £720 million. Of course, we will also provide the UK’s first nursery relief to support our childcare policies.

Our growth accelerator will encourage businesses to invest in their premises to drive improvements in productivity. We have delivered on the business community’s number 1 ask, which was to cap an annual uplift in business rates at the consumer prices index rather than the retail prices index.

Today’s bill invests £1.2 billion in our transport system, turning the A9 into an electric highway and delivering new railway investments such as the electric trains between Edinburgh and Glasgow.

Before the minister gets too carried away about the state of the Scottish economy, will he comment on the rise in unemployment by 14,000 people, which was announced today? Is he complacent about that?

The figure is lower than it was last year—and all the more reason to support this budget to invest in the economy, skills, productivity, research and development and innovation.

I can confirm that Transport Scotland has now developed specific proposals on how the pre-pipeline fund for new rail projects will work and be governed. It will publish full details over the coming weeks.

As I confirmed at stage 1, between 2017-18 and 2018-19 the proportion of the Scottish Government capital budget that is spent on low carbon has increased from 21 to 29 per cent. The proportion of our capital budget that is spent on low-carbon projects will continue to increase in future years.

To further support our transition to a low-carbon economy, the budget invests £146 million in energy efficiency and heat decarbonisation, including real-terms protection for the home energy efficiency programme. It also allocates £60 million for a low-carbon innovation fund and £20 million to support the transition to electric vehicles and to support more green buses, and it doubles investment in active and sustainable travel.

The budget today delivers £756 million of investment in affordable housing and £10 million in an ending homelessness together fund as part of our commitment to eradicate rough sleeping and transform the use of temporary accommodation.

Those investments will help to ensure that our future growth will be both inclusive and sustainable. Investment now in infrastructure and support for business needs to be complemented by investment in our people, services and communities.

Education is this Government’s number 1 priority. That is backed by above-inflation investment in our universities, colleges and local government. There is £243 million to support the expansion of publicly funded early learning and childcare entitlement; £120 million is allocated directly to headteachers through the pupil equity fund; and a further £59 million provides targeted support to children and young people in the greatest need. We are also providing the first investment of a new £50 million tackling child poverty fund, which will help address the underlying social and economic causes of poverty.

Yesterday I laid the local government finance order, which includes the additional £170 million that was announced following the constructive discussions with the Scottish Green Party at stage 1. That delivers an above-inflation investment in local government for local revenue services and adds to the real-terms increase in capital support. That has been welcomed by the Convention of Scottish Local Authorities and I note that, so far, 11 councils have exercised the flexibility that they have to increase their council tax levels by up to 3 per cent. If the remaining councils follow suit, that will be worth around a further £77 million to support local services next year.

I also had the opportunity yesterday to see a prime example of support for our national health service when I went to Leith surgery. I saw at first hand how the additional funding provided by the budget delivers for our core public services.

The bill will see a £400 million increase in health resource funding and take our total front-line investment in the NHS to more than £13 billion in the coming year. We will invest £110 million in reform of primary care, which will support our general practitioners and health centres to meet the changing needs of our people. We will increase our direct investment in mental health services—child and adolescent mental health services in particular—by a further £17 million. That is the third annual increase in a row, which will help to deliver an additional 800 mental health workers over this session of Parliament.

If the cabinet secretary is committed to improving children’s health, is he minded to drop from his budget the regressive sports tax—his cash grab that condemns communities to crumbling sports facilities for generations to come?

I will certainly not follow Labour’s chaotic and damaging tax plans, which would result in less resource than it claims. On non-domestic rates, I have not followed the Barclay recommendations and have supported the Dundee regional performance centre for sport. Surely Jenny Marra welcomes that decision.

In supporting the NHS, the Government continues to support free personal care and the roll-out of Frank’s law by April 2019.

The budget is about investing in a fairer Scotland. Yes, there is divergence from the UK. Our investments mean that students do not pay tuition fees, people who are ill do not pay prescription charges and our citizens are not vulnerable to the bedroom tax. I am proud to represent the only Government in the UK to lift the pay cap and offer a real pay rise to our public sector staff. We will also offer the most attractive system of business rates, invest in social rented housing—delivering at more than double the rate in England—and provide above-inflation investment in local government, the police and the NHS. That is the best deal anywhere in the UK and that is why a recent YouGov poll showed that the Scottish public support our proportionate approach.

When it comes to decision time, I invite members to support a budget that means that Scotland will be not only the fairest-taxed part of the UK but, for the majority of taxpayers, the lowest-taxed part of the UK. The budget reverses the real-terms cut that Westminster has imposed on our resource budget and delivers £1.2 billion of additional investment in public services and the economy. It protects our students, our elderly in need of care, our council services and our police services and it invests in the national health service. It delivers the best deal for taxpayers in the whole UK. It protects all that we hold dear while investing in our nation’s future and makes use of the Parliament’s powers to put the Government’s progressive values into action. I commend it to the chamber.

I move,

That the Parliament agrees that the Budget (Scotland) (No 2) Bill be passed.

15:08  

Another day, another budget debate. Sadly, the narrative from the Scottish National Party Government remains exactly what it was yesterday and for weeks before that. It is a pay-more, get-less budget. It has been prepared against a backdrop of the UK block grant to Scotland increasing from this year to the next, a fact that was confirmed by the Scottish Parliament information centre and the Fraser of Allander institute and accepted by the Cabinet Secretary for Finance and the Constitution himself.

As we heard yesterday, the budget breaks a promise that the SNP made in its manifesto in 2016 not to increase the basic rate of income tax. As a consequence of that broken promise, more than 1 million Scots will pay more tax than equivalent workers south of the border, which sends a message that Scotland is the highest-taxed part of the United Kingdom.

While taxes are going up, services are being cut. Across Scotland this week, local authorities are meeting to set their budgets. The warnings from the Convention of Scottish Local Authorities are clear: despite the additional money that has been found by the Scottish Government as a result of its deal with the Greens, councils still have to make savings. Whether it is reducing the number of teachers, cutting classroom assistants, scrapping school crossing patrollers or closing recycling centres and libraries, people’s experience all across the country is that they are getting poorer-quality public services while, at the same time, they are being asked to pay more in taxation.

The budget delivers pay increases for public sector workers. Those employed by the Scottish Government and its agencies and those in the NHS will all benefit. However, there is nothing in the budget that will deliver higher salaries for local authority workers, who no doubt will have a similar expectation to those elsewhere in the public sector. Yet, if those sorts of settlements are to be made, they can be made only by local authorities cutting services elsewhere. Even if a local authority is maximising its council tax increase at 3 per cent, it will not raise enough money to pay the level of increases to staff that are being applied elsewhere in the public sector.

That point was made by Councillor Gail Macgregor, COSLA’s resources spokeswoman. I know that the finance secretary knows Councillor Macgregor as he was pictured all over Twitter last night cavorting with her at a glitzy Scotland Excel event. On Tuesday—I am sure that she would have repeated this to him when they were together last night—she said:

“Because quite simply with no money in the settlement from Scottish Government for pay, any pay rises for council workers can only come from cuts to services or council tax rises.”

I would be interested to hear from SNP speakers in this debate. [Interruption.] If Mr FitzPatrick would like to intervene on me, I am very happy to allow him to do so instead of just heckling from a sedentary position.

The Tories’ tax plans would take £500 million out of the budget, plus they want to find extra money for local government. What will they cut?

The figure that Mr FitzPatrick needs to keep in his head is £16.5 billion. That is the cost to the Scottish economy of SNP failure. For the past 15 years, the SNP has failed to grow our economy at the same rate as that of the UK. If the SNP grew the economy, it would have more money to spend.

The cabinet secretary seems able to find money when he needs to. To do his deal with the Greens—to provide Patrick’s pocket money—he found an extra £110 million from underspend and reserves. Of that, £40 million comes from reserves and £70 million comes from underspends. That is curious because, when the finance secretary came to the Finance and Constitution Committee on 15 January, I quizzed him about how much money was available in that area of the budget. The figure in the draft budget for “Budget Exchange/Reserve” was stated as £158 million. In response to me, the cabinet secretary said:

“In the past, finance secretaries may have been able to hold on to that money for financial management reasons, for example. I have used the money up front for the purposes of budget negotiations. The figure is what it is because there is very tight financial management, and that is the figure that officials think is most appropriate”.—[Official Report, Finance and Constitution Committee, 15 January 2018; c 32.]

Yet, when the budget bill was presented to Parliament on 31 January—12 working days later—that figure of £158 million had gone up by £110 million. That is a 70 per cent increase in 12 working days. It is perfectly clear that the cabinet secretary had that squirrelled away to do a deal with the Greens, but he did not tell Parliament or its committees about it.

There is a serious point about our ability as a Parliament to conduct budget scrutiny. In the 12 working days between giving evidence to the Finance and Constitution Committee and presenting his budget bill, the finance secretary found an additional £110 million. It is not unreasonable to suggest that he knew perfectly well about that money when he came to the Finance and Constitution Committee. Had members of that committee, or indeed members of the subject committees that were conducting budget scrutiny, been made aware of those additional resources, much more meaningful discussions could have taken place about how the budget might have been improved. However, the finance secretary chose not to disclose that.

There is a serious point. We need a new approach in the future. The Parliament and its committees need to be much clearer about exactly how much money is in the budget, and as we look at implementing the recommendations of the budget review group, I hope that that question can be addressed.

I return to the key messages in the budget. What the budget does not do is address the woeful situation that we now have in the Scottish economy. Today, we learned that Scottish employment is now lower than the UK average and that economic inactivity and unemployment are higher than the UK average.

The Scottish Fiscal Commission has given us its prediction that the SNP-run economy in Scotland will fail to match UK growth in each of the next five years. In 2018, it will grow at half the rate of the economy of the UK as a whole, and it is projected to have the lowest growth of any major economy in the next three years—the lowest in the EU, the lowest in the G20 and the lowest among Organisation for Economic Co-operation and Development countries.

Does Mr Fraser accept that the economy of London and the south-east is somewhat different from that of the rest of the UK and that, in fact, Scotland is very comparable with other English regions?

That is not what the Fiscal Commission has been telling us or what its figures disclose. The productivity figures for Scotland suggest that Scotland is among the poorest-performing parts of the UK. Like too many SNP back benchers, Mr Mason wants to absolve the Scottish Government of any responsibility for the performance of the Scottish economy. The SNP needs to start taking responsibility for what is happening in Scotland.

We are talking about a budget that should have put growing the economy first. It should have been a budget for growth. Instead, it is a budget for cuts in public services and higher taxes. As Sir Tom Hunter, one of Scotland’s leading business figures, put it,

“The perception, if you are a talented person sitting in London, Manchester or Birmingham and Scotland wants to attract you, is that you may think Scotland is a high-tax economy.”

We should be listening to Tom Hunter, to Liz Cameron of Scottish Chambers of Commerce and to the voices of organisations such as the Confederation of British Industry, the Federation of Small Businesses, Scottish Engineering and the Scottish Retail Consortium, all of which have warned about the damage that having higher income tax rates could do.

I am no fan of his politics or of his music, but even Morrissey got it right when he said of the First Minister,

“Those hands will be in anybody’s pockets.”

The SNP Government has chosen to ignore all those voices and has delivered a budget that is bad for Scotland. That is why we should vote against it at decision time tonight.

15:17  

The budget is one for chief executives in Morningside, not one for communities who are facing savage SNP cuts. It is a budget that fails the needs of Scotland’s communities. Parents in Clackmannanshire will be dismayed by the fact that the budget will result in cuts in the number of teachers in their children’s schools.

Parents of children who are living in poverty who are struggling to pay energy bills will not understand why MSPs’ tax bills will barely increase. Pensioners who today have been unable to get an appointment with their general practitioner until next week will not understand why SNP MSPs cheer Derek Mackay’s budget. It fails on so many levels that it should be voted down by Parliament tonight.

One of the key areas in which investment is required is support for public services. Even after the changes that were announced following the grubby deal between Derek Mackay and the Greens, there remains a £386 million black hole in local government funding. It is not just the numbers that are affecting councils; it is the decisions that they are having to take. Moray Council is having to reduce the number of library assistants and close library services. How does the reduction in the number of teaching and learning assistant posts in Clackmannanshire help to educate our children or to build skills in the economy?

South Lanarkshire Council is proposing increased charges for school meals and care services at a time when the cabinet secretary has announced a pay policy for which he is not providing adequate funding. At the start of the process, there was a £200 million shortfall in the amount of money required to fund the pay policy and, as we have gone through the process, no new money has been announced. The reality of that, particularly for local councils, is that they face a decision. If they really want to fund fair pay, they will need to cut services and, potentially, jobs, as we see in Clackmannanshire.

There is also the modern-day scandal of child poverty in Scotland, where 260,000 children are living in poverty. Recently, during questions on finance, there was a question relating to Ayrshire and it emerged that, in Irvine West alone, 35 per cent of children are living in poverty. That is totally unacceptable, yet the SNP has rejected Labour’s proposals for an increase in child benefit to alleviate child poverty in wards such as Irvine West and throughout the country.

Yesterday, we saw again the drastic performance figures for accident and emergency departments as the NHS continues to struggle through the winter.

This budget has failed in many respects and is not fit for purpose, partly for the reason that came up in the debate on tax that we had yesterday afternoon. Ultimately, if we want a budget that addresses all the issues across public services, that funds fair pay and that tackles child poverty, we need a tax regime that raises adequate amounts of money.

Labour’s budget plans were based on revenue being raised from various different sources, including a tourist tax and a land value tax. How much would either of those taxes raise next year?

They would raise £145 million in total, as we detailed in our tax plan.

The reality is that SNP members do not have the political will to make the changes that are required. Communities across the country are facing savage cuts, the closure of facilities and the prospect of job losses, yet the meagre tax plans introduced by Derek Mackay will raise only £83 million net. That shows the poverty of ambition among cabinet secretary Mackay and his colleagues.

Let us look at the facts. SNP MSPs will pay only 29p more tax a week, and chief executives on £150,000 a year will pay only £17 more a week. That is a complete failure to take on the grave issues that we face. Time and again, during an election campaign, the SNP postures and declares that it supports a 50p top rate of income tax, but when it comes to delivering in Parliament and putting its money where its mouth is, it has voted eight times against a 50p top rate of income tax. It runs away from taking the decisions that are required to meet the challenges that Scotland’s communities face.

We need bold and radical action to address the issues that we face in this country. If we really want to grow the economy, we will not do that by cutting public services, taking teachers and teaching posts out of schools and undermining college budgets.

Will the member take an intervention?

No, thank you.

We need investment if we are to see kids graduate in science, technology, engineering and mathematics and contribute those skills to the economy. Without that, we will fail to do the joined-up thinking that is required.

The same is true in relation to child benefit, which is not just about trying to lift kids out of poverty. If there were fewer children in poverty, that would help to improve the education system and it would help in terms of the budgets for housing and the NHS. It would save money across the Scottish budgets.

We have had a number of debates on the budget, now, and it is like groundhog day. The Government’s answer is to continue to be weak on tax powers. People will suffer. This budget is more interested in protecting the pockets of chief executives than in putting teachers in schools. This budget fails to address the scandal of child poverty and the cuts to public services. This budget lets Scotland down and should be rejected by the Parliament tonight.

15:25  

As, I think, Murdo Fraser said,

“Another day, another budget debate.”

It is certainly another day and another opportunity for the Conservative Party to conveniently forget that, during the first minority Government session of Parliament, it voted through budget after budget after budget. Every year, in fact, the Conservative Party voted for the SNP’s budget. It negotiated and tried to get policy changes. However, during those years, it never quite managed a policy change on anything like the scale of that which the Greens have achieved over the past two years. I have to admit that I am glad that the Conservative Party has decided to stop negotiating properly. We might well be seeing much worse budgets if the Conservative Party was still negotiating and trying to get policy change out of the Scottish Government, as it used to.

Nevertheless, I remain disappointed that the progressive political parties across the chamber are not attempting to get change in the Scottish budget. It might well reduce my negotiating hand if other parties engaged constructively in that process, but I suspect that the outcome as a whole would be better. To those who made proposals at the very last minute—too late even for the Scottish Fiscal Commission to examine them—I say that the process needs to be better in the future.

As a result of the negotiating process that we engaged in with the Scottish Government, we have significant change—and not only in relation to the smaller-scale measures. There is the additional fund that the finance secretary mentioned that will enable communities to make their own proposals on rail improvements, which I am glad to see will happen sooner than expected. There is the extra money to accelerate the designation of marine protected areas to protect our marine environment. There is the long-term shift away from high-carbon investment to low-carbon investment, and there is an improvement in the public sector pay settlement. There is also the substantial reversal in the cuts to local government funding.

Is the situation for local government perfect? Of course not. Does this budget relieve local government of every pressure that it faces? Of course not. However, there is a real-terms increase in Scottish Government funding for local government, and that is an important step forward.

I see that Monica Lennon is looking to intervene.

Does Patrick Harvie agree with Mike Kirby of Unison Scotland, who says that the budget

“falls far short of maintaining vital levels of services”

for our local authorities?

I agree that local government faces significant pressures. Some of them relate to rising costs and some relate to our expectation of a fair pay settlement. However, those pressures cannot be related to cuts to the core funding through the Scottish Government’s local government finance order, because we have ensured that that funding is going up, not down.

When it comes to the longer-term picture, we need to unite. Whatever we disagree on about this budget, we need to unite in saying that the Scottish budget process must not become an annual rearguard action against local government cuts because the fundamental situation that local government remains in is one of utter dependence on Scottish Government revenue. Local government in Scotland has such limited financial powers that, in many other European countries, what we call local government would not be recognised as such.

Local government ought to have a far greater ability to make its own decisions on local taxation and other fiscal issues. Those are issues on which there should be agreement across the political parties. I welcome some of Labour’s proposals on what it has called—although it is not—a land value tax. I would like to see a levy on vacant derelict land and a real land value tax, but we know that it would take time to legislate for those and to implement them. I want to see progress on that.

I also want to see progress on the recommendations that were agreed across the political parties by the commission on local tax reform, which the Scottish Government and COSLA created and which recommended, centrally, that the current system of council tax must end. All of us, with the exception of the Conservatives, entered into that review, and all of us who took part in the process entered into it in good faith, as did local government. The review’s recommendations cannot be allowed to gather dust on a shelf. Therefore, today, I have written an open letter to the First Minister, setting out a range of proposals that must be adopted if we are not to be in a situation, year after year, in which Scottish budget debates become debates about how much pressure to push down the chain to local government.

We should set a target for the percentage of local government finance that is raised locally. We should introduce a new fiscal framework between the Scottish Government and local government that is underpinned by the incorporation into domestic law of the European Charter of Local Self-Government. We should secure a commitment to multi-year—indicative, at least—funding settlements from the Scottish Government, baselining the additional funds that have been won this year so that they can be relied on in the future. We should commit to legislating during the current parliamentary session to replace council tax with a fairer system. Again, the consultation, legislation and implementation will take time, but the initial steps must be taken if we are to make progress.

The Scottish Government promised us a fundamental review and reform of non-domestic rates. Instead, the Barclay review was incredibly limited and narrow, so the wider question remains. As well as a vacant and derelict land levy, new fiscal powers need to be created in order that we can have local government that is truly worthy of the name and a system in which it is not entirely dependent on centralised decisions being made by the Scottish Government.

If there is progress on that local tax reform agenda over the coming months and during the course of this year, the Greens will again be able to enter budget negotiations—but that, I am afraid, will be a precondition.

15:32  

The budget is built on a broken promise. Nicola Sturgeon, who is in her seat on the front bench today, will remember that she stood beside me in debates during the 2016 election campaign and promised basic-rate taxpayers that their tax would not go up. What we see in the budget is that it has gone up. The SNP led people to believe that their tax would not go up, which is important in terms of the integrity of a Government and its belief in how it conducts itself on tax. If people are expected to pay more tax, they should be told that before an election campaign—just as the Liberal Democrats told them. We were very clear, open and up front about it. The SNP was not, which breaks trust with the voters. That is incredibly important.

Will the member confirm that he believes in proportional representation and that one minority party should not be able to force through its manifesto?

That very argument has been made before, when we were in coalition, and Mr Mason dismissed it. Now he wants to resurrect it to patch up the SNP’s pathetic campaign to justify this tax rise. It is important that people are honest, open and up front before election campaigns, but the SNP has not been. We believe that tax rises should be for a specific purpose—to make sure that we invest to make a change so that people see the outcome at the end of the process. That builds confidence in any tax rises, and progressives like me believe it to be important that we make that case.

Today, figures have been announced that show that unemployment in Scotland has gone up by 14,000. That should be a warning signal for the Scottish Government. To be fair, I will say that the UK figure has gone up as well, but the Scottish figure is above the UK average. We should have a budget today that reflects and meets that big challenge.

A second challenge that is coming down the track is Brexit, which I am sure the cabinet secretary will agree is a big threat. That is the one thing that the Scottish and UK Governments agree on. In all the models that have been put forward, the predictions show that there will be a hit to the Scottish and UK economies of between 2 per cent and 9 per cent as a result of Brexit. Based on whatever model we choose, there is going to be a hit. We should have a budget that matches and meets the potential challenge that is coming. We should have a budget for the long term that is bold and meets those challenges but—yet again—this budget is a missed opportunity.

The SNP is often behind the curve on the big issues that come forward. On the pupil premium, it took five whole years before the Scottish Government admitted that that UK Government plan was working and was closing the attainment gap by five percentage points. We are therefore five years behind the curve, and a generation has missed out.

Thanks to the SNP, colleges were starved of funds for a good five years and 150,000 places were cut. The SNP has finally admitted that the policy was wrong and is opening the doors for part-time and mature students and women to take up opportunities, but it was behind the curve for a good five years.

On nursery education, I am sure that I bored everybody in Parliament when I went on—[Interruption.] Members agree. I went on and on about nursery education because it really matters, but it took years for the SNP to accept that there was a case for two-year-olds getting nursery education. Two-year-olds are now skipping through the doors of nursery schools, thanks to our advocacy. Yet again, the SNP was behind the curve.

The SNP’s approach on mental health has been the worst of all. Thanks to the SNP, the mental health strategy was delayed for more than a year and the suicide prevention strategy was delayed. As a result, investment in mental health was delayed.

Will the member take an intervention on that point?

No.

That is another missed opportunity to get people who are suffering from mental health problems back into the job market by giving them the opportunities that everyone else in society enjoys. Again, the SNP is behind the curve.

Will Willie Rennie give way?

No—I will not, just now.

The Government should be bold and should meet the challenges of Brexit. It should not miss opportunities and be behind the curve.

One bright spot in the budget is because of the advocacy of my colleagues Liam McArthur and Tavish Scott on ferries. They saved the internal ferry services of the northern isles from collapse. If not for my colleagues, those lifeline services would be struggling.

Will the member take an intervention?

No.

The SNP Government would have overseen the collapse of those services. I commend the advocacy of my colleagues Liam McArthur and Tavish Scott.

The Government should be investing for transformational change on mental health, to take the budget up to £1.2 billion, which is where it should be in order to tackle the problems.

The budget should include investment of £500 million in education—in nurseries, schools and colleges—not just for the sake of education but for the sake of our economy. By investing in the skills and talents of our people, we can grow the economy for the future and in the face of the challenge of the Brexit that the Conservatives are pursuing, and we can meet today’s challenge of there being 14,000 more people unemployed under this Government. Those are the things that we should be doing and the opportunities that the Government is missing.

15:39  

I am pleased to speak in the stage 3 debate on the Budget (Scotland) (No 2) Bill, because I sincerely believe that this is perhaps the most important budget-setting day since the advent of devolution almost 19 years ago.

I am very pleased that the SNP Government has submitted to Parliament a budget that sets the tone for the type of nation that we want to be, and which clearly outlines the values of the progressive politicians who back it. The budget has the potential to be transformative through the improvements that it can deliver for the citizens of Scotland. It is a budget that, at its heart and within the limited powers that are available to Parliament, will deliver a stronger economy and a fairer Scotland.

If one spending commitment signals how we can build that stronger economy and fairer country and begin to transform Scotland, it is the investment of £600 million to deliver superfast broadband to 100 per cent of properties. That is a commitment that says loud and clear to all of Scotland that no matter where people live, whether it is in one of our great cities or in the remotest parts of our fantastic land, no part of our country will be left behind.

It is a commitment that is matched nowhere else on these islands and which clearly sets the tone for the type of nation that we want to be—a nation that will give people the potential to succeed in the coming digital age, no matter where they choose to make their home or to live and work.

As technology advances, so too must our country. Geography can no longer be a barrier to being connected to the digital world and all the advantages that that can bring, economically and socially.

In contrast, the UK Government is doing its level best to create new barriers to economic success through the madness of a possible hard Brexit and its inevitable impacts—in particular, on the availability of labour. In Scotland, therefore, we must continue to do all that we can to enable as many people as possible to enter the workforce of the future. That objective is not just about economic necessity; it is about building a more resilient, fairer and more equal society. Again, it is about setting out the type of nation and country that we want to be.

That is why funding of early learning and childcare, through capital and revenue spending of £243 million in the next financial year alone, is so necessary to support infrastructure and workforce capacity. That funding will help to drive transformational change in the availability of early learning and childcare by doubling funded provision from 600 to 1,140 hours by 2020.

It is not possible to overemphasise just how important high-quality early learning and childcare can be in ensuring that our children and their parents can achieve their full potential. Every child in Scotland deserves the best start in life, regardless of their background. The expansion of free early learning and childcare will help to do just that. As well as transforming the choices and chances of children, the policy will save families thousands of pounds in fees every year, and will further benefit the wider economy through the creation of thousands of new jobs.

Despite the backdrop of a UK Government cut of £211 million to our day-to-day spending, Murdo MacLeod—[Laughter.] I mean Murdo Fraser, but bring back Murdo MacLeod: he was much better at playing the ball than Murdo Fraser is. [Laughter.]

The budget commits increased funding of £400 million to Scotland’s NHS. It will increase investment in mental health services by £17 million and deliver an additional 800 mental health workers.

From doubling of the active travel budget to an additional £15 million investment in research and development, and from real-terms increases in college and higher education budgets to an additional £170 million for local government, the budget delivers for all of Scotland.

Of course, to be in a position to support such a budget, we require revenue-raising proposals that are sensitive to the needs of individuals and organisations, and which are, crucially, capable of garnering support from across a wide spectrum of stakeholders and society. Like most members, I aspire to live in a prosperous, progressive and fair Scotland, which is why I am so very proud to support a Government whose tax proposals also set the tone for the type of nation that we want to be, and will protect people on the lowest incomes and make the system more progressive.

Members who oppose the Government’s budget will need to look to themselves and ask why they cannot support plans that will undoubtedly make Scotland the fairest-taxed part of the UK, while protecting our country against the worst excesses of the Tory Government, investing in our national health services, protecting our services and growing our economy.

I am very sure of one thing today: the people who support the budget in our Parliament will be in tune with the values of the vast majority of the people of Scotland.

15:45  

Time and again during the budget debate, we have heard the SNP’s standard line on the economy, which is that the fundamentals of the Scottish economy are strong. However, when we look beyond the SNP spin, we see the reality. Recent data that was published by the Scottish Government highlights the unprecedented weakness that the Scottish economy faces. Scottish economic growth is the lowest in the developed world, the value of Scottish trade has declined by 5 per cent, business investment is down by 15 per cent and, just last week, productivity figures showed that productivity in Scotland is at its lowest level in a decade.

Dean Lockhart will know about the relationship between capital allowances and business investment, which is a matter that is controlled by the UK Government. Unlike his colleague Murdo Fraser, does he think that the UK Government has any involvement in the economy in Scotland?

For someone who is obsessed with the constitution, Keith Brown does not seem to understand that the UK Government is responsible for monetary policy and interest rates, which are at a record low. The Scottish Government is responsible for enterprise policy and economic growth, which is also at a record low. If the UK Government is responsible for weak economic growth in Scotland, why is the economy of the rest of the UK growing three times faster than Scotland’s economy?

The fundamentals of the economy are not strong. As the Fraser of Allander institute said, we are facing the longest period of weak growth in 60 years. With the Scottish Fiscal Commission forecasting further weak growth for the next four years, the budget should have been a programme for growth. It should have been about stimulating the economy, increasing productivity and reversing the decline in business investment. It should have been about closing the gap between Scotland and the rest of the UK, which will cost us £16.5 billion in lost gross domestic product between 2007 and 2021.

However, the budget does none of the above. Instead, the SNP has once again prioritised politics over the needs of the economy and joined forces with its Green Party branch office to deliver a budget that will damage the economy, depress productivity and discourage business investment. The budget will be damaging for the economy for the simple reason that increasing tax for a million workers will reduce disposable incomes in Scotland by a total of £220 million a year. That is £220 million a year that will go out of the economy, which will reduce consumption and spending. The Scottish Retail Consortium gave the following example:

“A 1p rise in tax equates to approximately 2 per cent of Scottish retail sales. If that money is going into government coffers, it’s likely to lead to further reductions in sales.”

The SRC continued:

“With a quarter of a million ... retail jobs, any further fall in sales has serious implications for the economy.”

We agree that increasing tax in the budget will damage the economy.

Does Dean Lockhart accept that when that money is recirculated, for example by the employment of more teachers and nurses who will spend the money, that will keep the economy going?

Based on the SNP’s mismanagement over the past 10 years, I have absolutely no confidence that even a fraction of that money will find its way to the front line of services. There have been countless overruns on information technology systems alone, which have amounted to hundreds of millions of pounds, so I do not share John Mason’s view.

Last week, we saw that productivity in Scotland declined in each of the eight most recent quarters. As a result, Scotland is at the bottom of the second quartile of OECD countries, which is more than 21 per cent below the SNP’s target to be in the top quartile. In contrast, numbers that were released today show that productivity for the UK economy as a whole has increased in the past two quarters at the fastest rate in 10 years.

We need to address the challenge of productivity in Scotland. It is vital that we keep existing skilled workers and attract even more, but this budget will make attracting skilled workers more difficult. For more than a million skilled workers, it will mean a reduction in their net salary and a lower take-home wage than that of their colleagues elsewhere in the UK.

Will the member take an intervention?

I need to make progress.

Scottish Chambers of Commerce has warned that this budget will make

“Scotland a less attractive part of the UK for skilled employees”

and

“for businesses to recruit”.

By increasing tax on skilled workers, this budget will only exacerbate the low growth, the low productivity and the low-income economy that the SNP has created over the past decade.

On business investment, the budget imposes further costs on the struggling business sector in Scotland. By virtue of the increase in the poundage rate and the large business supplement alone, business will have to pay an extra £150 million a year.

It should come as no surprise that we have seen a 15 per cent decline in business investment in the past year. Businesses in Scotland were promised £500 million of investment support under the Scottish growth scheme, which the First Minister described as

“a half-billion pound vote of confidence”

in the Scottish economy to support business. We now know that, 18 months later, only £25 million of assistance has been given to Scottish business—that is 5 per cent of the investment support promised by the First Minister to business in Scotland.

With economic policies such as that, it is no wonder that the Scottish economy faces the longest period of weak growth in 60 years.

This budget is not fit for purpose; it breaches a central SNP manifesto pledge and does not come close to addressing the fundamental challenges that the Scottish economy faces. After 10 years of SNP mismanagement, we are seeing the weakest growth for 60 years. The budget will only further damage the economy, so it is time for a change of economic policy in Scotland.

15:51  

I remind the chamber that I am still the parliamentary liaison officer to the Cabinet Secretary for Finance and the Constitution.

There is strong consensus across Scottish society in favour of investing in our common good. Members on all sides of this chamber regularly make demands to invest more in our NHS, to build more housing and to strengthen broadband. Although there is definitely disagreement about how we fund those demands, there is agreement about the need to maintain or to increase funding in the building blocks of healthcare, education and connectivity.

Despite the challenging economic backdrop, this budget targets investment to meet the challenges of today and to seize the opportunities of tomorrow. It is a budget for the farmer in Staffin, the engineer in Drumnadrochit and the doctor in Dingwall.

People in the Highlands want reliable connectivity. This budget has a commitment to invest £600 million to support the R100 programme to deliver superfast broadband to 100 per cent of residential and businesses properties.

We want a well-resourced NHS Highland with more healthcare professionals. This budget not only increases spending on health by more than £400 million, but lifts the 1 per cent public sector pay cap and provides a pay rise for NHS staff—making Scotland the only place in the UK to do so.

People in the Highlands want more homes, and more affordable homes, to be built. In this budget, we are investing heavily in the provision of affordable housing by contributing £756 million towards the investment of £3 billion to build 50,000 affordable homes over this parliamentary session. The budget also specifically maintains funding for rural and islands housing funds.

We want improved roads and rail links. This budget has £1.2 billion of investment in key road and rail projects, including continuing the A9 dualling and upgrading the Highland main line between Perth and Inverness. It will also continue to progress design and development work on improvements to the A82 between Tarbet and Inverarnan.

We want well-resourced education for our children and accessible further and higher education for young people. This budget is committed not only to providing free education across Scotland, but to providing £120 million directly to headteachers to reduce the impact of poverty on a child’s educational attainment, and it invests nearly £2.4 billion in our colleges, universities and enterprise and skills bodies.

We want to see economic growth, too. With doubled funding for city region deals, support on business rates and a boost to businesses’ research and development funding, the budget is trying to mitigate the deeply unsettling times that are fast approaching our economy as the UK Government reduces our access to the talent pool and makes it harder for businesses to trade across borders.

That is our budget. That is the budget that every member of the Scottish Parliament will vote on, one way or another, at decision time today. The list of investments that I have set out is not like Labour’s unfunded, uncosted wish list and it has not been magicked up like the Tories’ incoherent plan to ask for more spending while reducing investment in public services by more than £500 million.

There has been much talk about behavioural change and how people will respond to changes to tax. That is a fair question. I strongly suspect that the stronger public services and more inclusive society that our budget will build will have a behavioural impact, because they will attract people to live, work and do business in Scotland.

Last October, in the report, “Tackling Inequality”, the International Monetary Fund made it clear that excessive inequality erodes social cohesion, leads to political polarisation and ultimately leads to lower economic growth.

This budget delivers three results. First, it makes our taxation fairer by cutting taxes for the 70 per cent of taxpayers who earn less than £33,000. Secondly, it raises additional revenue by asking those with the broadest shoulders to pay a little more. Thirdly, and critically, it targets funding to reduce inequality and grow our economy.

Will the member confirm that in this 2018-19 budget, the broadband budget has dropped?

The budget commits £600 million towards procurement of the R100 programme, which will deliver superfast broadband across Scotland. It does not commit to the shoddy 10 megabits per second that the UK Government is proposing.

There is no question that we face challenges today. By 2019-20, our discretionary budget allocation will have decreased by £2.6 billion since 2010-11, and the worst of the UK Government’s cuts are exacerbating inequality in Scotland. We will face economic challenges in the future, too. There is widespread concern about recruiting workers when immigration controls are tighter and about accessing markets on a tariff-free basis.

It is in that context that this budget protects the NHS and public services and supports low earners. It will unlock Scotland’s economic potential.

I have a wee bit of time in hand, so I can allow some time for interventions.

15:58  

The inconvenient truth for every SNP and Green MSP is that the budget that they will rubber-stamp later today will mean that, in the days and weeks ahead, throughout Scotland, hundreds of councillors of all political persuasions and none will have to decide which services in their communities will be cut and which of their neighbours’ jobs will be axed. The debate that is taking place in council chambers right now, right across Scotland, is not about which services to trim but about which services to scrap.

I listened carefully to Patrick Harvie’s speech to find out why the Greens are so desperate to be the SNP’s cheerleaders in these attacks on our councils, but all I heard was complete denial and an appalling attempt to blame other parties for his decision to sell out.

Our approach to the budget has secured a reversal of £170 million of local cuts. How much change has the member’s party’s approach made to the Scottish budget this year or last?

Let me tell members about the reality of Patrick Harvie’s negotiations. He stands up and says that, as a result of a local government settlement that is rising by just 1.5 per cent, there will be no cuts. It is an undeniable fact that, if burdens on councils are increased but they are not given extra funds to meet those demands, they will need to cut existing services. So far, Patrick Harvie has failed to acknowledge that.

Let me explain to Patrick Harvie what it means in simple terms. If I gave my four-year-old daughter £5 to spend on sweeties last year and told her this year that I will give her £5 again, but she will have to spend £2.50 on lemonade, she would say to me that she would have to cut what she spends on sweeties. If my four-year-old daughter can get that basic fact, why cannot Patrick Harvie?

The budget fails to provide extra funding for local government, but it adds additional burdens in relation to childcare, social care and pay. There is no additional funding to meet those extra burdens, so councils will have to cut existing spending on services. Frankly, it is dishonest of the SNP and the Greens to pretend otherwise.

The problem for councils is that it is not sweeties that they are being forced to cut; they are being forced to cut the school crossing patrols that keep our children safe. [Interruption.] I see that some SNP members seem to find that amusing. Councils are being forced to cut the carers who look after our loved ones as if they were their own and—I say this to the Green Party—the energy efficiency programmes to tackle the scandal of fuel poverty, which are not protected because they are funded by councils that face cuts. Learning support assistants are being axed from our classrooms because they are not part of the Government’s arbitrary teacher number targets.

Yesterday, Labour’s finance spokesman conceded that emergency legislation would have to be brought in to introduce its tourism tax and its land tax. Has any emergency legislation been drafted by the Labour Party? Has it produced any costings for essential new information technology systems or for new recruits, identified what the collection agency would be, or produced any necessary guidance on procedures? In fact, has Labour done anything at all?

The reason why a tourism tax has not been introduced is that the Government does not have the political will to make the changes that would fund public services properly.

There has been a failure to face up to the fact that adding extra burdens without extra cash is an underhand way to increase central Government ring fencing of local government. We have had ring fencing before, but at least when previous Governments brought in new initiatives, they came at a time of growing budgets with extra resources over and above the core local government grant. What is so perverse about the ring fencing that is supported by the SNP and the Greens in the budget is that it does not come with any new money to fund it. The Government is simply raiding the local government settlement and stealing cash from other council services.

From commitments on teacher numbers to the Carers (Scotland) Act 2016 responsibilities, hundreds of millions of pounds is being sucked from existing services because the finance secretary does not have the guts to raise the additional tax that is needed to deliver his unfunded commitments. After five years of attacks and £1.5 billion of cuts to lifeline council services, the utter contempt with which the Government views local government continues.

I could never quite work out just why the SNP has such disdain for local government and councillors that it is determined to attack the very services that the most vulnerable rely on most. I can only put it down to the obsessively centralist and dictatorial way in which it wants to run Scotland, whereby more and more decisions are made in Holyrood—or rather Bute house—and fewer and fewer are made in our councils. The Government sees local government not as a partner but as the enemy. When it comes to funding, there are no meaningful negotiations; there is just imposition. If local government dares to call for better funding, the finance secretary waves in its face the threat of removing funding further.

That is all being done by the SNP with the full support of the Greens. It is clear that keeping the yes coalition together is far more important to the Greens than keeping council services and jobs.

We know that it does not have to be like that. We know that all the cuts that the SNP and the Greens support—not just some of them—can be avoided. The Parliament now has the power to make different choices, to be genuinely progressive, to truly redistribute wealth, and to say to the people of Scotland that, if we want decent public services, we need to properly fund them.

The budget could have been an opportunity for progressive politics, for public services and for the fight against the scandal of poverty in Scotland. It could have been an opportunity to free 30,000 children who live in poverty out of the misery of austerity by increasing child benefit by just £5 a week, and a chance to stop all the cuts to our council services and invest £500 million more in our overstretched and underresourced NHS. The SNP and the Greens are good when it comes to the rhetoric of ending austerity, of progressive taxation, of wealth redistribution and of reducing poverty, but the budget shows that they are found wanting when it comes to putting that rhetoric into practice.

The modest tinkering on income tax by Derek Mackay raises a meagre £83 million more when the cuts to business rates are taken off. That is just £83 million more going into our public services, in a budget of £32 billion.

You will have to come to a close, please, Mr Smyth.

Earlier Derek Mackay claimed that anybody who votes against this budget is somehow voting against all Government spending. The reality is that today we could have had a very different budget—

You will have to come to a close, please, Mr Smyth.

—a budget that stopped austerity cuts and stopped the SNP in its tracks.

16:05  

Today I hope and believe that Parliament will approve spending plans to build a fairer, more prosperous Scotland by investing in our public services, our workers and our economy. Today we take another step towards delivering the bold and progressive agenda that was set out in the programme for government.

MSP colleagues who will vote with the Government demonstrate their commitment to developing stronger public services and a more inclusive society. Unfortunately, the same cannot be said for the Tories, their Labour brothers-in-arms and Willie Rennie’s gang of three.

First I turn to that divided grouplet: the Orkney and Shetland party, who are elected as active constituency members with traditional party support, and their erstwhile mainland colleagues, the tactical voters—the “vote for us not because you believe in us but to stop somebody else” party.

Legend has it that when Howard Carter prised open Tutankhamun’s tomb back in 1922, he was mesmerised by treasures moulded in gold and carved in ivory—trumpets, weapons, clothing and all manner of wonders. An aged papyrus scroll caught his eye. Tentatively unfurling it, he carefully deciphered the ancient hieroglyphics. One simple phrase emerged: “a penny for education”. Through millennia of war, revolution, reformation, pestilence and plague, fire and flood, that shekel/denarius/groat-for-education policy has remained sacred to a small, much despised and marginalised sect that was known to the ancients as “Lib Dems”. Heretics say that it has been policy only since 1983 and much devalued by inflation since then.

Yet even though its architects have seen the policy ignored for decades and many of its early adherents have moved to that big ballot box in the sky, its current high priest, St Willie of Rennie, who is here in his ghostly if not actual presence, remains an avid devotee. Without making any effort to explain how, this wizened sage mystically claims that its implementation would release £500 million for education, although the precise mechanism of how much would be allocated to each part of the system remains known only to the truest of cult members. Certainly, that lazy thinking has not been explained to Parliament or the people of Scotland. If only this tiny group of latter-day magi spent as much time examining the budget as they do following the letter—if not the spirit—of the law in relation to election expenses in their target seats.

I must admit that I was a little bewildered by the Tory party-political broadcast that aired earlier this month. Apart from Annie Wells, there was little sign of the familiar Tory faces that we know and love here at Holyrood. Instead it was a showcase of Ruth’s warm, couthy, more proletarian Tories. It is frankly insulting that the Tories believe that the electorate do not need to hear about their policy ideas, tax proposals or, indeed, the failure of the 13 members of Parliament from Scotland to represent Scottish interests at Westminster. Do the Tories really believe that people will be convinced that they have changed simply because Annie Wells used to work at Marks & Spencer or because Bill Grant MP’s late father was a miner?

I think that in the next broadcast we need to hear the authentic voice of Toryism in Scotland. We should hear Donald Cameron, 27th Lochiel, discussing the trials and tribulations of being a clan chief in 21st century Scotland or debating with Alexander Burnett who has the most aristocratic heritage and whether Harrow’s polo team was better than Eton’s. We could hear Sir Edward Mountain bewailing the difficulties of finding a good butler these days, or Peter Chapman wistfully reminiscing about the four farms he jointly owned prior to becoming an MSP. In the next Tory broadcast, their voters need to be reassured that it is still the same old party of vested interests, landed wealth and privilege that it has always been.

If we must have Bill Grant, rather than polishing road signs, he could explain not only why he refuses to support the 4,750 WASPI women in his constituency and sign the women against state pension inequality pledge, but why he fell asleep on the green benches during Westminster’s debate on the matter back in December.

In any case, I hope that retired firefighter Bill Grant will join me in welcoming this budget, which will protect police and fire services, and work to ensure that those services retain in full the savings that will be created from being able to reclaim VAT as well as ensure that the £140 million that has already been taken from those services by the UK Tory Government is returned.

Will the member take an intervention?

I yield to the leader of the Scottish Conservative and Unionist Party, who is the reason why Nicholas Soames has been wandering up and down Westminster declaring, “Ruth Davidson is not getting my Mid Sussex seat!”

I would like to ask the member whether such a long diatribe against individual members of my party shows more the reason why he has never graced the front benches of his own party or more the reason why he has nothing to say about his own party’s budget?

I am experiencing a wee bit of déjà vu, because that is not the first time that Ruth Davidson has used that line. She needs to think up some new ones. I am talking about the budget, but my point is about the false face that her party is presenting to the people of Scotland, which I find most irksome.

Meanwhile, Labour has again been too preoccupied with in-fighting and political manoeuvring to make any meaningful contribution to the budget process. Perhaps Jackie Baillie will not take Murdo Fraser up on his Valentine offer to join the Conservative Party but, given the way in which Labour MSPs vote with the Tories against the SNP Government, one might be forgiven for getting the pair confused.

Jeremy Corbyn MP ventured up to north Britain last week to meet a select group of acolytes, while having a wee pop at the SNP and austerity. Perhaps someone should gently remind him that, in fact, Labour introduced austerity—

On a point of order, Presiding Officer. I wonder what relevance any of Mr Gibson’s speech has to the budget debate. As Ruth Davidson has said, it has been a diatribe against named individuals, dealing them low blows, and it has absolutely nothing to do with the motion under consideration today.

I am sure, Mr Scott, that Mr Gibson is about to enlighten us on that, but your point was not actually a point of order.

I thank my Ayrshire colleague for his observation. I am sorry that I have not mentioned him in any of my speeches this year, but perhaps I will do so in later debates.

Labour introduced austerity while still in government at Westminster and has consistently failed to oppose Tory welfare cuts since then. In fact, what was interesting about James Kelly’s opening speech was that he did not criticise the Tory Government’s cut to this Parliament’s budget once. Other members can call it what they want—“cognitive dissonance” or “collective amnesia”—but I prefer “outright hypocrisy”.

Today Labour and the Tories will vote against investing in childcare. They will vote against improving our schools and hospitals. They will vote against protecting our public services and they will vote against a fairer society for all. It is important to bear in mind that 70 per cent of Scots will actually pay less tax in the coming year than they do now. That might be difficult for Opposition members to spin away when they explain to their constituents why they voted against today’s budget, but it is a fact nonetheless. By diverging from the UK on tax, we can better protect public services that are free at the point of use, including free prescriptions, free personal care and indeed free higher education, which the children of many MSPs of other parties benefit from.

Our investment will help to reduce the attainment gap, double free childcare, and deliver 50,000 additional homes and £600 million in broadband. I urge members to support the budget today to deliver first, last and always for the people of Scotland.

I must apologise to Mr Scott, because that was, in fact, a point of order. I think that Mr Scott will be pleased that relevance did come eventually.

16:13  

I think that that is debatable, Presiding Officer. If there is anything to be learned from what we have just heard, I think that it is that the member will not be in the SNP’s next party-political broadcast with Nicola Sturgeon.

I want to focus my comments on what the budget means for our NHS in Scotland. The finance secretary and the SNP Government have been boasting about record health spending, but for some reason they never want to refer to the fact that a significant part of that extra health spending is directly linked to the Barnett consequential funding that the Scottish Government receives. Since the UK Conservative Government took the decision to protect health spending, that has amounted to some £2.154 billion extra that the Scottish Government has had since 2011 to spend on our health service.

Will the member take an intervention?

No, I have just started my speech. I may allow interventions later.

How is overall spending on our NHS across the UK nations performing? Official statistics show that, in recent years, because of the decisions that have been taken by SNP ministers, health spending in Scotland has been rising at roughly half the rate of spending on the NHS in England. Although health spending in England increased by around 10 per cent between 2012 and 2016, it has increased by only 5 per cent in Scotland. Perhaps Ben Macpherson would like to explain that to me.

Miles Briggs is speaking positively, I think, in favour of spending on the NHS, so perhaps he can explain why he is likely to vote against £400 million extra spending for the NHS and why the Scottish Conservatives’ tax proposals to take £501 million out of the Scottish revenue budget would cut 12,000 nurses from the Scottish NHS. Can Miles Briggs explain his rationale?

Mr Briggs, do not stand up while another member is still intervening—please wait until you are called.

I refer to what I have already said. Given the £2.154 billion that has come to Scotland from the UK Conservative Government, what SNP members are saying would not be put into our health service is a bit of a drop in the ocean, even for them. We have invested across the United Kingdom in our health service; we are proud of that record. The question is whether the SNP will take that forward.

If SNP members will not listen to me, it would be worth their listening to Professor Jim Gallagher, whose authoritative report, “Public Spending in Scotland: Relativities and Priorities”, which was published last September, concluded and emphasised:

“In 2006 Scotland had a health lead of 16% over England but by 2016 this lead had reduced to 7.5%.”

That was caused not by an overall squeeze on the Scottish budget but by the choices of SNP ministers who have given less of a priority to spending on the health service than to the budget as a whole.

How will that impact on our NHS? In this SNP-Green budget for the NHS next year there is a big cut to NHS capital spending of almost £67 million. That is despite the well-documented backlog of maintenance repairs across NHS Scotland’s estate, the cost of which is estimated to stand at more than £900 million, and the fact that the proportion of the significant and high-risk maintenance backlog has increased.

How would the NHS cope if I had to see through the £211 million reduction in resource next year from the UK Government and, on top of that, the further £556 million reduction for Scotland’s public services that I would need to find if I followed the Tory tax plans?

SNP members are completely forgetting what I have said already. More than £2 billion in additional money has come to our health service. How this Government decides to prioritise that is its decision.

I welcome the cabinet secretary’s comments on Frank’s law. I welcome the fact that the Scottish Government is finally working with stakeholders to prepare for the implementation of that change. I therefore would like to hear more when the cabinet secretary sums up about how much is being provided to prepare for the implementation. For more than 9,000 Scots across our country, Frank’s law is needed today—indeed, it was needed yesterday—so I hope that it will be delivered as soon as possible. As my party leader, Ruth Davidson, said, Derek Mackay and the SNP will have our support in doing that as soon as possible.

We need to take action specifically because of that. We all know the demographic challenges that our country faces. In Edinburgh alone, the number of people aged over 85 is expected to double by 2032 to more than 19,000. The number who require intensive levels of support will increase by 60 per cent and the number of people living with dementia is projected to increase by 25 per cent over the next 10 years to more than 10,000.

The SNP budget does not offer any long-term thinking on how we address the ever-increasing demands on our social care system, which cannot cope with the current levels of demand. Overriding all that is the fact that probably the biggest threat to future investment in our NHS and social care system is the pitiful economic growth that we are seeing in Scotland.

SNP ministers seem to be in denial about the fact that the low growth rates are not increasing the tax take in Scotland. SNP ministers will be responsible for that in future budgets and the people of Scotland will judge them on that. Instead of boosting our Scottish economy and making Scotland a more attractive and competitive place to work, live and invest, this budget hikes taxes and sends out the wrong message that Scotland is a high-tax country. Indeed, SNP income tax rises, even without the council tax rise, which most Scots will experience, are the highest income tax rises on Scots for more than 40 years.

The Labour Party in this chamber and Jeremy Corbyn might be preaching the failed economics of the 1970s, but that is what is being delivered by the SNP Government in Holyrood today.

This budget will go down as another staging post in the journey of the Scottish public losing faith in this SNP Government, given its mismanagement of our public services and its seeming indifference to creating and growing a positive economy in Scotland.

In the coming years, increasing numbers will find that they are paying more and receiving less. This SNP Government has no new ideas for growing our economy; it is making Scottish taxpayers pay the price for its failure to stimulate and grow our Scottish economy, and our public services will bear the brunt of that slow growth in the future.

Presiding Officer—

Yes. You must conclude.

I will, Presiding Officer. Scotland deserves better than this, and it is time for a Scottish Government that understands that economic success is fundamental to sustainable public services.

16:20  

This budget is bold and progressive, and it delivers for families and communities across Scotland. It is a clear example of the fact that where we have the powers here in Scotland, we are making different choices from those that are pursued by the callous Tory Government at Westminster. The Scottish Tories would happily follow that Government’s lead, cutting tax for the highest earners and creating a £500 million black hole in our public finances.

Fortunately for the people of Scotland, although we cannot control what the Tories do at Westminster, we in power in Scotland can make, and are making, different choices. Scotland will be the fairest-taxed part of the UK with the best deal for taxpayers, allowing us to mitigate Tory cuts, invest in our NHS, protect our public services and grow the economy. Under the progressive tax reforms, 70 per cent of taxpayers will pay less than last year, while higher earners will face a modest increase. Those tax changes will allow the Scottish Government to increase health spending by £400 million to £13.6 billion, lift the public sector pay cap and provide a substantial package of investment in the economy and in tackling poverty and social inequalities.

That is good news for people across Scotland, and in particular my Cunninghame South constituency, one of the areas that is suffering most under Tory austerity.

Will the member give way?

No.

The North Ayrshire Council area has amongst the highest rates of poverty in Scotland, alongside Glasgow and Dundee. In Irvine west, one third of children are living in poverty. The statistic should shock and shame us as policy makers, but the fact is that Irvine west is more than that statistic, demanding only admiration for the resilience of the communities who live and work there.

Will the member give way?

No.

We all know that Tory-imposed austerity is one of the main reasons behind rising child poverty. Indeed, the introduction to Ayrshire and Arran NHS Board’s 2017 report “The State of Child Health: Spotlight on Child Poverty and Welfare Reform” says:

“Child poverty is predicted to increase significantly in Scotland during the life time of the current UK Parliament, largely due to Welfare Reform.”

The Scottish Tories’ budget plans would exacerbate that dire situation by taking a further £500 million out of the public purse.

In stark contrast to the Tories’ plans to slash tax for the highest earners while cutting support for the poorest, the SNP budget will mitigate austerity and tackle inequalities. Moreover, in stark contrast to Labour’s rhetoric of doom and gloom, which criticises everything while offering few solutions for anything, we will take concrete action to improve people’s lives.

Will the member give way on that point?

Please sit down, Ms Lennon. It is apparent that the member is not giving way.

Negative rhetoric alone does not help anyone, and it does a disservice to those folk living in our communities who are facing the greatest challenges.

What will help my constituents is the £100 million that this Government will spend on mitigating UK Government welfare cuts next year, including £50 million to mitigate the callous bedroom tax.

What will help my constituents is a tackling child poverty fund worth £50 million over the period of the child poverty delivery plan.

What will help my constituents is £1.5 million of investment in a family financial health check guarantee to help families with children get all the money that they are entitled to and access the best deals on financial products, services and energy bills.

What will help my constituents is a £1.5 million fair food fund, which will see the Scottish Government working with national and local partners to ensure that everyone can access healthy, nutritious food in dignified ways; the expansion of free early years childcare; the new best start grant providing financial support to low-income families; and the baby box, which gives practical support to new parents and ensures that every baby in Scotland has the essentials.

I could go on, but the point is clear. Within the limited confines of its political and economic powers, this SNP Scottish Government is getting on with the job of taking concrete steps to significantly improve the lives of people in Scotland.

As well as its bold central Government initiatives, this Government has ensured that local government will receive an above-inflation increase in resource funding. For North Ayrshire, that means a budget boost of an extra £4 million to spend on local services to improve the lives of my constituents in Cunninghame South. It means more money to spend on things such as employability hubs, school clothing grants and free school meal provision during the holidays as well as during term time.

It also means more money to pursue projects such as the poverty challenge fund, which focuses specifically on preventative measures to support those most likely to experience poverty. It means more money to establish community food programmes, which explore how more sustainable models of local and dignified food provision can be developed. More funding will develop North Ayrshire’s fair for all strategy, which seeks to reduce inequalities.

Increased health spending will allow NHS Ayrshire and Arran to continue to build on excellent initiatives such as the integrated working that takes place between midwives and income-maximisation specialists within NHS Ayrshire and Arran, which increases the income of pregnant women and their families.

Voting against the Scottish budget is a vote against the investment in childcare, our schools, our hospitals and our other vital public services, which gives them the funds that they need to deliver better services for all of Scotland. Voting for this budget is a vote for a different path and a better future for the people of Scotland than the one that is being imposed on them by the Tories at Westminster. I know which side I am on.

16:25  

Let me start where Ruth Maguire finished. I am sure that she will agree that, far too often in this chamber, we talk about the symptoms of poverty rather than the causes. The cabinet secretary will not be surprised that I want to spend my time today talking about the sports tax that he has put on local communities right across the country. I link that to Ruth Maguire’s comments because I spoke to a sports expert yesterday who told me that the sports tax that Derek Mackay is putting on our communities makes the delivery of the prevention agenda in the Christie commission’s recommendations very difficult.

The Barclay review’s proposal to end rates relief for local authorities’ arm’s-length organisations is of real concern. Those organisations run a huge range of sports, leisure and cultural services, and they qualify for rates relief. The cabinet secretary knows that arm’s-length external organisations were initially set up for tax purposes, so that councils would have a bit more cash to provide much-needed sports and leisure facilities. However, Derek Mackay’s budget will give us a sports tax that will make it far more difficult for councils to build new sports halls and libraries.

It is astonishing that part of the rationale behind the Barclay review’s proposals was that ALEOs have an unfair competitive advantage over private leisure providers. The Barclay review says that ALEOs

“create unfair competition between the public and private sectors ... On the grounds of fairness, we believe there should be a ‘level playing field’ and council ALEOs should no longer be able to abuse the system.”

Frankly, that admission is surprising. Does Derek Mackay accept the argument that there is unfair competition? If he does, he is accepting right-wing ideology in his public policy for local authorities.

Let me say, for absolute clarity, that I am not implementing the Barclay review’s recommendation on ALEOs, as the chamber knows fine well. As a committee convener and a Labour MSP who supports the Labour budget, can Jenny Marra explain why she has written to me, demanding to know how I will address the deficit in the non-domestic rates pool, when I have sustained that deficit in the NDR pool? She cannot have it both ways.

Mr Mackay knows Labour’s tax proposals very well. We would not have to make that cut. He knows perfectly well what he is doing with the sports tax—he is top-slicing the grant that local authorities get. He says that there is unfair competition between private providers and ALEOs, but I can guarantee that there have been no planning applications from private gym providers in inner-city Dundee. As he well knows, the money is not there to make such facilities work.

Labour’s philosophy is that the Government should step in to provide public amenities not just in the communities that most need them but across the board, so that equal and high-quality sporting and cultural opportunities are provided.

Will the member give way?

No. I will take Patrick Harvie’s intervention in a minute, but I want to make some progress.

The SNP would have us believe that it shares that philosophy. That has happened many times in the chamber, but we need only to look at what the SNP is doing to see the reality.

I will spell out the effects of Mr Mackay’s sports tax, in case anyone is in any doubt. Late last week, Mr Mackay found a fix for the regional performance centre in Dundee. He had to. His decision to take tax relief away from ALEOs would have more than doubled the operating costs of the planned centre. Indeed, his £800,000 tax grab on the centre left a question mark over its viability. Even if it had remained viable, those costs would have been passed on to the people who used the centre. The fact that he fixed that problem in Dundee is very welcome, but his policy still stands for the rest of the country and for other projects in Dundee.

Who knows what will happen to the new tennis centre in Inverclyde or to the new community centre and library in Menzieshill, in Dundee? The councils concerned will have to find thousands of pounds of extra money to fund those facilities, as the cabinet secretary knows. [Interruption.] I would be happy to take an intervention from Mr FitzPatrick.

In passing their budgets this week, councils are having to pare their services back to the bone. Where will they find the cash for such new facilities? I doubt that they will be able to.

Will the member give way?

The member is in her final minute, so both the question and the answer must be brief.

The Labour Party has welcomed the fact that the Barclay recommendation in question will not be fully implemented, but does it acknowledge that there remains an issue with accountability and that we should be creating incentives to bring services back into democratically accountable control rather than allowing more and more assets to be transferred to ALEOs?

I believe that there is an issue with accountability, but Mr Mackay’s proposal means that councils will have to find more money to build sports halls and libraries. It is completely unacceptable.

The councils in the poorest areas in Scotland created ALEOs because they needed the relief to build community facilities. That need has not gone away—it remains and is greater than ever—and I really hope that Mr Mackay will look again at his regressive tax.

16:32  

I am delighted to have the opportunity to speak in the final debate before the Parliament votes on the Scottish Government’s budget, which will benefit all those who live in the Renfrewshire South constituency that I am honoured to represent.

When I vote for the budget, I will be voting for more than £1.8 million of pupil equity funds to go directly to schools across Renfrewshire South. Carlibar primary school will receive £121,000 and St Mark’s primary school will receive £109,000. Both of those schools are in my home town of Barrhead. Johnstone high school, which is in the town where my constituency office is based, will receive £104,000, Woodlands primary school will receive £141,000 and the Riverbrae special school will receive £190,000. Those schools are in Linwood, a town that was cast on the scrap heap by a previous Tory Government but that is now 10 years into a regeneration process that was begun by an SNP-led Renfrewshire Council under my colleague Derek Mackay.

Schools the length and breadth of my constituency and across Scotland have benefited from and will continue to benefit from attainment funds. I have had the privilege of meeting staff and pupils from across my constituency and have seen at first hand the benefits that PEF money brings through a range of interventions such as specialised staff and additional activities that enrich and enhance the learning environment.

I also put on record my support for the Government’s continued investment in the NHS. The budget includes an additional £400 million for the NHS, which takes total health spending to some £13.1 billion. As the son of a nurse and an NHS estates officer, both of whom are retired, I am delighted by the Government’s commitment to lifting the public sector pay cap.

One further point that I wish to make on health spending is about how the money is spent and the fundamental importance of how spending decisions are made in health. One of the SNP Government’s finest achievements was the delivery of the publicly owned Queen Elizabeth university hospital. In particular, I highlight the £40 million of investment that has been put into the institute of neurological sciences on the Queen Elizabeth campus over recent years. I have direct knowledge of the fact that it is a worldwide centre of excellence that practises cutting-edge medicine.

In May of last year, my brother collapsed at his home in Barrhead. He was rushed by ambulance to the Royal Alexandra hospital, where he received exemplary treatment from the accident and emergency care team and the on-call consultant, who suspected a brain haemorrhage. My brother was then quickly transferred by ambulance to the institute of neurological sciences at the Queen Elizabeth campus, where a subarachnoid haemorrhage was diagnosed. Within a matter of hours, he was in surgery.

Having lost a close friend to a subarachnoid haemorrhage a few years ago, I and my family feared the worst. However, three weeks later my brother was back in college and passing exams with flying colours. His remarkable recovery was made possible by the incredible NHS staff who treated him. Those staff, in turn, benefited from a Government that invests money in our health service and, crucially, listens to the advice of clinicians on how that money should be invested.

Before concluding, I reiterate my backing for this budget’s support for our creative sector, particularly given the reductions in funding from the national lottery. I also commend the decisions to increase the economy portfolio budget significantly and to continue the support for small business, which demonstrate that this Government is determined to support economic growth.

All of that has been achieved against the negative actions of the UK Government, which is cutting the Scottish Government’s resource budget by some £500 million over the next two years. That, as everyone but the Tories seems to understand, is the budget that pays for the day-to-day running of our public services, which includes paying the salaries of public sector employees such as nurses, firefighters and police officers.

That £500 million budget reduction should also be understood in the broader context of almost a decade of austerity implemented by the UK Government. It is a challenge not only to the Scottish Government but to all of us in this place, which is, after all, a Parliament of minorities. I commend the Greens for their pragmatism and for rising to the challenge. It is disappointing but unsurprising that Labour chose not to engage constructively in the process.

As for the Tories, they have failed to produce a fiscally and politically coherent proposition. Of course, Tories reflexively wish to slash taxes for high earners and shrink the state. I fundamentally disagree with that approach, but it does at least represent a school of thought that can be subjected to scrutiny and debate. However, the current Tory proposition, which calls simultaneously for tax cuts and increased public spending, warrants not debate but ridicule.

In the end, politics comes down to values and choices, and nowhere is that more apparent than in the setting of a budget. The Tories will not admit what they would cut, and Labour does not have a set of proposals that would meet the rigorous standards of the Scottish Fiscal Commission. In contrast, the budget that has been introduced by Derek Mackay shows that the Government puts progressive values into action, is committed to protecting and strengthening public services, supports business and economic growth and is committed to ensuring that every child has the opportunity to succeed. It is a budget that works for my constituents in Renfrewshire South and for all of Scotland, and I look forward to supporting it this evening.

16:37  

This stage 3 budget debate should, perhaps, be put in the context of the divergence between comments that have been made by the finance secretary and those that have been made by economic commentators. Since the stage 1 vote on 31 January there have been wildly different interpretations of what is happening on the ground.

In summing up yesterday’s rate resolution debate, the finance secretary trumpeted the underlying strength of the Scottish economy. Specifically, he mentioned improving productivity levels, rising output, gross value added, improving median weekly earnings and foreign direct investment. However, if we look in more detail at Mr Mackay’s budget—as many economic commentators have done—there is another part of the story, relating to the overall direction of travel. It is set against the most recent analysis that has been undertaken by the OECD, which clearly exposed the extent of the economic issues that are facing Scotland as a result of the projected poor rates of economic growth. Despite all the spin that Mr Mackay can muster, the overall tax burden from the budget will rise, which is why commentators have a rather different perspective from Mr Mackay’s.

The other context for the debate is how well we spend our money. It is not just about tax revenues and how much we collect from hard-pressed taxpayers; it is a debate about the general wellbeing of business and industry as they plan their investment, jobs and trading operations. It is not just about our taxpayers and the demand side of the economy. It is also about the supply side, so let us take a look at each in turn.

On the demand side, the Scottish Retail Consortium has made it plain that the overall increases in tax on working people will make it much harder to persuade the public to spend more of their money in shops and local businesses. Many of us—perhaps all of us—represent constituencies with small towns whose high streets are already struggling, with empty premises, threatened closures and shops that are struggling to make ends meet. Many of those towns also include businesses that have a rateable value of over £51,000 and which in Scotland face the large business supplement of 2.6 per cent, whereas the supplement is 1.3 per cent for their counterparts in England. Those businesses need all the help that they can get from the public, but they are having a hard time of it because of the SNP’s tax plans.

Will Liz Smith explain, in that case, why tonight she will oppose the support package of about £720 million for non-domestic rates relief?

I will do that because we have been very clear that the budget does not do nearly enough to ensure that business is competitive, and it will not properly invest in the things that we need in Scotland to ensure that we can sustain economic growth.

What is it, exactly, that business leaders have been saying in their warnings? They make the point that the SNP’s commitment to a higher-tax Scotland makes it much harder to attract the necessary talent and investment at a time when Scotland’s economy is already growing at a lower rate than that of the rest of the UK. The OECD and Scottish Fiscal Commission analyses do not make for good reading; the latter makes it very clear that it is expected that between 2018 and 2022 the Scottish economy will grow by not more than 1 per cent.

For business leaders, the introduction of the new tax band at 21 per cent on incomes between £24,000 and £43,430 is unwelcome because it means that despite all the rhetoric from Mr Mackay, the burden of tax in Scotland will be greater than it is in the rest of the UK. That widening of the tax gap is a serious issue to them—quite rightly. Perception matters, as well as reality.

We know from the Barclay review about the end to rates relief for ALEOs proposal. We also know that the cabinet secretary was going to go ahead with that proposal until he felt the full force of public reaction and realised that it was not going to be acceptable. Jenny Marra, who is not in the chamber just now, made a very good point about what future there is for some of the new ALEOs. If, at any stage, we put in jeopardy any of those new projects, we need to have a serious look at the implications in relation to that investment and building for our future—especially for young people, in this year of young people, which is very important.

While I am on the Barclay review, I repeat my plea to the cabinet secretary to think carefully about the implications for nursery provision of his tax plans—in particular, in the light of what we read last week in an Accounts Commission report and heard yesterday from the fair funding for our kids campaign, which is talking a lot about accessibility of nursery places. It is not just about provision of more places; it is also about whether they can be accessed. The Scottish Government seems to think that it is sensible to pursue plans that will allow private profit-making nurseries to enjoy 100 per cent rates relief but will not allow that for nurseries that are charities and not for profit, and which help local authorities to deliver greater flexibility in nursery places. That does not make any sense. I think that it does not make any sense to members, and it certainly does not make any sense to parents.

The long and the short of it is that the SNP will be unable to sustain the budget because the budget does not have the necessary economic growth behind it. That is a message that the SNP has been told time and again—not just by the Conservatives, but by businesses.

It is no use the finance secretary saying that Brexit is to blame for all this. It is not, because Brexit is happening to the rest of the UK, too. The debate is about the SNP’s stewardship of the economy. Just about every economic forecaster is telling Mr Mackay that he is making huge errors of judgment and—worse still—that he is harming Scotland's ability to be the most competitive and most successful part of the UK. That is exactly why the Scottish Conservatives will not support the budget.

16:44  

As the series of debates on this year’s Scottish budget draws to a close—after what seems like an eternity—it is perhaps time to take stock of where we are.

We have heard much today, in yesterday’s deliberations on the rates resolution, and in earlier budget debates about the details of the Government’s spend and tax proposals—how much extra is being spent on the various portfolios, how much is being raised, and where from. We have heard alternative proposals being advanced, and we have heard different economic theories and varying perspectives on the impacts of tax and spend. It has to be said that some are more grounded in reality than others.

The Laffer curve, in all its manifestations, has had a good airing and is about to be put safely back in its box for a period of rest and recuperation in preparation for next year’s budget cycle. We have seen “tax income elasticities” and ‘“differential marginal propensity to consume” emerge on the scene as new contenders for the economic jargon of choice award.

Interest groups and respected independent bodies have been quoted endlessly. The full alphabet soup of trade bodies, third sector organisations and think tanks has been deployed to support arguments by all sides. The Fraser of Allander institute, in particular, it must be said, has seen its stock rise yet again, having been quoted against itself—from opposite sides of the chamber at the same time—on more than one occasion. The intense heat that has been generated by the debate has even managed to generate enough free energy to split the most compact political entity of them all: the Scottish Liberal Democrats.

Perhaps it is time to reflect on the wider politics of all that. What is the perspective of people outside the bubble—the payers of tax and consumers of services? What do the woman and man in the street take away from our deliberations over recent weeks? Taxpayers at different levels of income may or may not notice a shift in their take-home pay. In most cases it will go up; in some cases, it will go down. People will understand that the income tax system in Scotland is now different from that down south. They will also understand better that other taxes are different. The gap between council tax levels north and south of the border continues to widen, in their favour.

I thank Ivan McKee for taking my intervention. When he next sees the man and woman in the street in his constituency, will he tell them that he broke his pledge not to increase tax?

I will tell them that the vast majority of people in my constituency will have a tax reduction as a consequence of the budget.

The tax changes in the budget have been carefully tailored to minimise the chances of anyone altering their tax affairs or moving house in order to save an extra penny in the pound—especially when the higher council tax on a new house down south would wipe out any income tax gain. Future analysis by the Scottish Fiscal Commission will attempt to quantify the value of tax that is lost due to behaviour change, but I expect that it will be minimal.

Public sector workers will see different approaches to how the pay cap is handled by the different Governments across the UK. The narrative that says that business investors will be driven away by a penny in the pound rise has been overplayed. From experience, I know that the factors that determine business investment decisions are wide and varied, but that levels of personal income tax come low down on that list, and are far behind infrastructure, skills availability, business taxes and Government support.

The debate has, perhaps, also caused taxpayers to reflect on what they get for their money. Services that are free north of the border but cost money down south have been highlighted once more, and the quality of those public services has been contrasted with that of provision across the rest of the UK.

The people who use our health services, and those who work in them, increasingly hear of the problems that are besetting services in England and Wales, and understand that services in Scotland are different. The concept of “You get what you pay for”—or, in more technical terms, “negative price elasticity of demand”—is possibly the most common refrain in the public debate over past days. People feel instinctively comfortable with that concept, and most are willing to pay more to get more. Of course, the challenge for our public services is to ensure that that trust is not mistreated and that perceived value is delivered for the extra spend, that we continue to shift the focus to preventative spend and that we focus increasingly on outcomes and not just inputs, in line with the principles of the Christie commission.

I suggest that we will, when the dust settles, see a stronger Scottish Parliament—a Parliament that is taking, as the Scottish Council for Development and Industry put it,

“a progressive, mature and significant”

approach to deploying its new tax powers. I expect that the people of Scotland will see that, and will understand that a major step has been taken in the direction of making Parliament yet more relevant to their daily lives. The perception that Parliament now matters more—not just in service-delivery portfolios but in relation to take-home pay—has been reinforced. The understanding that Scotland is different—that we are able to take a distinctively Scottish approach to how we fund our public services, and how we raise the money to pay for them—has also been reinforced.

In conclusion, I say that although last year’s budget was historic, with new powers being available for the first time, this year’s budget is even more significant, because it shows Parliament starting to use those powers. Even more important is that it is yet another significant step on the road to creating a Parliament that has all the powers that are needed to run all aspects of our country and our economy.

We move to the closing speeches.

16:50  

The cabinet secretary opened by saying that the budget is putting “progressive values ... into action”. If only that were true. Despite all the back-slapping during the debate, the budget fails to protect the most vulnerable people in our society. It does not raise enough revenue and it fails every one of Scottish Labour’s five budget tests: it will not halt austerity, it will not stop the growth of poverty, it will not redistribute power or wealth and it will not grow our economy in the interests of the many, rather than the few.

Scottish Labour’s alternative plan passes every one of those tests. I am sorry that Patrick Harvie feels that he did not have enough time to consider it, because he would have seen that it would raise almost £1 billion of extra stimulus for the Scottish economy. Bruce Crawford asked members to consider the type of nation that we want to be: Labour has a prospectus that would save lifeline local services, fund a pay rise for public sector workers, put money in the pockets of working families by topping up child benefit by £5 per week, and deliver extra spending for the national health service.

Our costed alternative is proof of what a difference Parliament could make if only the SNP had the political will to make the choices for real progressive change, rather than continuing to tinker around at the edges. Ruth Maguire made important points about the scandalous levels of child poverty: it is a pity that she did not take an intervention that would have allowed her to agree with the trade unions and charities in her constituency and across Scotland that the top-up to child benefit that we propose would lift 30,000 children out of poverty immediately.

Our alternative tax plans would raise more than £540 million more than the proposals in the budget, while ensuring that the richest would pay their fair share and that 70 per cent of taxpayers would not pay a penny more. Our plans, just like the SNP’s, would ensure that people who earn up to £33,000 would not pay a penny more in tax than they do now. The difference is that, unlike the SNP, we would ask the very richest people in our society to pay their fair share. By dropping the threshold for the 45p rate to £60,000 and introducing a new 50p rate for those who earn more than £100,000, our proposals would raise vital money for public services.

It is now widely accepted that Labour’s proposal for a 50p tax rate would actually lose money. Will Monica Lennon confirm that she and her party support a policy that would lose money from Scottish taxes?

I do not accept that; there is no evidence for it. There is a perception that is shared by the SNP front bench and Tory back benches. Put simply, the issue is about progressive taxation. We are not embarrassed to ask people who can afford to pay a bit more to do so—which the SNP used to believe in. We had manifesto promise after manifesto promise from the SNP that there would be a 50p rate of tax, but the Government is now sheepish when it comes to explaining why it has binned that promise. Our 50p tax rate would mean that a person on 150 grand would pay £142 more per week in income tax. The SNP is asking them to pay just £17 more.

The bottom line is that the SNP’s tax plans are timid and will not solve austerity. Central to our additional stimulus package is the extra funding for local government, which has been unfairly squeezed in year after year of budget negotiations since 2011. COSLA has stated that local authorities need £545 million to protect lifeline services. That is what our funding package is all about. Cuts to local councils mean cuts to vital local services, which has an impact on people’s everyday lives. Colin Smyth spoke about the dilemma facing local councils that are under the control of various political parties, and Jenny Marra raised the importance of preventative spending. I know that a lot of members agree with that, but look the other way when the issue is raised.

The Scottish Government has claimed time and again that councils are getting a fair deal, but the cabinet secretary has failed to take responsibility and explain why nine out of 10 austerity job losses have been in local councils. That is not scaremongering: it is a fact that 28,000 local government posts have been cut in the past seven years. That is a disgrace.

Will the member take an intervention?

It will have to be brief.

Why will Monica Lennon oppose the real-terms increase that will go to local government as a consequence of the budget?

I thought that the cabinet secretary was going to correct his earlier misleading of Parliament when he said that 28,000 cuts to local jobs was “scaremongering”. Labour is about putting money into public services—not taking it out.

Presiding Officer, I have taken a couple of interventions and am not sure how much time I have left.

Derek Mackay does not easily take our word for it. I wonder whether he has paid attention to the recent Unison and Jimmy Reid Foundation report on local government. It states:

“If local government continues to face the same level of grant reduction, there are extremely difficult choices ahead.”

Derek Mackay is shaking his head, but that is what the report says. It continues:

“As it stands the level and speed of cuts is not sustainable in the long term. Whilst the demand for services will continue to grow the fall in budget is placing increasing pressure on local government and its staff. Those hit hardest by the cuts are the poorest groups in local communities, who are, and will continue to be, unable to cope with service reduction or the complete withdrawal of ... services. Local authorities are facing the risk where they will be unable to meet their statutory duties and unable to deliver critical services to their poorest and most vulnerable citizens.”

We simply cannot afford to go on like this, so we can and must make different choices. We have the powers to do so, but despite the rhetoric, when the opportunity to use those powers is in front of it, the Government is running scared. It has declined to introduce a 50p rate for the highest earners, despite promising that in election after election, and it has refused to use the powers that it argued for to top up benefits including child benefit, which would lift 30,000 children out of poverty.

Our plans show that there are costed alternatives that can be used and which would make a real difference to working class families across the country. The budget does not raise enough revenue to stop austerity or to fund our public services. That is why our plan to provide a near £1 billion stimulus package for the economy would deliver, by contrast, the real change that is needed. Our plans would produce a budget that works in the interests of the many, not the interests of the privileged few.

16:57  

Pay more, get less; that is the message of today’s budget. It is a budget that puts up taxes, despite the fact that the Scottish Government’s block grant will go up this year. It is a budget that increases our rates of income tax, despite the SNP promising more than 50 times in the past two years not to do that. It is a budget that will do nothing for consumers and that will damage Scottish business—damage that could take years to repair, according to the Scottish Chambers of Commerce.

Perhaps most seriously of all, this is a budget that does nothing to address the fundamental problem with the Scottish economy: growth that is chronically low, relative to growth in the rest of the UK. That is the legacy of the SNP’s decade-long mismanagement of the Scottish economy. Time after time this afternoon, we have heard SNP speeches that have failed even to mention economic growth, which shows just how unfit to govern the SNP has become. Growth is not an economic buzzword or a piece of jargon that we can choose to take or leave as we like. Growth is central; it goes to the core of how we fund our public services—the world-class public services that we all rightly demand. Grow the economy and we increase economic activity; increase economic activity and we grow the tax revenues that accrue to the Government; boost tax revenues and there is more public money to invest in front-line services. It is not complicated, but it seems to be beyond this cabinet secretary.

This budget does not do any of that. It does the opposite. It takes money out of the hands and pockets of families, workers and consumers. It makes doing business more expensive in Scotland by making Scotland the highest-taxed part of the United Kingdom, and a place where everyone earning more than £26,000 a year will pay more tax. By doing that, the cabinet secretary is inhibiting growth, not enabling it. He is saying to hardworking families, “Don’t strive for your family—put your feet up,” because, if someone aspires to succeed, he will tax their aspiration and, when he is done with that, he will tax their success.

He is saying to Scottish businesses, “Don’t invest here”. If business confidence is low, he will keep it low. If their taxes are too high, that is too bad. Here are the facts: under the SNP, Scotland has the highest business rates in Europe; business confidence is 20 points lower than it is elsewhere in the UK, which is a near record low; Scotland’s rate of business growth is slower than the rate anywhere else in the United Kingdom; and business investment in Scotland is down. Pay more, get less—that is Nicola Sturgeon’s dismal economic legacy.

I want to say something about the budget process, which was mentioned in a couple of the opening speeches this afternoon, including those of Patrick Harvie and Murdo Fraser. There cannot be effective parliamentary scrutiny of the Government’s budget proposals unless those proposals are presented in as open and transparent a manner as possible, but, yet again, that did not happen this year. Between the publication of the draft budget, which was presented to Parliament in December, and stage 1 of the Budget (Scotland) (No 2) Bill, which took place a fortnight ago, Derek Mackay found an additional £160 million of public spending, which is this year’s price for the Green Party’s support. The annual dance between Mr Mackay and Mr Harvie, in which the cabinet secretary routinely manages to find a nine-figure sum that he somehow failed to account for in his draft budget, is one of the most unedifying spectacles in the parliamentary calendar.

What is the difference between the process that Mr Mackay has gone through with the Greens in finding money to afford the final stage of a budget and the process that I went through with the Conservatives in the past to do exactly the same?

The difference is that when the Conservatives were working with the SNP, we got results. When the Greens are working with the SNP, all that happens is that taxes are pushed up even higher, which suppresses the growth that we need for the Scottish economy.

The process that I have just described is not conducive to good—[Interruption.]

Just a minute, Mr Tomkins. Members should settle down now. I want to hear what everybody says.

The process that I have just described is not conducive to good government, is not in the public interest, bypasses effective parliamentary scrutiny and does nothing to diminish the SNP’s growing reputation for preferring secrecy to open government, and murky back-room deals to transparent policy making. This Parliament deserves better than that and, as we move next year to a new process of budget scrutiny, I hope that Government and Parliament will learn the lessons from, and not repeat the mistakes of, the B-grade and substandard process that we have had to endure again this year.

The third theme that has emerged from this afternoon’s debate is that this budget is one of betrayal. It is a clear and unambiguous breach of trust. Why? In 2016, two thirds of Scots voted for parties that promised not to raise taxes in this parliamentary session. Nicola Sturgeon, the First Minister, said:

“it is not right to increase income tax for those who are on the basic rate.”—[Official Report, 3 May 2017; c 9.]

She also said:

“I have been very clear that the Government will not increase income tax”.—[Official Report, 2 February 2017; c 10.]

John Swinney said the same, as did Derek Mackay. In the past two years, the SNP promised 53 times to not raise the basic rate—53 broken promises.

Today, the news is grim not only for those who were once fooled by the credibility of the SNP’s false election promises, but for Scottish workers. Today’s figures show that the Scottish employment rate is down and that it is lower than that of the UK as a whole.

Today, the news is also grim for the unemployed—unemployment is up in Scotland and the rate here is higher than it is in the UK as a whole. That is the SNP’s lousy record, and its budget today will do nothing to turn it around.

Pay more, get less—that is the message from this budget, and Parliament should vote it down.

17:05  

This is, of course, a significant debate, but for politicians in the chamber the highlight must have been watching Mr Swinney burst Adam Tomkins’s bubble when he showed the latter’s rhetoric to be empty and his numbers to be a fiscal fantasy of the Conservatives.

When asked who I would choose—

Will the minister take an intervention?

No, thank you. I am not going to lower the level of debate to Neil Findlay’s level. Sorry, but I have too much to get through; I have too many important things to say. When asked who would be more—

Cabinet secretary, I caution against making personal remarks.

Then I will talk about political parties that I would rather align myself with, Presiding Officer.

When it comes to budget deals, I am closer to the Scottish Green Party than I am to the Democratic Unionist Party, so I have no problem in finding a consensus around progressive and positive politics. At one point, the Labour Party may have considered itself to be a progressive party, but now it is reduced simply to being an anti-SNP party in this chamber.

I return to the consensus on some elements of the programme for government, including things such as abolishing care charges for more people, expanding access to free sanitary products, targeting resources to post-industrial Scotland, introducing a graduate entrepreneurial challenge, investing in oil and gas decommissioning, electrifying road transport, expanding our trade envoy network, supporting breastfeeding funding, creating more air quality zones and low-emission zones and establishing a national investment bank.

This budget will fund those PFG commitments—and much more. Those areas have not been widely debated this afternoon, but they are the kind of measures that Opposition members across the chamber have been asking this Government to take. Investment in those areas—in addition to all the other investment—is part of the £1.2 billion of additional resources in the Scottish Government’s budget, which will be opposed by the Labour Party and the Conservative Party this evening. They are happy to spend resources, but neither has a clue about how to fairly and competently raise the necessary resources to make those investments.

Is it not reasonable that, over the coming months and years—and before we get to this process next year—we strike a balance between how local councils not only spend but raise the money that they need? Should we not be setting a clear expectation that councils have the ability to raise a significant proportion of the revenues that they will need for future years to provide their local services?

As I have said before, I am always open to discussion, but the reality is that this budget will give a real-terms increase to the resources of local government before they even consider using their power to raise council tax.

I will comment briefly on the economic model of the United Kingdom as a whole. It is clear—the evidence tells us this—that the UK Government’s economic model is centred on London and the south-east of England. It is no surprise that other parts of the UK, including Scotland, are at a disadvantaged position because of that model. A UK Government cannot walk away from its responsibilities in macroeconomic policy; neither can the Tories abdicate their responsibility to have proper fiscal policies, because we cannot raise less and spend more.

When challenged on how to make savings, the Conservatives can point only to measures such as stopping the baby box scheme. That is their answer to how they would find half a billion pounds to fund tax cuts for the richest businesses, people and home owners in society.

It is no good for Murdo Fraser to say that, if only he was in charge, he would have a Scottish Fiscal Commission report that says he would have £16 billion more to invest in Scotland’s economy; it is no good for Murdo Fraser simply to cry wolf when I find extra resources for the Scottish budget. I have set out a clear and transparent process. If only the other Opposition parties could engage constructively in that process.

On listening to business, many business organisations have welcomed much of the budget. The Federation of Small Businesses welcomed the small business bonus—of course—and went on to say:

“Further, the introduction of a new business accelerator relief is a clever move that deserves plaudits.”

The Chartered Institute of Public Finance and Accountancy, which takes a considered opinion of public funding, said:

“it is welcome news that Scottish public services will receive more funding. As, without extra resources, the financial resilience of many services would inevitably be put into question.”

Liz Cameron, from the Scottish Chambers of Commerce, said of the budget:

“We welcome much of the substance of Mr Mackay’s announcement ... In particular we appreciate his willingness to listen to the voice of business”.

I could quote many more organisations that have welcomed the investments in this Government’s budget. Even the Scottish Retail Consortium, which is much quoted by the Tory party, said:

“the decision on income tax to protect workers on low and modest earnings is exactly right.”

The Scottish Council for Development and Industry said:

“This is a progressive, mature and significant use of Scotland’s income tax powers.”

There is much support for the budget, including from the public, who back our tax plans by two to one.

James Kelly has presented an alternative that is, frankly, neither competent nor coherent. The effect of his tax proposals would be cut in half, given the behavioural impacts. Other elements of his budget would require legislation. The Labour Party was asked when it would present its alternative budget, and it transpires that the detail will come after stage 3. That is a preposterous position from the Labour Party, and it shows that Labour has no credibility whatever.

Working with the Green Party, we have produced a budget that is able to find consensus on investing in our public services and lifting the public sector pay cap in Scotland.

Of course, when James Kelly did the arithmetic on the income tax plans, he said that an MSP’s tax would increase by only 26p. I advise members not to seek advice from James Kelly on their tax returns, because he was wrong to the tune of 1,300 per cent. That is how inaccurate he was, just on the proposition on MSPs’ income tax. Why would we trust the Labour Party on the overall budget?

This is a very serious budget, which uses Scotland’s devolved powers responsibly and fairly. It protects the students of Scotland from tuition fees. It expands childcare, which is good for children and good for the economy. It protects universal support around poverty and inequality, delivering free school meals for children in primary 1 to primary 3. It ensures that the ill do not have to pay prescription charges and it supports the continuation of free eye examinations. The NHS—a precious service—is the largest beneficiary of the budget, and the budget protects the entitlements that give us the best deal anywhere in the UK.

The budget will help to build 50,000 new affordable homes. It will help to expand digital, with investment of more than £600 million. There will be new interventions on homelessness and child poverty. There will be real-terms increases for the NHS, higher education, further education, and police and fire transformation. I know that those commitments command the support of the Scottish people.

Bruce Crawford was right when he said that the budget puts in place resources that speak to the vision of what we want this country to be. The budget delivers on the commitments that the First Minister made in the programme for government. It prevents the negatives that come from Westminster austerity and turns real-terms reduction in resource into growth. It will create a more equal society, tackling inequality and growing our economy.

As we approach the completion of stage 3 and the legal stages of the Scottish budget—of course, we still have the non-domestic rates element and the local government finance order to deal with, so it is not quite over yet—we have an opportunity to deliver divergence and make Scotland, for the majority, the lowest-taxed part of the UK and, crucially, the fairest-taxed part of the UK.

Brexit is a huge challenge to the UK’s economy and to Scotland’s economy. Businesses have said to me that it is a much greater concern than even the perceptions around tax as propagated by the Tories. Therefore, we are delivering stimulus, sustainability and a stronger society, respecting the powers that we have and using them wisely with an evidence base to restructure tax in order to build a better and fairer country.

I ask members to consider all of that and the £40 billion that is allocated in the spending plans in the budget.

I might not be a Morrissey fan, but the old band is back together: better together is back together. I am more of a Proclaimers kind of a guy, which is why I visited Leith yesterday. There was indeed sunshine on Leith at the GP surgery there. The NHS is the biggest beneficiary of the budget.

I commend the budget to the people of Scotland because I know that it commands the support of the Scottish people. I hope that it will command the support of members this evening.