Meeting of the Parliament

Meeting date: Tuesday, October 30, 2018

Official Report 1187KB pdf

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Topical Question Time

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United Kingdom Budget

To ask the Scottish Government what its response is to the UK budget. (S5T-01279)

Yesterday’s budget from the United Kingdom Government failed to live up to the Prime Minister’s commitment to end austerity. Given the continuation of UK welfare reforms, and that Scotland will receive less funding than had previously been promised, it was a budget of broken promises and one that fell short of the £600 million commitment to the national health service. The Scottish Government has already set out plans to support the NHS in the years to come, but has identified a £50 million shortfall in the funding uplift for 2019-20 that was promised by the Tory UK Government only four months ago.

There is little in the way of new funding for our wider public services and, even including the NHS funding uplift, Scotland’s resource block grant will still be almost £2 billion lower in real terms in 2019-20 than it was in 2010-11—i.e. when the Tories came into office.

Does the cabinet secretary agree that, although there are elements of the budget that should be given a cautious welcome, it is equally true that the Chancellor of the Exchequer disappointingly failed to respond to the legitimate concerns of the WASPI women—the women against state pension inequality—from the 1950s, who feel cheated and betrayed by the UK Government with regard to their pensions?

Does the cabinet secretary agree that the chancellor also failed to address the fundamental flaws in the miserable universal credit system, particularly given that new analysis by the Resolution Foundation today shows that three quarters of the £12 billion cuts to social security that the UK Government announced in 2015 will remain in place after yesterday’s budget?

The chancellor could have gone much further in stimulating the economy, giving justice to the WASPI women and investing in public services, and he could have done so while staying within his own fiscal mandate and his own fiscal targets. According to the Office for Budget Responsibility, he had fiscal headroom of about £15.4 billion. He has chosen to keep that in reserve rather than to spend it in a way that could have done those things.

It is galling that, in this climate, the chancellor has chosen not to give justice to the WASPI women. More than 2 million women paid their national insurance contributions throughout their lives in the expectation that they would receive their state pension at a certain age, only for the goalposts to be moved by the UK Government.

On welfare, the Tories continue their pernicious welfare policies.

The Resolution Foundation’s independent analysis has revealed that the overall impact of Tory tax and benefit policies will once again help the rich at the expense of the poor. The poorest fifth of households are set to be £400 a year worse off by 2023-24, and the richest fifth are set to gain £390 a year.

The chancellor announced his intention to raise the higher-rate threshold of income tax to £50,000 earlier than expected. Given that decisions on the higher-rate threshold are devolved to the Scottish Parliament, his plans do not apply in Scotland. People are therefore asking what the Scottish Government’s position is on that matter, and when the cabinet secretary will make it clear what his Government’s intentions are on the higher-rate threshold.

I will, of course, make that clear in the Scottish budget when I present it on 12 December. However, I take some pride in the fact that I have been a finance secretary who has ensured that we have the fairest income tax system in the United Kingdom. The majority of people in Scotland pay less tax, and Scotland is the lowest-taxed part of the UK. The Tories have once again chosen tax cuts for the richest people in society, but we will choose a fairer and more progressive path. I will set out the details of that in the Scottish budget on 12 December.

For information, seven members have indicated that they would like to ask questions.

Despite what we have just heard, the UK budget delivers for the people of Scotland. Yesterday, the cabinet secretary acknowledged that the Scottish Government’s future budget will increase as a result of the UK budget. In fact, the UK budget will deliver £1 billion of additional funding to Scotland as a result of Barnett consequentials, £550 million of additional resource for Scotland’s NHS, £43 million of additional spending for Scotland’s high streets, and £41 million of additional funding to fix potholes across Scotland.

Does the cabinet secretary welcome the £1 billion of additional funding that is coming to Scotland from the UK Conservative Government? Will he follow the chancellor’s lead and invest the additional £43 million in Scotland’s struggling high streets? Can he guarantee that every penny of the £550 million that is coming to Scotland as a result of record NHS spending will be spent on Scotland’s NHS?

At last year’s Tory party conference, the staging fell apart; this year, it is the Tory Prime Minister’s commitment to ending austerity that has fallen apart.

No, I do not welcome the figures that the chancellor announced, because they represent—let us put aside the NHS for a moment—real-terms reductions for the rest of Scotland’s public services. The Tories promised £600 million for the national health service, but in four months they have already short changed the NHS in Scotland by £59 million.

The budget will not undo the damage of the past eight years of Tory Government, it will not undo the £2 billion pounds real-terms reduction that we have endured and it will not undo the pernicious welfare reform that is pushing so many people into poverty. So, no—I do not welcome it.

The pothole fund south of the border will not fill in the huge crater that has been created by the Tories’ economic mismanagement and the Brexit bungling that will cost this whole country dear.

The cabinet secretary must accept that, under this Scottish National Party Government, public services are in crisis. That is demonstrated by the fact that NHS patients are stranded on waiting lists, unable to get the treatment that they deserve, and the fact that thousands of teachers took to the streets on Saturday to demand a fair pay settlement. Will the cabinet secretary use his Scottish budget to reverse the chronic underfunding of public services and alleviate the pain that is being piled on local communities?

I will deliver a budget that is balanced and competent, unlike the incompetence that I saw from the Labour Party last year. It is very interesting that the shadow chancellor, John McDonnell, has already said that Labour would not even overturn the Tory tax cuts for the richest in society. The Labour Party will accept the Tory tax proposals. I think that the Labour Party communication system has broken down in the same way that its calculator never worked in the first place.

We are allocating more money to the NHS than the Labour Party proposed that it would allocate if it won power at the previous Scottish Parliament elections. We are giving more to local government than the Labour Party gives where it is in power in Wales. With the pay uplift, we departed from the public sector pay cap even though the chancellor did not fund it; where the Labour Party is in power, it will lift it only if the chancellor pays for it. It is all talk with Labour; with the SNP, the people get real action and investment in our public services.

This should have been a budget not only to end austerity but to repair the harm done by it and to respond to the climate emergency. Instead, we see, yet again, a UK Government giving away the biggest tax cuts to the richest people and continuing to recklessly pursue an unsustainable economy. Will the Scottish Government acknowledge that it needs to respond by providing not only the resources that local communities need but the powers that they need to be able to invest for the future? Will the cabinet secretary give a commitment that we will continue the progress towards a fairer tax system for Scotland?

I think that Patrick Harvie is referring to the wider discussion about reform and local authorities. My door is open to that dialogue, and I have said that I am open to constructive suggestion. I agree with Patrick Harvie about the regressive nature of the UK budget and about its failure to invest in our public services and stimulate the economy. It is absurd that the chancellor has in reserve £15.4 billion that could have been unleashed to stimulate our economy, invest in our public services and undo some of the pernicious welfare reforms that the Tory party is hammering the poor with but he has chosen not to do that.

I agree with Patrick Harvie that we should continue to look further at how we use our powers to ensure that we get the best deal possible for all Scotland’s public services. On climate change, of course we have to look at the spend that we are undertaking to ensure that we can make that transition to a low-carbon economy.

With a hit to the economy, a fall in living standards and the threat to future investment, Brexit casts a dark shadow over the UK budget. The chancellor is even openly talking about having an emergency budget in the spring. What is the cabinet secretary’s plan to respond to that possibility? Does all this chaos not show that we need a people’s vote to get us out of this Brexit mess?

I point out that the figures that we received from the chancellor are contingent on a deal being reached with the European Union and on the Westminster parliamentary arithmetic for that working out. If there is the calamity of no deal, the chancellor will have to return to an emergency budget. That reflects the economic mismanagement at the hands of the Conservatives and the Tory chancellor. The position with the European Union is well understood. The Scottish Government wanted us to stay in the European Union or, short of that, to stay in the single market and the customs union. If we had a deal that achieved that, the UK budget numbers would be better and the chancellor would have greater economic growth and more resources to allocate.

I agree that we need to do everything possible to get the least worst Brexit. The Government has made its position clear on how we can get there, and we will continue to push for that.

Just four months ago, the UK Government trumpeted that a swathe of additional health consequentials would be available to the Scottish Government to spend on the NHS. Following yesterday’s budget, can the cabinet secretary set out just how far the Tories’ promises have fallen short of delivering what they said they would deliver?

I have heard the slogan “Never trust a Tory” and this is exactly why. The Tories promised £600 million to Scotland’s NHS. I challenged the chancellor and the Chief Secretary to the Treasury to say whether that would be a net £600 million for Scotland’s NHS. We found out after only a matter of minutes that we have already been short-changed to the tune of around £50 million a year. [Interruption.] I can hear the Tories grumbling and saying that £50 million is not a lot in the context of £600 million. Over five years, more than a quarter of a billion pounds that was promised by the Tories will have been denied to the Scottish NHS. We cannot trust the Tories with Scotland’s NHS.

The SNP’s sustainable growth commission said that the Scottish Government should operate the same rate of corporation tax as the UK Government operates, or a lower rate. Does the SNP support a corporation tax cut to 17 per cent or below for big business, or will it support income tax cuts for ordinary families? Whatever happened to putting people before the profits of big business?

First, independence is the genuine alternative to austerity as, with all the economic levers, we could deliver greater economic growth. What the Government proposes is targeted investment and relief to stimulate the economy, which is exactly the approach that we have taken with the tax powers that are at our disposal—

And corporation tax?

The direct answer to the member’s question is no, I do not support a race to the bottom on tax.

Incidentally, the growth commission proposed far higher public spending and stimulation of our economy than the chancellor announced yesterday.

Yesterday’s UK Government Tory budget failed to implement the real living wage and perpetuates state-sanctioned pay discrimination against young people. The pay gap between a 16-year-old and a 25-year-old is now a staggering £3.86 per hour. Does the cabinet secretary agree that the UK Government budget fails to deliver for people who are trapped in in-work poverty and fails the young people of Scotland?

Yes, the budget fails people in that regard. The welfare reforms are a disaster: they are pushing people to use food banks and they are not making work pay. The UK Government should have stepped back from implementation of universal credit and other pernicious policies, such as the two-child cap.

We can take some comfort from the fact that we have the highest proportion of people who are paid the living wage of any UK nation—although we have more to do if we are to reach 100 per cent. Of course, the Tories have played games with the living wage, and we need a substantial minimum wage, a real living wage and equality for young people in that regard.

It is telling that the Resolution Foundation’s work shows that the biggest beneficiaries of this UK budget are the richest in society and the biggest losers are the poorest in society. That tells us that, although the Tories’ image might have changed, their policies and pernicious approach have not.

I thank the minister and members for getting through all those questions.