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Chamber and committees

Meeting date: Thursday, March 5, 2020

Meeting of the Parliament 05 March 2020

Agenda: General Question Time, First Minister’s Question Time, Whitburn Academy Be Herd Group, Scottish Parliamentary Corporate Body Question Time, Portfolio Question Time, Budget (Scotland) (No 4) Bill: Stage 3, Parliamentary Bureau Motion, Decision Time


Contents


Portfolio Question Time


Finance

The Deputy Presiding Officer (Christine Grahame)

Question 1 has been withdrawn.


Landfill Tax

2. Maurice Golden (West Scotland) (Con)

To ask the Scottish Government what consideration it is giving to varying landfill tax rates and bands during the extended period before a biodegradable municipal waste to landfill ban. (S5O-04213)

The Minister for Public Finance and Migration (Ben Macpherson)

Rates and bands for the Scottish landfill tax are intended to support a more circular economy and the delivery of our ambitious targets to reduce waste, increase recycling and cut the amount of waste that goes to landfill.

As confirmed in the Scottish budget, work is under way to explore the role that the Scottish landfill tax could play in encouraging a further shift away from the landfilling of biodegradable municipal waste. A further announcement will be made when that work is complete.

Maurice Golden

Will the minister confirm that this Government’s woeful record of failure in meeting waste targets, leading to artificially high landfill tax revenues, is more a muddle than a fiddle?

Ben Macpherson

As I said, work is under way to explore further changes to the landfill tax. However, in general, we expect local authorities to discharge their statutory obligations using their existing funding. In the case of the transition to the ban on biodegradable municipal waste going to landfill, there are no plans to review or change the arrangements.

As I said in my answer to Maurice Golden’s first question, a further announcement will be made regarding our exploration of the role that the Scottish landfill tax could play in encouraging a further shift away from the landfilling of biodegradable municipal waste.

Emma Harper (South Scotland) (SNP)

Landfill tax is one of the many important tools that can be used to incentivise a reduction in waste. Will the minister outline additional measures in the Scottish budget that will support a reduction in waste and an increase in recycling?

Ben Macpherson

As part of our response to the global climate emergency, the Scottish budget will continue to support the transition to a circular economy, as I have said, in cutting waste and carbon emissions, and opening up economic opportunities. That includes the development of a deposit return scheme for single-use drinks containers, which will reduce litter and make high-quality recycled materials available to the Scottish economy, as well as activity to support innovation in reducing waste and developing the circular economy through the circular economy investment fund. We are also committed to introducing a circular economy bill during this parliamentary session.


Budget 2020-21 (Scotland Reserve)

3. Donald Cameron (Highlands and Islands) (Con)

To ask the Scottish Government how it plans to utilise the Scotland reserve in its 2020-21 budget. (S5O-04214)

The Cabinet Secretary for Finance (Kate Forbes)

For 2020-21, we anticipate utilising £168 million in total from the Scotland reserve, which comprises £30 million of resource, £5 million of capital and £32 million of financial transactions from the existing reserve balance; and £101 million of resource underspend from 2019-20. That total compares with the £143 million originally stated in the “Scottish Budget: 2020-21” document, with the change due to an additional £25 million resource underspend this year, following updated forecasts. Therefore, there is no change to the forecast balance at the end of 2020-21.

Donald Cameron

In this week’s meeting of the Finance and Constitution Committee, the cabinet secretary said that

“we should add to the reserve in order to increase the Government’s ability to manage the inherent volatility under the fiscal framework.”—[Official Report, Finance and Constitution Committee, 4 March 2020; c 15.]

Given that the Scottish Government faces a black hole of over £500 million in next year’s budget, how does she intend to build up the Scotland reserve further?

Kate Forbes

As the member will know, every financial year since 2017-18, the resource, capital and financial transactions underspends have been deposited in the reserve and it is quite right that we build up the reserve. However, the fact of the matter is that the fiscal framework is insufficient to allow the Scottish Government to manage the volatility and the uncertainty that is inherent in our financial position in terms of meeting some of the forecast error challenges that, it is worth remembering, are about Westminster clawing back resource because of forecast error.

Kenneth Gibson (Cunninghame North) (SNP)

After the delay to this year’s United Kingdom budget, it is clear that more flexibility is needed in setting Scotland’s budget. Can the cabinet secretary please advise the chamber what engagement the Scottish Government has had with the UK Government regarding increasing the limits on borrowing and Scotland’s reserve powers, given the likely post-Brexit economic turbulence that we will face in coming years?

Kate Forbes

The member is quite right to highlight that. We have been seeking immediate changes to our borrowing and reserve limits, given the volatility inherent in the fiscal framework. My predecessor wrote to the Chief Secretary to the Treasury in September 2019 requesting an increase to those limits, but we have yet to receive a formal response to that request. However, we continue to discuss the matter at ministerial level and, as recently as last week, I raised the matter in an introductory call with the Chief Secretary to the Treasury and I will follow that up in our bilateral meeting.


United Kingdom Budget

4. Bill Kidd (Glasgow Anniesland) (SNP)

At the risk of reiterating things: to ask what engagement the Scottish Government has had with Treasury ministers regarding the impact of the United Kingdom budget on Scotland’s finances. (S5O-04215)

The Cabinet Secretary for Finance (Kate Forbes)

My predecessor and I have engaged with Treasury ministers on numerous occasions to highlight the challenges caused by a late UK budget—challenges that were recognised on a cross-party basis. Despite that, the UK budget will not take place until 11 March, and I have received no indication of its likely content. The Chief Secretary to the Treasury has agreed to attend a meeting of finance ministers from the UK Government and the devolved Administrations on 10 March but has noted that the information that he can share on the UK budget will be constrained by market sensitivities.

Bill Kidd

With Barnett consequentials having to be estimated on commitments made during the 2019 general election, does the cabinet secretary agree that the unnecessary delay has shown a complete disregard for Scotland’s budget process?

Kate Forbes

Indeed, I do. It is not just a complete disregard for this Government but a complete disregard for Scottish communities and businesses that rely on the certainty that comes with the information in the budget. In order to combat that, we have presented the budget on the basis of the best available information, including provisional block grant adjustments and the Conservative Party manifesto from last year. However, that increases the financial risk around the budget and the risk of larger fiscal framework reconciliations in later years. The lack of engagement by the UK Government demonstrates a complete disregard for devolution and the interests of Scottish communities.

Rhoda Grant (Highlands and Islands) (Lab)

If there are additional consequentials from the UK budget, will the cabinet secretary speak to and consult other parties, and, indeed, the whole Parliament, before bringing back spending proposals to the chamber?

Kate Forbes

The member will know that any in-year budget changes are taken through the Finance and Constitution Committee; there is scrutiny in that process. There are also autumn and spring budget revisions. Subject to the level of difference between our estimates and what is in the UK Government budget, which will be announced next week, we intend to honour that process, as we have done every year.

Patrick Harvie (Glasgow) (Green)

Has the new chancellor given the Scottish Government any indication that the UK Government’s cart-before-the-horse approach will not be taken again in subsequent years? Does the cabinet secretary think that there is an understanding at an official level in Whitehall of the catastrophically chaotic impact of the delay that the UK Government has imposed on us this year?

Kate Forbes

I am not particularly optimistic that that has been recognised. At the quadrilateral meeting next week, I, along with ministers from the other devolved Governments, intend to make the case about how much volatility and uncertainty the delayed UK Government budget has introduced. This is about taxpayers, our committees and our public services, which rely on the certainty that comes through the budget.

On engagements between Treasury officials and our officials, we have repeatedly been referred to the Conservative Party manifesto for the best available estimates of what we should include in relation to consequentials, which is no way to set a budget.

The Deputy Presiding Officer

Question 5 was not lodged.


East Lothian Council Revenue Allocation

6. Iain Gray (East Lothian) (Lab)

To ask the Scottish Government for what reason East Lothian Council’s provisional revenue allocation per head is the fourth lowest in Scotland. (S5O-04217)

The Cabinet Secretary for Finance (Kate Forbes)

The local government finance settlement is distributed in full using a needs-based formula. That is discussed and agreed with the Convention of Scottish Local Authorities. All local authorities, including East Lothian, receive their formula share of the total funding available. In 2020-21, East Lothian Council will receive an above-average increase in support for revenue services of 6.5 per cent, or £11.5 million.

The Scottish Government is always open to suggestions to improve the funding formula, and should the member, or the council, wish to propose a change to the current formula, that would need to be raised with and through COSLA in the first instance.

Iain Gray

I understand that there is a formula, but the problem is that it is not working for East Lothian. Not enough account is being taken of East Lothian’s almost unique rate of population growth. That growth is being fuelled by the building of more than 10,000 houses, which are required of the council’s local development plan by the Scottish Government. Will the Scottish Government not find some way to reflect that, so that the council can fund the infrastructure that is needed for that expansion, which is demanded by the Scottish ministers?

Kate Forbes

Of course, we are supporting population growth through a range of measures, including our ambitious affordable housing building programme, for which £843 million will be included in this year’s budget.

I repeat the point that, if the member considers that there should be a change in the methodology, that would have to be agreed with all 32 local authorities. All would have a case to make on their own unique circumstances. Therefore, the matter should be raised with and through COSLA. If the member does that, I would be happy to speak to COSLA.


Local Authority Funding

7. Michelle Ballantyne (South Scotland) (Con)

To ask the Scottish Government what strategy it has to ensure that local authorities are sufficiently funded. (S5O-04218)

The Cabinet Secretary for Finance (Kate Forbes)

The Scottish Government works in partnership with the Convention of Scottish Local Authorities on behalf of all 32 local authorities to negotiate a financial settlement that ensures that local authorities can continue to provide the high-quality front-line services that the people of Scotland expect and deserve.

As I confirmed at stage 1 of the Budget (Scotland) (No 4) Bill, the Scottish Government is providing local government with a substantial funding package worth £11.4 billion in total, which includes an increase to support for spending on core revenue services of £589 million, or 5.8 per cent, in 2020-21.

Michelle Ballantyne

Figures released by the Scottish Government last week show that local authority debt has risen by nearly 15 per cent in just five years. It now sits at more than £18 billion, while Scottish councils run a deficit of £53 million, prompting COSLA to call for more funding in this year’s budget.

The amount of money pledged by the Scottish Government to councils this year is £6 billion less than their debt alone. When central funding is so low, how does the Government propose to help councils to conclude that without relying on additional council tax increases?

Kate Forbes

The fastest way to end austerity is to ensure that it is ended at source. That means ending Tory austerity. Chancellors have promised an end to austerity in 2018 and in 2019 and failed to deliver. We will wait and see what happens next week.

In terms of how local authorities use their resources, our policy is to ensure that local authority spending allows them the financial freedom to operate independently. They must use their resources as efficiently as possible and deliver services effectively to ensure that taxpayers get the best possible value. In this year’s budget settlement, we are ensuring that local authorities receive a total funding package of £11.4 billion to do that.

Richard Lyle (Uddingston and Bellshill) (SNP)

Scotland’s annual budget has fallen in real terms by 2.8 per cent over the past decade. Does the cabinet secretary agree that, when it comes to ensuring sufficient funding for local authorities, Tory members of the Scottish Parliament should join us in calling for that UK Government cut to be reversed? The hypocrisy of Tories in this Parliament is astounding.

Kate Forbes

I agree with Richard Lyle and call on all parties in the Parliament, including the Scottish Conservatives, to call for an end to UK austerity. Any influence that they might have on their colleagues in London to ensure that the UK budget next week delivers for Scotland would be welcome. Ensuring that they deliver on their manifesto promises would be a good start.


Scottish Government Budget

8. David Torrance (Kirkcaldy) (SNP)

To ask the Scottish Government which measures in the draft budget aim to boost economic growth, improve productivity and support improvements in innovation. (S5O-04219)

The Minister for Public Finance and Migration (Ben Macpherson)

The Scottish budget includes a range of measures that will foster inclusive economic growth, raise productivity and improve innovation. For example, we have pledged £201 million of funding for city region and growth deals during 2020-21. There will be £220 million of fresh seed funding for the Scottish national investment bank, contributing to our commitment to invest £2 billion over 10 years, and the National Manufacturing Institute Scotland will receive £26.5 million of funding.

David Torrance

The minister will be aware that Energy Park Fife in my constituency supports the renewables sector. How much investment is being made in hydrogen technology as an alternative source of fuel?

Ben Macpherson

We are undertaking a wide-ranging assessment of hydrogen, its various applications and how it may contribute to achieving our ambitious target of net zero emissions by 2045, and also how it can provide social and economic value for the country. Informed by the outcomes of that assessment and other companion pieces of work, we will publish a Scottish Government hydrogen action plan in 2020. The potential contribution of hydrogen in Scotland’s transition to a low-carbon economy was further recognised in the recent Scottish budget, which committed £10 million for hydrogen for heat demonstration projects.

Alexander Burnett (Aberdeenshire West) (Con)

How does the Scottish Government measure the return on its support for innovation centres and will centres that offer exceptional returns, such as the Data Lab, receive additional support?

Ben Macpherson

We recognised in the Scottish budget that innovation improves productivity, competitiveness and growth. We will therefore continue to support business investment in research and development with a target to double the spending of £870 million that happened in 2015 to £1.7 billion in 2025, meeting our commitment to increase support for business research and development from £22 million to £37 million per annum in the three years 2018 to 2021.

The specific point that the member raised would be better directed to the Minister for Trade, Investment and Innovation. I encourage Alexander Burnett to take it up with the minister directly.

The Deputy Presiding Officer

That concludes portfolio questions on finance. There will be a short pause before we move on.