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Chamber and committees

Meeting date: Wednesday, January 17, 2018

Meeting of the Parliament 17 January 2018

Agenda: Urgent Question, Portfolio Question Time, Education and Skills, Public Services, Business Motion, Parliamentary Bureau Motion, Decision Time, Robert Burns (Economic Potential)


Contents


Public Services

The Deputy Presiding Officer (Linda Fabiani)

The next item of business is a debate on motion S5M-09888, in the name of James Kelly, on protecting public services.

14:53  

James Kelly (Glasgow) (Lab)

Let me be clear: Scottish Labour has no confidence in the draft budget introduced last month by Derek Mackay, the Cabinet Secretary for Finance and the Constitution. We cannot have any confidence in a budget that is neither progressive nor fair and that piles the agony and the pain on to local communities. It is weak and incompetent on tax, and it lacks transparency on pay policy. It is not fit for purpose. As such, we declare that Mr Mackay needs to change the budget dramatically if it is to fill the gaps that exist in Scotland’s communities because of the lack of funding.

John Mason (Glasgow Shettleston) (SNP)

Will the member give way?

James Kelly

I want to make some progress.

Let us look, for example, at how local councils have been penalised, not just in this year’s budget but since 2011. Cumulatively, they have suffered £1.5 billion-worth of cuts. The Scottish Parliament information centre briefing relates the fact that this year’s budget will add another £135 million-worth of cuts to that total, which will leave a black hole in local government funding of up to £700 million.

Councils are beginning to assess their budgets and look at the implications of Mr Mackay’s draft budget. South Lanarkshire Council faces proposed cuts of £23.5 million, which will include the cutting of library services and a proposed reduction of 225 jobs. Those are the painful decisions that councils face. The City of Edinburgh Council faces £24 million-worth of cuts, including a reduction in leisure facilities. In last week’s sport debate, we discussed the Glasgow 2018 European championships, the feeder venues for which include the Commonwealth pool in Edinburgh. The Government and other Opposition parties talked up the opportunities that those championships offer, but how can we gain advantage from the holding of those championships if leisure facilities in Edinburgh are to be cut? Cuts worth £10 million are proposed by Clackmannanshire Council. They include reductions in the number of teachers and classroom assistants, which will drain away critical support for education.

I will take Mr Mason’s intervention now.

John Mason

I appreciate that very much. Since I first tried to intervene, the member has mentioned the figure of £700 million. Could he spell out for us how he would raise that £700 million? Would he do that through cuts elsewhere in the budget or through increased taxes?

James Kelly

Having seen what a mess the cabinet secretary made of his tax proposals, Labour will take adequate time to put forward its proposals.

The budget process is a three-stage process. We are in the first phase, and we will publish our tax proposals in full ahead of the stage 1 debate. That is a perfectly reasonable position to take in the budget process. We will take that approach because we are beginning to see the pain that local communities will have to suffer, which includes reductions in teacher numbers and the closure of leisure facilities. Consideration has to be given to such serious matters.

Of course adequate and substantial changes in taxation are required, not the weak proposals that Derek Mackay has put forward. The Fraser of Allander institute has said that, once the business rate offsets and the social security changes are taken into account, there is only £28 million available for allocation in other budget areas. As the Scottish Trades Union Congress has pointed out, that is inadequate—it is a weak proposal. That is not enough money to enable us to face up to the challenges that confront us. The STUC told the Finance and Constitution Committee that the gaps in the budget mean that there is a shortfall of at least £500 million. The Government needs to step up to the mark, because Mr Mackay’s proposals are simply not good enough.

The Greens are involved in negotiations with the Government. Given that at least £500 million will be needed to address those cuts, I hope that the Greens will not be bought off by the offer of a smaller sum than the one that was offered last year.

Kenneth Gibson (Cunninghame North) (SNP)

Will Mr Kelly take an intervention?

James Kelly

Not at this time.

In addition, Derek Mackay’s tax plans are riddled with loopholes. For example, people who earn between £43,525 and £58,500 will pay less tax this year than they paid last year. How can that be right? How can it be right that a nurse who earns £33,000 will pay more tax this year while a civil servant pays less tax? The tax proposals are not just unfair but incompetent.

When Mr Mackay published his scenarios for tax, back in the autumn, one of the tests for the tax plans was that they should enable us to tackle austerity and stop the cuts. The tax plans clearly fail to do that, given that they leave only £28 million available to stop the cuts. Part of the reason for that is that the top rate will be only 46p. Once again, Mr Mackay has backed away from asking the people on the top rate of tax to pay 50p, which is not an unreasonable ask of people who are earning more than £150,000. The tax proposals are weak, they are not fit for purpose and they do not meet the tests of being progressive and stopping the cuts.

Kenneth Gibson

Will the member give way?

James Kelly

No, thank you.

The Conservative amendment talks about the importance of growing the economy. I argue that support for public services is vital to growing the economy. We need to invest in and support education, rather than reducing teacher numbers and classroom assistants, as is happening in Clackmannanshire. We need proper investment in education. If we are to give our kids and college students the support that they need, we need to invest in infrastructure, teachers and lecturers. We need to invest in the proper information technology, to enable students to get qualified, so that we can best fill the engineering and IT gaps in our economy.

Ash Denham (Edinburgh Eastern) (SNP)

I am genuinely puzzled. Labour has had the same opportunity that all the other Opposition parties in the Parliament have had to engage constructively with the finance secretary and to offer proposals and suggestions about the choices that it would make. Why not engage with that process, instead of engaging in this parliamentary stunt?

James Kelly

This is not a parliamentary stunt—[Interruption.] This is about setting out the very serious point that we want a budget that protects public services, protects jobs in communities, supports education and makes a real difference.

Mr Gibson wanted to intervene—

Kenneth Gibson

You can let me in now if you want.

James Kelly

As a member of the Scottish Parliament, Mr Gibson is going for seven in a row; this will be the seventh budget in a row from the Scottish National Party that will reduce funding for council services. When will SNP MSPs such as Kenny Gibson, John Mason and James Dornan start standing up for their local communities, instead of selling the jerseys? What is the point of coming to the Parliament and supposedly representing constituents, and voting year after year for cuts at budget time?

Kenneth Gibson

Will the member take an intervention?

James Kelly

No, thank you.

I make the point—[Interruption.]

The Deputy Presiding Officer

Mr Kelly is in his last minute. Will members stop the raucousness and listen to his closing remarks, please?

James Kelly

As we embark on the remainder of the budget process, Labour wants to see a budget that is serious about tackling the black hole in public services. [Interruption.]

The Deputy Presiding Officer

I ask for some peace and quiet, please. Mr Kelly can have another minute.

James Kelly

We also want a budget that is transparent and serious about tackling public sector pay. When Derek Mackay appeared at the Finance and Constitution Committee on Monday, he could not tell us the cost of the public sector pay policy or how it was allocated in the local government budget. That is not transparent or competent.

We also want to see action to address the fact that we have more than a quarter of a million children in child poverty. That is an absolute scandal in modern Scotland.

Let us not have the seventh year in a row in which local councils and public services are penalised. Let us have a fair settlement for our communities.

We do not have any confidence in the budget. It is time to stop the rot, reject the draft budget, and stand up for local communities.

I move,

That the Parliament believes that the Draft Budget does not protect public services.

15:06  

The Cabinet Secretary for Finance and the Constitution (Derek Mackay)

As parliamentary stunts go, that was about as woeful as I have ever seen in the chamber. Rather than asking questions about confidence in the Scottish Government’s budget, James Kelly’s speech asks questions about confidence in the Labour Party to deliver alternatives or to be able to construct an argument in which it can engage positively in the budget process.

There is a well-established budget process in which Opposition parties can engage. James Kelly tried to insult the Green Party for engaging in those discussions. Is it not for all parliamentarians to engage in budget discussions? The draft budget process is about the Government presenting its position and recognising that this is a Parliament of minorities in which we must work across the chamber to find compromise and consensus in order to give stimulus and sustainability for our public services, and also—crucially—stability. The public expect no less from the Opposition and the Government.

James Kelly

Does Mr Mackay think that the public expect him to deliver a budget that will result in local councils having to make cuts in their local area?

Derek Mackay

The budget serves to invest hundreds of millions of pounds more in our public services right across the public sector. That is what the public expect.

In deploying our tax powers, I have set out four tests: protecting the economy, using the system in a more progressive fashion, protecting lower-income earners and investing in public services. I say to the Labour Party that we engaged in quite a consultative and collaborative approach to the deployment of our income tax powers. We invited Opposition parties to give us the policies that they would have us cost so that we could have a fair and balanced debate. I did not receive any proposals from the Labour Party—to be fair, it was embarking on a leadership contest thereabout—and the people of Scotland are still waiting to hear what its alternative specifically on income tax is. I would therefore argue that the people of Scotland have no confidence in a Labour Opposition that fails to work constructively when the opportunity is given to it.

I make the invitation again: my door is open to any Opposition party that wishes to discuss the budget.

Mike Rumbles (North East Scotland) (LD)

This time last year, the Greens claimed to have won a concession of £150 million for the Scottish budget. Will the finance secretary remind the chamber whether that was the case and where that £150 million came from?

Derek Mackay

I really do not see how that is relevant to this discussion. However, what we were able to do was to strike a deal that allowed us to take forward budget amendments as part of the process before stage 3. I think that that was welcome and orderly.

This Government is trying to deliver the budget in an orderly fashion, but the Labour Party returned to the issue of the top rate of tax. As I said when I presented the draft budget on 14 December, our income tax policy is intended to raise more money for public services. In relation to the top rate of tax, which James Kelly has raised again, the Labour Party’s proposition would raise less money next year for Scotland’s public services, as it is based on raising the top rate above the level that Scottish Government proposes.

We should not forget the Tories’ role, because over the 10 years to 2019-20, Conservative austerity will mean that the Scottish Government’s fiscal block grant allocation will have been reduced in real terms by £2.6 billion, and by 2019-20 the resource block grant will be around £500 million lower in real terms than it is in 2017-18. Our balanced and progressive budget proposals protect our public services from that real-terms reduction for Scotland and ensure that there is real-terms growth for Scotland’s public services.

Alex Rowley (Mid Scotland and Fife) (Lab)

Will the cabinet secretary give way?

Derek Mackay

I want to make a bit more progress.

Our budget means additional resources for the national health service, for example, with more than £400 million in additional funds.

If local government, which has been referenced in the debate, used its powers to increase the council tax by up to 3 per cent, that would mean real-terms growth for local government arrangements, with the cash settlement being protected and the capital settlement growing. It is significant that the Convention of Scottish Local Authorities said to the Local Government and Communities Committee that it does not think that it is

“calling for an extra £500 million explicitly”.—[Official Report, Local Government and Communities Committee, 22 November 2017; c 36.]

Jenny Marra (North East Scotland) (Lab)

Will the cabinet secretary give way?

Derek Mackay

I want to make a little more progress to say a bit more about what the budget does for public services, which is what this debate is about. The wording of the motion means that it falls far short of being about a vote of no confidence; the motion is actually about public services.

We have invested more in real terms in the budgets for the police and fire services, and they can now recover VAT and enhance their spending power; we have provided more support for colleges and universities, with a real-terms increase in their funding; and our progressive pay policy does what we said it would by lifting the 1 per cent pay cap. That is a far more progressive pay policy than the one south of the border. Our budget gives support to our public services and those who work in them.

The budget is about fairness and delivery, with £750 million for new affordable houses and more funding for energy efficiency. More specifically, it mitigates the UK Government’s welfare reform and provides more for the ending homelessness together fund, more for attacking the attainment gap, more for supporting our front-line education service and more for supporting the child poverty efforts. As I said, all that should ensure that we live in a fairer society. We are making extra investment in all those areas, while ensuring that our tax plans are fair and allow us to be the lowest-taxed part of the UK, but in a progressive fashion.

Alex Rowley

This week, Audit Scotland published a report on Clackmannanshire Council, which has an annual revenue budget of £180 million. Audit Scotland says that the council has to take £29 million out of its budget over the next three years. Unless the cabinet secretary changes his policy, that council will collapse. Does he agree that he needs to look again at the local government settlement?

Derek Mackay

I have said over the course of this debate and publicly that I will engage with all political parties to find a compromise so that our budget can be passed. I think that it provides a fair settlement for local government. However, I make the point that the Labour Party has stopped talking about the national health service, while this Government is proposing to invest over £400 million more in the NHS. That proposal is not matched by one from the Labour Party, which seems to have forgotten about the national health service when it comes to the budget settlement.

We have a fairer income tax policy and will have more investment in infrastructure of some £4 billion to help us grow our economy in an inclusive way. A well-performing economy is a prerequisite for ensuring that we have high-quality public services and can invest in them. Many of our interventions are to support economic growth and deliver inclusive growth, such as early learning and expanding childcare, affordable houses, expanding infrastructure for transport connectivity and digital, and the environmental agenda, with, for example, more charging points for electric cars. All of that is substantial new investment by this Government that provides reasons to support the budget.

I have to engage with other parties to reach a mature decision about what is right for our country. I invite all the political parties to act constructively and maturely in that regard.

15:15  

Murdo Fraser (Mid Scotland and Fife) (Con)

I welcome James Kelly to his place on the front bench as Labour’s relatively new finance spokesman. I hope that he will forgive me when I say that we on this side of the chamber feel a little bit short-changed, because, last week, we were led to believe that Richard Leonard would lead the debate this afternoon. We were looking forward to hearing that 21st century Arthur Scargill entrancing the chamber with his rhetoric.

However, it might be no surprise that Mr Leonard is taking a back seat for this debate, because perhaps he has read today’s YouGov poll in The Times, which shows that the Labour Party in Scotland has slipped from second to third place in Holyrood voting intentions. A staggering 60 per cent of the electorate has no opinion whatsoever on Mr Leonard, so he needs to work a little harder on his public profile. I would have thought that he would welcome the chance to lead this debate so that the public might be aware of what he has to say to them. In the words of the song, things can only get better for Scottish Labour.

Today, the Labour Party has brought to us a debate on the Scottish budget. Labour is quite entitled to choose whatever subject it wants for its debating time, but it seems a bit curious to schedule this debate just two weeks before consideration of the Budget (Scotland) Bill at stage 1. I have some sympathy for the points that were made by the Cabinet Secretary for Finance and the Constitution. If the Labour Party really wants to be serious about influencing the direction of the budget, it is quite entitled to sit down and make a case to him about the changes that it wants to make. Mr Kelly would have been on stronger ground had he come to the chamber today and set out not only what additional spending his party wanted to see, but the tax changes that it would make in order to pay for that spending, so that we could all discuss those in the round.

It is hard to disagree with the basic proposition of the Labour Party’s motion, because the draft budget that we have had presented to us fails to protect public services. James Kelly was right to say that local government has been the loser in the budget. There has been a real-terms cut in total central Government funding for local authorities of £81 million from this year to the next. More significantly, the local authority distributable revenue grant has been cut by more than £200 million. Even if councils were to raise council tax by the maximum of 3 per cent from this year to the next, that would offset the rise by less than half—about £75 million. Overall, councils have seen their revenue funding from the Scottish Government cut, in real terms, by 7.6 per cent between 2010-11 and 2016-17, which is far above any reduction in its own discretionary spending budget in the same period. The consequences of that will be known to us all. Local authorities across the country, which are currently setting their budgets, are having to make savings across the board by closing schools, reducing teacher numbers, cutting arts and leisure programmes, reducing road and green space maintenance and, in some cases, increasing user charges for various council services. At the same time, councils are under pressure to increase staff salaries.

Derek Mackay

Will Murdo Fraser take an intervention?

Murdo Fraser

Let me make this point, and then I will give way.

The Scottish Government’s pay policy proposes a 3 per cent rise for those earning up to £30,000, and a 2 per cent rise for those earning above that. Not surprisingly, the unions that represent local authority workers believe that staff there should be getting the same rise; indeed, last week, they made a case for a 6 per cent increase. Yet the finance secretary’s draft budget contains no additional sums for salary increases to match what he is paying elsewhere in the public sector.

Derek Mackay

If the Conservative position is to argue for more resources for those areas, how does the member propose to balance that with the fact that, if I were to follow Tory tax policies, I would have to find a further £501 million?

Murdo Fraser

First, the cabinet secretary’s sums are wrong. Secondly, the cabinet secretary has more money to spend, because the Scottish Government’s budget, according to SPICe and the Fraser of Allander institute, is increasing in real terms from this year to the next. Indeed, the finance secretary accepted that explicit point when I put it to him at the Finance and Constitution Committee meeting last week.

Although the Scottish Government will complain that its discretionary spending has been reduced relative to the high point of 2010, the Fraser of Allander institute states that the reduction is some 3.8 per cent, which is well below the 8 per cent figure that is often quoted by the SNP. More significantly, if we compare spending today with what it was 10 years ago when the SNP came to power, we find that there has been no real-terms reduction in the Scottish Government’s discretionary spending, according to Fraser of Allander.

Derek Mackay

Will the member take a further intervention?

Murdo Fraser

If Derek Mackay wants to contradict the Fraser of Allander institute, I will be interested to hear that.

Derek Mackay

It is more that I am stunned that Murdo Fraser does not see the point that I made, which was that, if I followed Tory tax policy for the next financial year, that would result in £501 million less. Irrespective of an argument over historic reductions, this is about what we propose for the next financial year if I followed Tory tax policies. They cannot have it both ways: raise less and spend more.

Murdo Fraser

That was a very curious intervention from the cabinet secretary. For years, we sat in the chamber listening to members from the SNP benches, Mr Salmond among them, telling us that the way to grow the tax take was to grow the economy. That was the way to get more money for public services. We remember Mr Salmond arguing for cuts in corporation tax to grow the economy. Mr Mackay produced an excellent paper just before Christmas arguing for tax cuts to grow the economy; he argued that, if we cut air departure tax, that would grow the economy and tax revenues. Why can he not see the logic of his own argument and his party’s position when it comes to the broader economy? Instead of increasing taxes, let us reduce them and grow the tax take. At the same time, think about how much money we would save additionally if we were to cut out waste, cut the unnecessary vanity projects of the SNP and scrap the named person policy. Any cuts that the Scottish Government makes are entirely of its own choice.

The SNP’s approach to the budget is not just to cut local services, but to increase tax. Despite the SNP promising at the previous Scottish election that it would not increase tax for those paying the basic rate of tax, that is exactly what it plans to do. Scots face a double whammy: their taxes are going up at the same time that services are being cut. Under the SNP, we are asked to pay more, but we get less in return.

In contrast, Conservatives are quite clear about what we want from the budget. There is no case for tax rises, particularly when promises were made that taxes would not go up and when the budget, in terms of the block grant, is increasing. This budget should cut waste and grow the economy so that tax revenues rise, which is what we say in our amendment.

I move amendment S5M-09888.4, to leave out from “believes” to end and insert:

“acknowledges that the UK Parliament block grant to the Scottish Government is increasing in real terms from 2017-18 to 2018-19; notes that any spending cuts to local services are a choice by the Scottish Government, not a necessity, and calls on the Scottish Government to abandon its plans to raise income tax and instead deliver a Budget that will focus on growing Scotland’s economy and tax base.”

15:23  

Patrick Harvie (Glasgow) (Green)

I welcome the opportunity to have the debate. I was going to reflect on the fact that it is perhaps the second half of the stage zero process for the budget because, as Murdo Fraser will remember, the Conservatives lodged a motion the day before the draft budget was published.

It struck me as a little odd that Murdo Fraser said that it was curious that the Labour Party had chosen to debate the issue two weeks before the budget is voted on at stage 1. If we use the opportunity properly, it is fair enough to have a little advance debate, whether before the budget is published or before it is formally voted on. Budget scrutiny has been shorter in recent years than it ought to be, so additional time in the chamber is helpful if we put it to good use.

We could gain a lot from more debate on how we fund our public services, as well as other aspects that are often underexamined, such as the carbon assessment process or the shortcomings that exist, as the finance secretary admits, in issues such as gender budgeting. I commend the written submission from the Scottish women’s budget group and the serious criticisms that it makes, some of which the cabinet secretary accepted at the Finance and Constitution Committee meeting this week.

I have a question for the Labour members today, and I really want to ask it in a constructive spirit. Are they using this opportunity, or the wider opportunity that come through a period of minority government, to best effect? Two weeks before stage 1, Opposition parties ought to be proposing positive and constructive ideas to the Government that will make the budget better. The Government then needs time to conduct its own scrutiny, as does the Scottish Fiscal Commission, and then we can go through parliamentary scrutiny of those proposals. Producing tax proposals after the Budget (Scotland) Bill has reached stage 1 will not leave any time to change the budget for the better and see a positive effect.

Mike Rumbles

Earlier, I asked the Cabinet Secretary for Finance and the Constitution whether he could tell us where the £150 million that Patrick Harvie claims he received from the Scottish Government last year came from. The cabinet secretary could not tell members. Will Patrick Harvie tell members where that £150 million came from?

Patrick Harvie

I will be happy to ask my office to send Mr Rumbles the links to all the formal discussions that he was well aware of at the time. We got £160 million in cuts to local government reversed. I think that I am right in saying that that was the only stage 2 amendment in the process since devolution; it was certainly the biggest budget concession since devolution.

Today we are being asked to vote on the draft budget instead of debating changes to the real thing. I cannot disagree with a word in the Labour Party’s motion, but everybody here is aware that the draft is just that—a draft. The purpose of a draft budget is for the Government to make its proposals so that we can all examine and challenge them. The vote that matters is the vote on the actual bill that will be introduced, and on the rate resolution in February. Labour’s rhetoric bills today’s debate as a vote of no confidence in the budget before the committee scrutiny has been completed. Sadly, that suggests to me that Labour has no more interest in improving the budget than it has shown in previous years.

Last year, I challenged Labour’s refusal to engage in that process properly, and maybe I did so too aggressively. If so, I apologise. Let me say now—more in sorrow than in anger—that if Labour MSPs care about a better budget that protects our public services, they need to propose the solutions that have been lacking so far.

Monica Lennon (Central Scotland) (Lab)

James Kelly set out that we will do that. Does Patrick Harvie agree that there is an important principle at stake here? The cabinet secretary wants to engage constructively but he is denying that the draft budget will harm our public services. We are simply asking for that recognition, because the language that is being used implies that the draft budget is a fair settlement for local government when it is clearly not.

Patrick Harvie

I certainly agree that what is in the draft budget is not a fair settlement for local government, but the draft budget does nothing. The real budget will do something and we will need to seek changes to that.

The Green approach has been very clear all along. We use up-front, early engagement and are clear about our principles. We took them to our party conference to seek its democratic mandate for an approach that prioritises progressive changes to income tax, the protection of public services including at the local level, a fair public pay settlement, and investment in low-carbon infrastructure.

The impact on local government is very clear. Compared with the draft budget of the previous year, the increases and decreases show that local government gets the third biggest cut of any of the 30-odd areas in the SPICe analysis, which also shows that, depending on which pots of money we consider to be part of the core settlement, there will be a £187 million cut or a £135 million cut or a £157 million cut. That last one comes closest to the comparison figure that we used last year.

We also need to ensure that local government has the resources that it needs for a fair pay settlement.

The case for low-carbon investment is extremely urgent. The Liberal Democrats’ amendment mentions ferries, but the wording is perhaps premature, given the fact that we have not yet seen the relevant committee’s recommendation. That committee has discussed the issue, but its recommendation has not been published yet. I expect the cabinet secretary to respond clearly during the budget process to whatever the committee recommends on the issue.

We also want progress on fuel poverty. The cabinet secretary says that there is more money for that, but the fuel poverty and energy efficiency budget line goes from £114.1 million to an incredibly impressive £114.3 million, which is hardly the kind of increase that reflects the national infrastructure priority that has apparently been placed on the issue.

The Deputy Presiding Officer

You must close please, Mr Harvie.

Patrick Harvie

We have put forward specific proposals to the Government, which can choose to work with us or with any one of those other extremely constructive political parties, but it will have to make that choice soon.

I move amendment S5M-09888.3, to leave out from “Draft Budget” to end and insert:

“Budget for 2018-19 must protect public services, fund a fair pay increase for public sector workers and invest in low-carbon infrastructure; urges the Scottish Government to amend the proposals in the Draft Budget to achieve this, and considers that all opposition parties have a responsibility in a period of minority government to put forward positive and constructive proposals for change.”

15:30  

Willie Rennie (North East Fife) (LD)

Our general approach to budgets has been constructive and about engagement. Since I have been leader, we have voted for the Scottish Government’s budget on two occasions and, as the finance secretary will know, we have always engaged constructively. We voted for the budget previously because we perceived that it was, not perfect, but good enough. We secured more investment for nursery education, free school meals and for colleges. However, the approach this year has changed, which we deeply regret. In previous years, we have engaged positively and constructively with Derek Mackay but, this year, he is trying to strongarm us into supporting the budget by using the significant issue of the northern isles ferries. To try to secure our support, he is threatening to withdraw a clear commitment and promise that he made to the northern isles to provide financial support for the internal ferries for those islands.

Derek Mackay

Will Willie Rennie take an intervention on that point?

Willie Rennie

Certainly, if the cabinet secretary is going to change his position.

Derek Mackay

No, it is not a change of position. I have attended all the meetings in that regard, and the position is that we enter into meaningful negotiations with local authorities. It is a deep misunderstanding to suggest that there is an automatic allocation of a sum of money.

To answer Willie Rennie’s point, Patrick Harvie is right that the issue of the ferries in the northern isles has been discussed at the Rural Economy and Connectivity Committee. I have not seen the committee’s report, either, but I will look at its recommendations and respond in due course.

Willie Rennie

There are two Government documents that are very clear about the Government promises. One of them, from back in 2014, talks about a negotiation at that time to conclude the issue. That commitment was made in 2014, but nothing has changed since. Discussions might be happening, but I cannot see any commitment to actually delivering on the promise. The ferry services plan from 2012 was equally clear about resolving the injustice for the internal ferry services. The result is that, if there is no change, public services will be cut or ferries will be cut. It is Derek Mackay’s responsibility to come to terms with that. That is why we hope that, when the final budget is published, we will see a clear commitment to deliver on the promise that he made. I hope that there will be a change of tack, because I would like to get back to the constructive process of engagement that we have had in previous years.

Liberal Democrats have been clear, open and honest about our costed manifesto commitments. At the election, unlike the Scottish National Party, we said that we were prepared to put a penny on income tax to invest in a transformational investment in education for nurseries, schools and colleges. We were frank with people so that, when they voted for us at the ballot box, they knew what they were voting for. However, those who voted for the SNP were not clear, because the SNP said one thing and has done another since then. Nevertheless, I welcome the fact that the SNP now recognises that we need to use the powers that the Parliament has gained to make a transformational change. We therefore urge the Scottish Government to go the full length by making a proper investment of £500 million.

We think that a £500 million boost to education is necessary because that will benefit the economy, in the face of Brexit. I agreed with much of what the First Minister set out in the paper that she published on Monday on the economic impact of Brexit. However, we do not see any action in the budget to try to deal with that. We need to invest in people’s skills and talents to try to supply the skills that will allow businesses to grow wealth and opportunities in this country.

That is why we think that there should be a proper investment programme in nurseries for the expansion of nursery education for two, three and four-year-olds; proper investment in school budgets and the pupil premium—or the pupil equity fund, as the Scottish Government calls it; and reversal of the damaging cuts to colleges of recent years, in which 150,000 places were cut and mature and part-time students were deprived of opportunities. That is the investment that we think is necessary in order to get the Scottish education system back to being the best in the world.

We also need to invest in mental health. In the previous budget, we recommended that mental health spending should go up to £1.2 billion. We need that significant extra investment in mental health because we have seen large numbers of people who have to wait to get essential mental health treatment—young people who just cannot get the support that they need and people waiting for up to a year to get the basic treatment and support that they need. One of the commanders of police in Dundee has said that mental health is one of the major issues that the police force in Dundee now deals with. We need investment in mental health to take the pressure off the police and the front-line services.

Monica Lennon

Does Willie Rennie agree that, if the Scottish Government invested properly in public services, it could come to agree with other parties that want to see school-based counselling—an ask that the Scottish Association for Mental Health has reiterated this week?

Willie Rennie

There was a very interesting report this morning about first-aid mental health for schools that I thought was a good move in the right direction. That is the kind of thing that we could invest in.

Finally, we need to see the fulfilment of the commitment that the Government has made on ferries. That is the best way of securing constructive engagement across this chamber so that we can agree a budget for Scotland.

I move amendment S5M-09888.2, to insert at end:

“, and further believes that the Draft Budget fails to deliver the transformation required in both education and mental health services, and that it defies the will of the Parliament, and the Scottish Government’s own commitment, by omitting fair funding for internal ferries in the Northern Isles.”

The Deputy Presiding Officer

We now move to the open debate and speeches of five minutes, please. All the opening speeches went a wee bit over, so we are quite tight for time.

15:37  

James Dornan (Glasgow Cathcart) (SNP)

Thank you, Presiding Officer; given your last comment I will unfortunately not be able to take any interventions, about which I am very upset, take it from me.

I heard that Mr Kelly, in his opening comments—soon to be famous, I suspect—said something about me “selling the jerseys” when I came here on a regular basis. I assure you that I can see only one Arthur Daley party in this chamber, and that is the Labour Party. It promises something, but every time it is in a position to give it, it sells a dud instead. One of the downsides of growing old is seeing people and institutions that we hold dear deteriorate: family and loved ones who become ill and frail, film stars who end up on made-for-television afternoon films, football players who think they still have it but do not, old theatres and cinemas going to rack and ruin while we remember them in better days.

Unfortunately, that is what we are witnessing. A once great institution that was held dear by me and many of my generation shows itself to be a poor facsimile of the party whose name it dares still to use. While our budget is being cut in real terms by Westminster, the Labour Party would rather spend its time indulging in a stunt that uses our public service workers as a political football than work with the Scottish Government to ensure that Scotland gets a fairer deal. That was not the Labour way; it used to defend the workers when the party was in office, not use them when it was out of it. Hypocrisy is now a byword for Scottish Labour, I am afraid.

It is clear that the Scottish Government recognises in the draft budget that public sector workers form an integral part of Scottish life. It also recognises the workers’ need for improved pay, especially in light of the increasing austerity measures coming out of Westminster. Social security cuts alongside rising inflation are causing real hardship to many of our lowest paid public sector workers, and this budget shows the Government’s commitment to those hard-working staff members and their families.

Jackie Baillie (Dumbarton) (Lab)

Will the member take an intervention?

James Dornan

I am sorry, Jackie; I do not have time for one of your stories.

This Government recognises that, even in the toughest of financial times, public services must be maintained and staff should be paid fairly in order for us to provide the people of Scotland with some of the best public services throughout the UK. What is Labour’s position, outside of a press release?

I know that Anas Sarwar will get up and speak about the NHS shortly, but before he does, let me say just three words to him: Labour-controlled Wales. Wales has a very poorly run health service and a Labour Party that refuses to increase public sector pay unless it receives extra funding from Westminster.

Let us get back to Labour hypocrisy. It is no secret that pressures on the Scottish NHS have been vast over the winter period; in fact, both the cabinet secretary for health and the First Minister apologised unreservedly for any delays that patients may have had to face. However, at no point was any blame apportioned to the hard-working staff of our NHS. That is because this Government genuinely supports and cares for our front-line staff.

Let us compare that attitude to that of the new leader of the Scottish Labour Party—[Interruption.]—he is probably the acting leader, because I doubt that he will be there that long. I will quote a tweet that he put out just last week:

“I would like to hear your stories: good, bad or indifferent of the experience you, or a loved one, had with the NHS over winter”.

Call me cynical, but I highly doubt that Mr Leonard will be coming to the chamber tomorrow to ask the First Minister how the Scottish NHS has managed to generate so many good news stories at such a difficult time across the UK. [Interruption.]

I suggest that Mr Leonard is using his political platform to fish for stories that he can use to beat the Scottish Government with. Can people imagine the audacity of a party that would bring a motion to this chamber claiming to stand up for our public service workers while at the same time fishing for ways in which to criticise and complain about the brilliant work being done under the most difficult of circumstances? It is beyond contempt.

Perhaps Labour members should remind themselves—

The Deputy Presiding Officer

Excuse me, Mr Dornan. Jenny Marra has a point of order.

James Dornan

What is the betting that it is not a point of order?

Members: Oh!

The Deputy Presiding Officer

I did not catch that, Mr Dornan, but please be quiet until we have heard the point of order.

Jenny Marra (North East Scotland) (Lab)

On a point of order, Presiding Officer. Can you advise the chamber to what extent the member speaking has to stick to the motion and not simply use his time to attack a party that has lodged a serious motion for debate?

The Deputy Presiding Officer

That is a decision for whoever is presiding in the chair, Ms Marra.

James Dornan

Perhaps the Labour Party should not have lodged a motion in the first place that was solely to attack the Government; it should have taken part in the process.

As I was saying before I was interrupted, Labour members should remind themselves of their failings in the creation of the ruinous private finance initiative system, with 93 PFI projects adding up to a staggering £30.2 billion, with contracts being repaid over up to 35 years, at more than five times the initial cost of projects—

The Deputy Presiding Officer

You must come to a close, please, Mr Dornan.

James Dornan

—I wonder how much of a pay rise that could have funded.

In conclusion, I suggest that if the Labour Party thinks that it can balance the books better, it would be best to provide an amendment, or indeed an alternative motion—one that balances the books, although in saying that—

The Deputy Presiding Officer

You must close, please, Mr Dornan.

James Dornan

—going on previous performance, it seems much more likely that it will continue—

The Deputy Presiding Officer

Mr Dornan, will you please close? Thank you very much.

James Dornan

What about the point of order?

The Deputy Presiding Officer

Mr Dornan, as I have said already, that is entirely my decision. I have asked you to close. Thank you.

15:43  

Iain Gray (East Lothian) (Lab)

Of all the public services that are underpinned or perhaps undermined by this budget, arguably the most important is education. If there is a silver bullet in the fight against poverty, the struggle against inequality or indeed the drive to grow the economy, it is education.

Across the years, so many have told us just that, from Mandela, who called it the most powerful weapon to change the world, to Malala, who said:

“One child, one teacher, one book and one pen can change the world”,

and risked her life to learn.

Education is not just a public service; it is a public good, an investment in opportunity for our children and grandchildren and the future for us all. Our obligation is to make the necessary public investment in it and to reject a budget that fails that test of principle, not just of detail. After all, the First Minister has told us so often that this is her number 1 priority. She asks to be judged on it, but the evidence says that she cannot be trusted on it.

Over the years, the SNP has cut spending per annum per secondary school pupil by £1,000 and by £500 per pupil across all our schools.

Since 2010, £1.2 billion less has been spent in our schools than would have been had spending simply been maintained. In colleges too, years of cuts and flat cash settlements amount to real-term cuts. At the same time university students have seen grants slashed and their debt burden for living support double.

The effect in our schools is real. There are 3,500 fewer teachers—4,000 fewer considering only the core school budget—and there are 1,000 fewer support staff. Average class sizes in primary schools are bigger than they have ever been.

We cannot recruit even those reduced teacher numbers. Hundreds of posts lie vacant, while every week we hear of unacceptable measures that schools are taking to cope, whether it is begging parents to help out in the classroom or unqualified students teaching a critical subject such as maths. That is happening right here in our capital city, in a school—Trinity Academy—that has a proud record stretching back over 120 years.

The reason for that is not hard to find. Teachers’ pay has eroded every year under this Government, and another below-inflation pay deal has just been awarded—another real-terms cut. Our teachers have gone from being among the best paid in the developed world to well below average in the international league table of pay.

Of course, the most worrying effect of those cuts to this public service has been the decline in achievement in core skills such as numeracy and literacy, as we fall behind other nations, and a continuing gap between children from the richest families and the rest.

The questions for this budget are: does it reverse those trends and does it begin to undo 10 years of cuts? To do so, it would have to demonstrate adequate resources for the local councils that fund our schools, not just to avoid further cuts but to begin to rebuild core teaching and support staff numbers, reverse the increase in class sizes and provide a pay increase sufficient to make teaching an attractive profession once again.

Stewart Stevenson (Banffshire and Buchan Coast) (SNP)

I absolutely respect the member’s experience as a teacher. He will remember, of course, that in providing answers, pupils have to provide their workings as well. As he has provided neither yet, will he use his last minute to produce one or the other for us?

Iain Gray

With regard to teachers’ pay, the table from the Organisation for Economic Co-operation and Development report can be found in the Times Educational Supplement, which I am happy to supply.

With regard to the erosion of teachers’ pay, a teacher today is earning around just under £6,000 less than they would be had their pay kept pace with inflation. I am more than happy to provide the workings to Mr Stevenson, as would be the Educational Institute of Scotland, I am absolutely sure.

To protect education, this budget would have to restore cut funding to grant support for students, so that those who cannot ask their families to subsidise their living at university can afford to go there without being put off by the scale of debt that they will face.

Presiding Officer, this budget does none of that. It leaves a shortfall of in effect £700 million for councils, so they will not even be able to stand still on schools, never mind restore teacher numbers and teachers’ pay.

Kenneth Gibson rose—

The Deputy Presiding Officer

No—Mr Gray is just closing.

Iain Gray

The tax measures that the cabinet secretary has referred to actually raise only an additional £28 million and are so progressive that someone who earns £40,000 will pay less tax but someone—

The Deputy Presiding Officer

You are just closing, Mr Gray.

Iain Gray

It provides no additional support for students, and we see the consequences clearly as councils prepare their budgets. What confidence can we have that this budget invests in education?

The Deputy Presiding Officer

Mr Gray, please close.

Iain Gray

None—none at all. That is why we should support the motion.

15:49  

Tom Arthur (Renfrewshire South) (SNP)

I am grateful for the opportunity to speak in the debate. Before highlighting a few of the ways in which I believe that the draft budget supports our public services, I would like to take a moment to remind the Parliament of the economic and fiscal backdrop.

The UK Government is cutting the Scottish Government’s resource budget by £500 million over the next two years. That is, of course, 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 which, in itself, represented a failure to respond effectively in the wake of the financial crash of 2008.

As a consequence of misguided and dogmatic UK Government policy, we have endured a prolonged period of wage stagnation, with real income growth suppressed and inequality rising. All of that—wage stagnation, the rise of insecure work and welfare cuts—has been exacerbated by the huge economic imbalance between the south-east and the rest of the United Kingdom. All of the systemic distortions and inequalities within the wider UK economy, combined with the anticipated headwinds resulting from Brexit, on top of a £500 million reduction in the resource element of the block grant, create an extremely challenging environment in which to set the budget. That is a challenge not only to the Government, but to all of us in this Parliament, which is, after all, a Parliament of minorities.

The draft budget, as laid before the Parliament, represents a bold and innovative response to that challenge. In committing an additional £400 million to the NHS, it supports our most treasured public service. By increasing spending on educational attainment, it demonstrates this Scottish Government’s commitment to reducing the attainment gap. Significant increases in the economy portfolio budget and continued support for small businesses show that this Government is determined to support economic growth. The allocation of additional funds to Creative Scotland, in light of reductions from the national lottery, has been welcomed across Scotland’s cultural sector. Those represent but a handful of the provisions in the draft budget that will contribute to protecting public services.

Patrick Harvie

The cabinet secretary has made the case that the tax policy changes that he proposes bring the overall Scottish Government budget back into real-terms growth. Does the member have any idea why it is therefore impossible to provide real-terms growth in the funding from the Scottish Government to local government to protect those services?

Tom Arthur

I thank Patrick Harvie for that intervention. That is a point that I will come to later in my remarks. It is fundamentally down to choices and I am sure that he will continue to engage constructively with the cabinet secretary to make that case but, ultimately, funds being allocated to one area of spending mean fewer funds for another area. He will have to advocate for his position.

On that topic, today was an opportunity for Labour to lodge a motion setting out its priorities and vision for public services and for that to be subjected to the trial of parliamentary scrutiny. It is therefore disappointing that James Kelly has chosen instead to frame this debate as a vote of no confidence in the draft budget.

Just as it is unwilling to engage constructively with the Government ahead of the draft budget, the Labour front bench would unfortunately rather chase the easy headline and spare itself the bother of the deep thinking and heavy lifting that making a meaningful contribution would require. As is sadly now the norm for that once great institution, it will choose easy gimmicks over hard graft.

Turning to the Tories, it seems that they are having something of an identity crisis. Instinctively, they wish to slash taxes on high earners and shrink the state. However, the Tories are a devious lot and they know that such a view—

Jamie Greene (West Scotland) (Con)

Will the member take an intervention?

Tom Arthur

Sorry, I have already taken one intervention and do not have time.

The Tories know that such a view is in the minority. They know that to slash and burn is the minority position in Scotland and that holding that view would see them punished at the ballot box.

Therefore we end up with the unsustainable absurdity of the Tories simultaneously calling for tax cuts for the wealthy and increased public spending. For a party that prides itself on straight-talking, commonsense politics, that is utterly pathetic.

The Tories should have the courage of their convictions. If the Tories believe that high earners, such as MSPs, should receive a tax cut, then they should set out from where in the draft budget they will take the money to pay for it. Will they take it from the £400 million for the NHS?

The Deputy Presiding Officer

You must close, please.

Tom Arthur

Will it be from the £179 million to raise attainment in our schools? Will it be from the £600 million committed to the roll-out of 100 per cent access to superfast broadband? Or will it be from the £100 million that the Scottish Government spends every year mitigating the Tories’ welfare cuts?

The budget works for all of Scotland, and I look forward to backing it in the coming weeks.

15:54  

Alexander Stewart (Mid Scotland and Fife) (Con)

The sole purpose of taxation is to ensure that public services are adequately funded. However, it seems that some members in the chamber need reminding that raising taxation has consequences for individuals, families, businesses and our economy. When we make decisions about the level of tax, we have to balance the need to deliver excellent schools and effective hospitals with the impact on our constituents’ pay packets and on the nation’s economic growth. We in the Scottish Conservatives take the view that no one in Scotland should pay more in income tax than someone who is doing the same job in another part of the United Kingdom.

Kate Forbes (Skye, Lochaber and Badenoch) (SNP)

Will the member take an intervention?

Alexander Stewart

Time is tight. I would like to continue.

It is incredibly important that our levels of taxation remain competitive so that we retain talented individuals who are contributing to the work, life and business that we have in Scotland. Putting up a sign at the border that says “higher taxes here” sends completely the wrong message. However, it is not just the Scottish Conservatives who are challenging the red, orange, yellow and green consensus.

Derek Mackay

Will Alexander Stewart welcome the fact, particularly because it is progressive, that a majority of taxpayers in Scotland will pay less tax than they would if they lived south of the border?

Alexander Stewart

The cabinet secretary is quite wrong. The fact is that the Government is taking more out of people’s pay packets—it knows that, and we know it as well.

The Scottish Conservatives are challenging that, and the organisations that represent our country’s businesses are saying that it is wrong. CBI Scotland has warned that the tax rises in the budget will make it harder to attract talent. Scottish Chambers of Commerce has indicated that outside investors will perceive an increase in the cost of doing business in Scotland. The Scottish Retail Consortium has said that the tax increases will be likely to result in lower consumer spending. Those are stark warnings from people in business who understand and know the priorities that we face. The other parties in the chamber would be wise to give them careful consideration.

The block grant to the Scottish Government from Westminster will be protected in real terms this financial year and will increase in the following year. Therefore, even without the SNP’s tax rise, the entire Scottish Government budget has been protected, so any decisions that it makes are of its own making. The real-terms reduction in central Government funding for local authorities is a prime example of decisions that the Scottish Government has chosen to make. To govern is to choose, but the nationalists choose badly and they govern badly.

Some of the recent proposals that the Scottish Labour Party has put forward are even worse. Not only has its leader indicated that he is happy to hit every single taxpayer in Scotland, he has proposed support for a 50p rate of income tax. Even the SNP has dropped that ridiculous policy after a Scottish Government analysis that found that it might result in a reduction of tax revenues of about £24 million. That is a classic example of ideological policy making that is very likely to undermine its stated objective of funding our way forward.

At the same time as proposing policies that would lose money and waste money, the Labour Party wants to spend even more finance. Its leader has said that he wants to buy back all existing PFI contracts, which would cost £29 billion. He also wants to renationalise ScotRail immediately if he gets the opportunity. Labour can take no opportunities here to tell us what it wants to do, because, in reality, it will not protect anybody—it will just attack everybody it can.

On the theme of being honest with the electorate, decisions about taxation must be based on economics rather than ideology. Our priority at the same time should be to grow our economy and our tax base—that is the important issue, not taking more money away from hard-working families and individuals and threatening our economic stability. I firmly believe that, and it is important for us to discuss today the opportunities that we have. That discussion is not taking place in the chamber. I am afraid that Labour has no opportunities to give us, only problems to deliver.

The Deputy Presiding Officer (Christine Grahame)

Speeches should be no more than five minutes long. I call Clare Adamson and I remind Jenny Marra to press her request-to-speak button, because her intervention will have switched it off.

15:59  

Clare Adamson (Motherwell and Wishaw) (SNP)

I had hoped that we might have a constructive debate this afternoon, that constructive ideas would come forward and that the debate would not just be an opportunity for grievance politics, but I have been sorely disappointed.

Murdo Fraser had a little tease of members of different parties about a recent opinion poll. The Labour Party would do well to consider that it was the Scottish electorate who dumped it on the sidelines of politics. If Labour wants to get back on the pitch, it has to improve its game severely. Today, it has given us nothing—no new ideas. Will Labour members seriously vote against increasing health spending by more than £400 million? Will they vote against £120 million on top of core education funding going directly to headteachers to help ensure that all young people can fulfil their potential? The Scottish attainment challenge is providing £750 million over the course of this session of Parliament to tackle the poverty-related attainment gap. It prioritises improvement in literacy, numeracy and health and wellbeing among children who are adversely affected by poverty in Scotland.

I understand Mr Gray’s concerns about education and I understand a lot of what he said today. However, given that he mentioned the EIS, I point out that in a tweet on the day of the budget, the EIS welcomed the increase in the attainment fund by saying that it would provide desperately needed funding for schools,

“mitigating against impact of poverty in education.”

Larry Flanagan of the EIS welcomed

“the fact that the Finance Secretary has confirmed that the damaging 1% public sector pay cap will be lifted in 2018. For far too long, teachers and other public-sector workers have been financially punished for an economic situation that was not of their making. The lifting of the pay cap is a long-overdue recognition that public-sector workers deserve to be paid fairly for the vital work that they do.”

That was the EIS’s response to the budget. We have lifted the pay cap for NHS staff, police, teachers and others.

Iain Gray

Will the member take an intervention?

Clare Adamson

No, thank you. Labour will criticise, but it fails to do the same where it is in power, in Wales.

In 2018-19, councils will receive funding through the local government finance settlement of more than £10.5 billion. They have also been given the flexibility to raise an additional £77 million by increasing the council tax by up to 3 per cent. I will talk about Scotland. In fact, I will talk about North Lanarkshire, which is where I live, where Labour failed to use that 3 per cent council tax increase last year, denying £3.98 million of additional funding to North Lanarkshire. That is a compounded miss—it is not something that we can get back in years to come; it will be missed now and for ever and it will be compounded if Labour continues not to use that flexibility. Its argument is, “It is not enough, so we will not take it,” which is a ridiculous attitude to take.

Clackmannanshire was mentioned. North Lanarkshire Council has already cut classroom assistant numbers. Last year, the council’s Labour administration removed 198 posts.

We are facing the toxic legacy of PFI. Labour will carp from the sidelines, but it is increasingly clear that we are still paying for the mess that Labour left over a decade ago, with payments of £426.8 million across our council areas. North Lanarkshire Council itself faces a PFI bill of £22.5 million, yet it turns down the possibility of additional funding.

Mark Griffin (Central Scotland) (Lab)

Will the member take an intervention?

The Deputy Presiding Officer

The member is in her last minute.

Clare Adamson

Voting against the Scottish budget will be a vote against investing in childcare, our schools, our hospitals and other vital public services, giving them the funds that they need to deliver better services for Scotland. I, like all my colleagues here, look forward to the positive proposals coming forward that would allow Labour to deliver on some of the demands that it has brought to the chamber today. We need ideas in here; we just do not need grievance politics.

16:04  

Jenny Marra (North East Scotland) (Lab)

Last year, Dundee City Council had to make cuts of £12.5 million; the year before that, it had to make cuts of £23 million. This year, the proposed settlement is so bad that the SNP council leader, John Alexander, has written to the cabinet secretary to try to secure a better deal for our city. That comes shortly after he announced that, based on the draft budget, Dundee will face cuts of up to £15.7 million this year.

It is extremely worrying that there are indicators from the council that workers’ terms and conditions could be affected. Given the continual references by the council and the chief executive to flexibility from staff, coupled with different shift patterns for care workers, it is clear to me and the Scottish Labour Party who will bear the brunt of the latest round of cuts.

Angus Council has also had millions of pounds cut from its budget. It has 500 fewer staff than it did in 2010. There are no signs of those reductions letting up—it plans to shed another 800 jobs over the coming three years. Even the council’s independent leader said that he cannot deliver the current range and volume of services and that the council will have to prioritise.

The cabinet secretary has tried to divert our attention by declaring that councils can raise their tax by up to 3 per cent, but that ignores that the crisis in local government finance has been crippled by his Government’s decade-long freeze of the council tax; it also ignores that a full 3 per cent rise would barely scratch the cuts required as a result of his budget. In Dundee, the SNP council estimates that the full 3 per cent rise would raise £1.5 million in additional revenue. That is not even one tenth of the savings that are required.

The problems in NHS Tayside are well known. It is the clearest example in Scotland of mismanagement leading to financial crisis in a public service. The board owes the Scottish Government £35 million, and it is facing cuts of more than £200 million in the next few years. That is coupled with the local council services cuts that I have outlined.

Derek Mackay

Will the member give way?

Jenny Marra

No, I will not give way.

The board still struggles to move away from using agency nurses and rising prescription costs, but what do we get? A meagre 1.3 per cent rise in real-terms spending for the NHS. That is nowhere close enough to meet the ever-increasing demands of an ageing population and ill health; it is not enough to get NHS Tayside anywhere near financial health.

Derek Mackay

Will the member give way?

Jenny Marra

I will make one more point before doing so.

What of the cabinet secretary’s promised pay rise for public sector workers? He announced in the chamber with great fanfare that he would give public sector workers a long-awaited pay rise, with those on £30,000 or less getting a 3 per cent rise. On Monday, he admitted under questioning from the Finance and Constitution Committee, that he has not allocated any extra money to councils to pay for that promise.

I am happy to take your intervention now, finance secretary. How should Dundee City Council pay its workers the pay rise that you promised while making cuts of £15.7 million? It would be very welcome if you could give workers in Dundee that answer today.

The Deputy Presiding Officer

Before the cabinet secretary intervenes, I make the point that the only person in the chamber who can use the term “you” in referring to other members is me as the chair. I ask members not to do so, please.

Derek Mackay

I ask the question that I wanted to put to Jenny Marra earlier, when she was speaking about expenditure items. It was my understanding that the Labour Party was proposing to give all additional revenues raised through taxation to local government, so why not a penny more for the national health service?

Jenny Marra

First of all, I apologise, Presiding Officer—I am still getting into my stride after a short absence, and I heed what you are saying.

The cabinet secretary forgets that it is he who has the budget in front of him, that he is responsible for the decisions, and that these are his cuts that he is asking people in my city and across this country to make.

Surely it is impossible for this Parliament to have confidence in a budget from a finance secretary who refuses to address the issues seriously. What does the Scottish Government say to those workers in Dundee City Council who do not know whether they will get the pay rise that he promised them and that they so desperately need? What does the cabinet secretary say to the patients, the nurses and the doctors in NHS Tayside whose health board is in financial dire straits and whose management cannot seem to be able to get them out of the situation that it is in?

In Dundee and Angus, we face increasing demand on our public services, as we do in the rest of the country, but we are governed by ministers who are not prepared to rise to that challenge.

The Deputy Presiding Officer

I am sorry, but you must conclude now. Thank you.

[Applause.]

16:10  

John Mason (Glasgow Shettleston) (SNP)

I will take that as a clap for my forthcoming speech.

I am more than happy to speak in today’s debate on public services, especially as the SNP has a very good record in government in its funding of public services. Health expenditure has been prioritised since 2007. At the same time, local government has been funded for the council tax freeze, and we have invested in road and rail infrastructure. Unlike with previous Administrations, major capital projects tend to have been delivered within time and within budget, which has meant that we have been able to do more with the same amount of money.

Of course, we have been through difficult times and have not been able to spend as much on public services as most of us would have wanted. One question that we must consider today is what Labour means by “protect public services”. Does it mean that we should keep the same service, delivered in the same way, with the same number of staff, for the same amount of money? Technically, that might mean protecting public services, but I suggest that that is not what the public want or need. If it means that there should be the same input in money or labour terms, that would leave no room for modernisation. It would, for example, exclude a council investing in a modern bin lorry that required fewer workers and using any savings to increase recycling provision.

The SNP has certainly protected spending on health but, as demand increases, challenges will inevitably be faced. Should we protect the accident and emergency service as it has been, even if that means providing more and more money as more and more people go to A and E, or should we invest more in community healthcare, thereby reducing the need for A and E and potentially reducing the need for hospital beds in the longer term?

Patrick Harvie

Is the member aware that demand on local government services is also rising significantly? I do not want to take anything away from the point that he makes about the NHS, but surely we have a responsibility to fund local government services rather than threaten councils with an even deeper cut if they do not accept arbitrary rate capping.

John Mason

I have already said that I think that local government has been treated pretty fairly over the years, but I am happy to accept that local government and national Government are in a very difficult financial position. We do not have endless resources, nor does local government. We all have to find a balance between how we can raise our income and how we can control our expenditure.

I feel that Labour’s approach to protecting public services is far too simplistic. Is Labour looking at inputs, outputs or outcomes? Does Labour want to protect inputs such as A and E costs and staff, or does it want to protect outputs such as waiting times and the number of patients who are treated? Alternatively, does Labour want to protect and improve outcomes such as the proportion of the population who are living healthily at home?

At committee meetings, Labour MSPs can often be quite sensible. They agree that we should emphasise preventative spend and that, for whoever is in power at the moment, budgets are tight, but it seems that when we come into the chamber, reasonable discussion goes out the window and it is all about easy soundbites and unreasonable expectations.

I want some public services to be expanded. I am thinking, for example, of the number of hours of childcare provision and the level of support for elderly people in their own homes. Those are forms of preventative spend, which should, we hope, mean that there will be less need for reactive services in schools and hospitals later on. If the suggestion is that we must protect reactive services, I would say that we should not. We should increase preventative services and, at the right time, reduce reactive ones.

The motion focuses on the budget, so it is worth thinking a bit about what the budget options are. Broadly speaking, if we are to spend more in one area, we must spend less elsewhere or raise taxes. I think that we are in danger of repeating ourselves in such debates, but I am happy to say again that I support a sensible increase in taxes. However, I urge that we proceed cautiously, because we do not know what the behavioural change might be, especially if richer taxpayers were to leave Scotland. Therefore, I am comfortable with income tax bands being raised by 1p or 2p, but I would be very wary of raising them by 5p or more in one go.

The other option is to cut another area of expenditure, but Labour has been reluctant to say whether it would do that. I am left wondering what services Labour might cut.

The Conservative amendment focuses on growing the economy, but if the benefits of growth go only to the top 10 per cent or even the top 1 per cent, as we heard at yesterday’s Economy, Jobs and Fair Work Committee has been the case, who wants that kind of growth?

We have before us a motion that is probably well meaning but which is not particularly realistic and does not sit well in the real world of income and expenditure.

16:15  

Tom Mason (North East Scotland) (Con)

I am pleased to take part in this debate, which concerns many issues that affect our constituents. It is important that we have public services that are fit for purpose, but we must be mindful of how we raise the money to make that happen.

The SNP’s draft budget proposed to pay for public services by increasing income tax. It is regrettable that the SNP is not the only party to support such a principle. It has been interesting to listen to Scottish Labour recently, if only because we are able to see where its priorities lie. Labour would fund an eye-watering programme of nationalisation by hiking taxes for basic rate taxpayers. Its idea of progressiveness is making the lowest paid in our society pay more. To ask people who are earning £12,000 a year to pay for an uncosted rail nationalisation or the £29 billion buy-back of PFI contracts—policies that the Labour leader supported in September—is not progressive; it is just wrong. To increase the burden on those who need our help most is senseless and needless.

Labour’s plans for the higher tax brackets run into yet more difficulty. Even the SNP accepts that a 50p rate would lose money, but the Labour Party still thinks that that is a wonderful idea. With ideology placed ahead of common sense, it is little wonder that Labour is in such a mess.

This might be quite a complicated subject for SNP members. For almost the entire existence of this Parliament, they have been told to believe that tax rises are not the answer, but now they are instructed to believe the opposite. Principled government, indeed.

The position is made even more complicated by the finance secretary’s acceptance, last week, of the Fraser of Allander institute’s point that the Scottish Government’s total block grant, excluding financial transactions, will increase by around 1 per cent in real terms. To say that that blows the economic case for the announced rises out of the water is something of an understatement.

The SNP is ignoring the warnings of Reform Scotland, CBI Scotland, the Scottish Chambers of Commerce, the Scottish Retail Consortium and the Federation of Small Businesses. It is also breaking its manifesto commitment. The SNP misled those who voted it into office, but there is still time to change direction, and I hope that it will do so.

We in the Conservative Party keep our promises. We said that taxes in Scotland would be no higher than they are anywhere else in the United Kingdom. We will justify the trust of those who voted for us by sticking to that position. We are proud of the action that has been taken to alleviate the pressure on the lowest paid in our country. For example, the UK Government has continually raised personal allowances since 2010.

In essence, the whole issue boils down to the rationale and method by which the Government raises money. Taxation is a tool not for reordering society but for raising money for public services, and the answer is not to increase the burden on those who contribute but to create more jobs and boost wages, so that the people who are not currently active in our economy participate, and at a much higher level. The SNP has failed to increase the tax base throughout its 11 years in office. We would make that a priority.

The SNP Administration has accepted that the block grant is going up in real terms, which makes the proposal to cut local authority budgets even less sensible. It is unacceptable for the SNP Government to tell local government that the only way for it to break even is by putting up council tax—in addition to the council tax rises that are a result of the rebanding last year. The SNP once promised to get rid of the council tax. Now it recommends a 3 per cent rise—yet another U-turn.

If the other parties are serious about better funding for public services, I encourage them to join us in ensuring that that comes about through an increase in the tax base, rather than an increase in the burden on those who most need our help.

16:19  

Kate Forbes (Skye, Lochaber and Badenoch) (SNP)

I remind members that I am the parliamentary liaison officer to the cabinet secretary.

As some members have already said, this debate falls right in the middle of the budget process. I have just noticed a tweet that suggests that there would be better engagement in the debate if MSPs went outside and had a big snowball fight.

The Deputy Presiding Officer

Is that a point of order to suspend proceedings?

Kate Forbes

I should pay credit where it is due: the tweet was courtesy of Philip Sim of the BBC.

As members across the chamber know, at a time of minority government, each of them could help to shape and contribute to the budget process. The real test for all of us—including members of the Labour Party—lies in the extent to which we want to see change. Do we just verbalise that in the chamber, or do we actively engage with the Scottish Government to try to shape the budget?

I pay tribute to many members who have made speeches already. We can see and hear the real concern of many about the impact that the budget will have on their constituents. The budget will make a difference to every resident in Scotland, from the youngest to the oldest.

If memory serves, Labour’s sole contribution to shaping the budget last year was a whole lot of noise in a debate that was very similar to this one. It does not look like things will be any different this year.

Jamie Greene

Kate Forbes says that the budget will have a noticeable effect on people across Scotland. Does she accept that there are genuine cuts to services—cuts that councils across the country are saying right now they will have to make as the budget goes through?

Kate Forbes

What I recognise is that the budget will ensure that £500 million-worth of tax cuts will not be passed on to those whom we are talking through deeper cuts.

As John Mason said, we are all operating within financial constraints with the Scottish Government’s budget and the decisions that are made about it. However, I see a budget that will increase spending on health by more than £400 million, lift the 1 per cent public sector pay cap and provide for a 3 per cent pay rise for NHS staff, police, teachers and those who earn up to £30,000. Incidentally—this has already been referred to—the Labour Party has not done that where it is in power elsewhere; I have not mentioned the country’s name.

Labour talks about education—in fact, we are all talking about education—but there are members who will not back a budget that will provide an extra £120 million, over and above core education funding, direct to headteachers and that will invest nearly £2.4 billion in our colleges, universities and enterprise and skills bodies, including a real-terms increase for both the college and higher education budgets.

We talk about local government spending. There are members who will not back a budget that will protect day-to-day local government spending for local services in cash terms, deliver an increase in capital spending of almost £90 million and contribute £756 million to the whopping £3 billion of investment to deliver 50,000 affordable homes. Affordable homes are desperately needed in rural and remote places such as Skye in my constituency, where the lack of affordable housing is having a knock-on impact on the ability to recruit staff.

The budget talks about rural communities. That issue is very close to my heart. The budget will support the £600 million procurement for the R100 programme to deliver superfast broadband to 100 per cent of business and residential premises across Scotland.

I go back to Mr Greene’s intervention. I back the budget because it will have a positive impact on every resident in Scotland, it does not pass on tax cuts, and it ensures a secure source of funding for our public services across Scotland. If any party in the chamber wants something to be included in that budget, the cabinet secretary is ready and waiting to listen to its suggestions.

16:24  

Anas Sarwar (Glasgow) (Lab)

In the budget, the Scottish Government had a choice: to stop the cuts and protect public services or to endorse austerity and inflict yet more cuts on Scotland’s vital public services. Sadly, it came as little surprise that it chose the latter. That means more cuts to council budgets, Scotland’s classrooms and Scotland’s NHS, and no real plan to invest in and protect our public services.

If only Scotland had a Government that was prepared to stand up to Tory austerity. If only we had a Scottish Government and a finance secretary prepared to be bold with the powers that they have at their disposal—but, no.

Derek Mackay

If only the Labour Party had a leader who would present tax plans in advance of the budget’s consideration by the Scottish Parliament. Can Anas Sarwar advise me what shape Labour’s tax plan might take so that that can inform the debate?

Anas Sarwar

The cabinet secretary knows that I published detailed tax plans and sent them to him—but he did not respond. He has already seen what we want our tax plans to be: we want to stop the cuts because there is a black hole in council budgets of up to £700 million. That means cuts to social care packages across the country and cuts to the integration joint boards that commission care packages for vulnerable Scots. The cabinet secretary talks about £400 million for the NHS, but responses to freedom of information requests that I sent to health boards across the country show that they are planning to make cuts to the NHS of £1.5 billion over the next four years. As a result, public services in Scotland face a deepening crisis, despite the best efforts of staff.

We have heard about the pay cap. We should remind SNP members that they voted against lifting the pay cap in April last year. The cabinet secretary has talked about ending the pay cap, but can he guarantee a fully funded, real-terms pay increase for NHS staff and other public sector staff? If he cannot provide such an increase, the result will be either more cuts to services or further job losses. That is not acceptable to people across the country, and it is certainly not acceptable in our health service.

We have a health service that is in crisis, but there is not one utterance from a health secretary who, it appears, breaks the record every week for the worst-performing Scottish health secretary ever. Last week, we had the worst ever accident and emergency performance figures, but they are even worse this week. One in four Scots now waits longer in A and E than the Scottish Government says that they should, and 40,000 bed days were lost in the Scottish NHS last November, despite a promise from SNP health secretary Shona Robison to eradicate delayed discharge. In the first week of January alone, 500 operations were cancelled—a number that is almost the same as the number for the whole of January last year. Seven out of eight of the Scottish Government’s own key performance indicators have not been met and patient care is being put at risk because of a lack of resource. However, it is never, ever the fault of the cabinet secretary or the SNP—or, indeed, the responsibility of the Scottish Government. It is always somebody else’s fault. We have a record-breaking cabinet secretary who sounds like a broken record herself.

It does not have to be like this. Derek Mackay has the powers at his fingertips to stop the cuts. He could bring forward budget plans that would stop the cuts, but only if he wanted to. He could use the powers of the Parliament that he campaigned for to invest in public services, but only if he really wanted to. What we have is a Derek Mackay budget that, in the face of Tory austerity, raises a mere £28 million extra for public services. It is just a Tory-lite budget.

SNP back benchers have the chance to join Labour today and say no to austerity. I stood shoulder to shoulder with every Glasgow SNP MP and MSP in the face of job centre closures. Why will not they stand shoulder to shoulder with us on police station closures? Why are they not standing shoulder to shoulder with us on the cuts to the Royal Alexandra hospital, the Vale of Leven hospital or Inverclyde royal hospital? Because it is easy to protest about cuts made by Westminster and stay silent on cuts made by their own Government here in Scotland: cuts made in Scotland for Scotland by the Scottish National Party. I think that Scotland deserves much better than that.

16:30  

Donald Cameron (Highlands and Islands) (Con)

I thank our public service workers for the job that they do in keeping our country moving—particularly today, as extreme winter weather affects people across Scotland. However, offering thanks is never enough. Public sector workers need to see genuine commitment to the services in which they work.

The Labour Party—that once great institution—has called for the debate today. [Interruption.]

The Deputy Presiding Officer

Excuse me a minute, Mr Cameron. I am sure that members will want to hear the rest of the compliment. [Laughter.]

Donald Cameron

Although I agree that we all need to hold the Government to account—

Derek Mackay

Just out of curiosity, is the Tory party proposing to vote with the Labour Party on the motion this evening? That would be quite telling.

Donald Cameron

We will have to wait and see.

Although I agree that we all need to hold the Government to account, it is equally appropriate to point out that Labour’s plans to hike taxes would damage our economy and, in turn, damage our public services.

I fear that the debate, like many others, has seen a familiar pattern emerge. We have heard the SNP boast about its record on delivering public services in Scotland, but it peddles a false economy. It regularly says that the only way in which we can promise increased spending is by taxing people more. Yet, anyone with an ounce of sense will know that we can have strong public services only if we have a strong economy, which means supporting businesses so that they can grow and employ more people, thus widening the tax base; it does not mean hiking up the taxes of existing taxpayers. It also means having a competitive tax regime that is on a par with that in the rest of the UK, so that people have more say over how they spend their money; it does not mean creating a slew of new tax bands that will see 1.16 million Scots facing a tax rise.

Patrick Harvie

Will the member take an intervention?

Donald Cameron

I am sorry, but I do not have time.

That is our message, and we will continue to stand by it. We have focused on investment in the NHS, in schools and in transport, but we should not forget one area that has taken a battering: local government. Local councils have been hit time after time, and they are all too often the scapegoat for the SNP Government. Such cuts lie at the door of the SNP Government and no one else. As Murdo Fraser said, there has been a real-terms cut in total central Government funding for local authorities, from this year to next year, of £81 million, and the distributable revenue grant has been cut by more than £200 million. I have spoken to local councils across the Highlands and Islands—some of which have no party alignment—and they have real and genuine fears about the future of services like never before.

The effects of such cuts are, of course, felt by the very people who put us here. Let me give one example. On Monday, I met constituents on Islay, which is an island with a thriving tourism industry that is driven in part by its large number of whisky distilleries. In many ways, Islay is a microcosm of Scotland. It already contributes a huge amount in tax receipts from the whisky sector alone, and it has huge economic potential. What issue did every person I met talk about? It was decaying infrastructure and the state of the crumbling, ageing roads that they are unable to repair.

Derek Mackay

Would Donald Cameron like to quantify the extra resource that should go to local government and say where that should come from?

Donald Cameron

The fact is that the cabinet secretary has a choice. His budget is protected and the block grant is up, in real terms. He does not need to make such cuts, especially when that budget is protected—it is his choice to do so. Given that thousands of tourists visit places like Islay, such cuts are particularly pertinent, but they wreak havoc not only on local industry but on the people who live there. Those are just a few examples of the reality on the ground for people living in my region. It is the reality of the SNP’s mismanagement of the economy, of its cuts to local authority funding and of the knock-on effect on public services and the people who deliver them. Under this SNP Government, people will pay more in tax but get less in services.

Ultimately, it comes down to a political choice for the SNP. The SNP has chosen to make the cuts and, as it sows the wind, it will reap the whirlwind. The SNP has the benefit of a real-terms increase in the block grant from the UK Government, and it has more powers than ever before thanks to the UK Government’s commitment to empower this Parliament. The SNP can deliver strong public services that are fit for the present and the future, but it will do that only if it focuses on the issues that the people of Scotland care about.

16:35  

Kenneth Gibson (Cunninghame North) (SNP)

It is extraordinarily telling that Labour members have lodged a motion that is as brief as their contribution to constructively discussing this year’s budget, which they have made no effort to do.

Labour has had countless opportunities to bring valuable recommendations and suggestions to the table but, instead, we have had weeks of empty rhetoric. It is all too easy to moan about the draft budget but, clearly, it is far more difficult for the Labour Party to outline what it would offer in its place in terms of taxation and spending. Mr Kelly told us that he is taking “adequate time” over his tax proposals, and I am sure that we are all waiting for those with bated breath.

In stark contrast to the policy vacuum of Labour, the finance secretary has constructed a balanced budget in the face of a real-terms cut to this Parliament’s resource budget of more than £200 million thanks to the Tories at Westminster.

The figures that Labour MSPs and Tories such as Donald Cameron quoted bear no relation to reality. At last week’s meeting of the Local Government and Communities Committee, we unanimously agreed that the real-terms reduction to the local government resource grant, about which we were informed by SPICe, would be £58.1 million, or 0.6 per cent, and that is the figure before council tax increases are added or negotiations on the budget are concluded. Meanwhile, the local government capital grant will go up in real terms by £77.1 million, which is a 9.8 per cent increase in real terms.

Some 20 years ago this week, as a Glasgow city councillor—the only SNP councillor in Glasgow in those days, though we have 39 councillors there now—I stood, megaphone in hand, to address a crowd of angry council workers in George Square. The reason for their anger was the decision of the UK Labour Government to cut £500 million—I have the figures here from SPICe—which was, in real terms, a 6 per cent cut to Scottish local government funding at a time of no recession. A third of that cut fell on Glasgow, which suffered a real-terms cut of 7 per cent in a single year, leading to the sacking of 3,000 Glasgow council workers. There was no ban on compulsory redundancies as there has been under this enlightened SNP Administration; instead, Labour told folk to go. There was such unrest that the council almost did not deliver its budget, and Labour councillors were ignominiously sneaked into and out of the building.

Now, members of that party, which was the architect of austerity, come to Parliament to criticise a policy that their own party has much greater experience of. In 2007, when the SNP came to power, Wendy Alexander gave the famous hungry caterpillar speech in which she denounced the Scottish Government for not having 3 per cent year-on-year real-terms cuts to local government budgets top-sliced. Labour MSPs were so disgusted with Wendy Alexander that they unanimously voted her in as their leader a few weeks later. In 2015, Labour MPs including Anas Sarwar, who has suddenly decided that he opposes austerity, walked into the lobby at Westminster to vote for £40 billion of cuts around the UK, including a £3 billion cut for this Parliament. You should not come here with your hypocrisy—

Anas Sarwar

Will the member take an intervention?

Kenneth Gibson

No. I tried to intervene on you twice and you would not take an intervention from me. Mr Sarwar needs to understand how the rules work in this Parliament.

On taxation, what a bunch of hypocrites they are.

Anas Sarwar

On a point of order, Presiding Officer.

On a point of factual correctness—

The Deputy Presiding Officer

That is not a point of order. Sit down, please.

Kenneth Gibson

On taxation, Labour squeals because the SNP wants to have a top rate of 46p in the pound. For 13 consecutive years, bar the final four weeks of the 1997-2010 UK Labour Government, it had a top tax rate of 40p in the pound, yet Labour criticises us for going up to 46p. The reality is that the Labour Party is the party of austerity, tuition fees, Trident, PFI, the House of Lords and the Iraq war. Importantly, it is a party without any ideas.

Mark Drakeford of Welsh Labour has said that the reason that they have to make cuts—[Interruption.] Labour members are applauding, but we know that that is sarcastic, because they are embarrassed about what they are doing in power in Wales.

Mark Drakeford said that Labour has to make cuts to local government because of the UK Government settlement in Wales. If you watch the Labour leader, Jeremy Corbyn, as I am sure a few of you do, you will see that, every week, he denounces the UK Government for its settlement in Wales and, when Prime Minister May responds, he says that the NHS in Wales is the worst in the UK because of UK Government cuts. If Labour members want to attack us for what we are doing here, they must take responsibility for what happened when they were in power.

The Labour Party is a party without ideas, a party that cannae count and a party that has got nothing to offer the people of Scotland.

The Deputy Presiding Officer

Please conclude.

Kenneth Gibson

That is why—

The Deputy Presiding Officer

I said please conclude.

Kenneth Gibson

—you went from 53 constituency MSPs to three under devolution.

The Deputy Presiding Officer

Please conclude.

I also remind members not to use the term “you”. I was kind enough not to intervene in your speech, Mr Gibson, but, as I have said already, you should not use that term in here unless you are addressing the chair.

We move to closing speeches, and I hope that this will be a little more sedate—although it will perhaps not be. I call Willie Rennie.

16:40  

Willie Rennie

What a billing to get for this speech. I had thought things could not get any worse but then Kenneth Gibson got to his feet.

The debate has not been particularly edifying, but let me focus on a positive. Kate Forbes’s contribution to the debate was very good. Her calm and rational advocacy of what she believes are the budget benefits is perhaps the way that other SNP back benchers could follow. She put her points forward and, although I did not necessarily agree with a lot of them, she was respectful to the other parties. It was a decent attempt to have a decent debate. I looked for other positive contributions, but I must move on because there were not many.

“My officers and staff come into contact with people in times of crisis day in, day out and it caters for a huge amount of our demand.”

That is Paul Anderson from the police in Dundee. He is talking about mental health services and the considerable pressure that is being put on police resources. The budget needs to address one of the biggest pressures that our NHS and broader public services face: mental health services.

It is a great disappointment to me that, despite many warm words and high-level rhetoric on mental health, we still lag way behind on the provision of mental health services. The figures that were published last year showed that approximately 3,000 people were waiting for treatment for mental health issues way beyond the time for which they should have been waiting. We have also seen that child and adolescent mental health services are falling way behind.

That is why I was particularly pleased to hear the report from the Scottish Association for Mental Health this morning about the training of teachers in mental health first aid. We should be doing that to support children at the early stages, before their problems become more substantial in later life. That kind of early intervention is what is required.

We have advocated a substantial increase in funding for mental health services. We believe that the spend on mental health, which is at approximately £1 billion just now, should increase to £1.2 billion. That is quite a modest increase in investment to deal with something that is having an impact on a variety of services across the public sector.

We also think that the budget should address another major problem. Today, the latest gross domestic product figures for Scotland showed growth of just 0.2 per cent. Growth is bumping along the bottom and we need a big change. Tom Arthur was right to talk about the massive challenges that the country faces, including Brexit. It is, therefore, quite disappointing that, for a number of years, including this year, the Government has been timid in its response.

There should be a transformational investment in education. I have talked about investing in nursery education and how investment in the early years is the best investment that we can make. We advocated that policy for years, particularly for two-year-olds, and eventually the Government came on board. We should also be investing in a pupil premium—again, the Government is five years behind where England was but it has managed to close the attainment gap by 5 percentage points. We need big investment to make transformational change and invest in children to give them the skills for the future of the economy.

Finally, we should also invest in colleges, which have, unfairly, borne the brunt of the Government cuts in expenditure. The two big areas that we should invest in to have that transformational effect are mental health services and education. We should invest in education not just for its own sake but to invest in the economy so that we can deal with the massive challenge that is coming down the road with Brexit.

I was intrigued by Alexander Stewart’s contribution. He was right to talk about the balance between tax and spend, but it is not all one way. Public expenditure can be a force for good, through investment in mental health services and education to boost the economy, which helps us all. Alexander Stewart’s portrayal of cutting tax as being the only way in which to boost the economy is wrong. I gently remind him that his Conservative UK Government is proposing a social care tax and a police tax for local government in England. The Conservatives have implemented stealth taxes, as we might describe them.

The book that I am reading just now is Ken Clarke’s “Kind of Blue: A Political Memoir”, in which he takes great pride in the way that he managed to get a whole load of stealth taxes through the Parliament without anybody noticing. He is bragging about it now. I gently remind the Conservatives about that time when they were in government and about the fact that they are in favour of tax but perhaps not in favour of being up front about it.

There was perhaps a chink of light forthcoming from the finance secretary when he talked about a report that we do not quite know about yet that is being produced by a committee that I cannot report on. He indicated that there might be support for the northern isles ferries. I urge the finance secretary to follow through on that and ensure that the finance is forthcoming for those vital services in the north because, if it is not, we will see cuts to ferries or to public services. That is my final message to the finance secretary.

16:46  

Patrick Harvie

I began my opening speech by saying that additional time in the chamber to debate the budget before we get into the formal process of voting and committee scrutiny is worth while if we use it properly. I am not entirely convinced that, collectively, we have used this opportunity as constructively as we could have done. Your suggestion, Presiding Officer, that we should all try to be more sedate than Kenny Gibson might have been irrelevant, because I am not sure that any of us would be capable of being less sedate than Kenny Gibson was during the debate.

I urge members of all political parties in closing the debate and in the continuing scrutiny over the next two weeks to try to be constructive and to put forward solutions rather than only problems. I am focused on doing that and on ensuring that we can reverse the cuts to local services, rather than just rant and complain about those cuts. I share the anger of many members who have spoken today about those cuts, but I want that budget line to change rather than just to hear angry speeches from those of us who are concerned.

I also want to make the case that we need to respect local government’s autonomy. Over the years, the Parliament and Government have missed many opportunities to reform local taxation. The Scottish Government’s current approach of rate capping, especially with the threats of even deeper cuts for councils that do not accept the arbitrary and unlegislated-for rate cap on council tax, is not a principled approach. Earlier this week, Derek Mackay emphasised to the Finance and Constitution Committee that local government keeps non-domestic rate revenue, but he has decided centrally to offer a big package of non-domestic rates cuts—a package that amounts to more than half of the additional revenue that he intends to raise from his income tax policies.

Over the next two weeks, I will also focus on continuing to make the case for low-carbon infrastructure investment. Right across the country, in probably every constituency and region, there are opportunities to invest in better public transport and to give councils and local communities the opportunity to put their ideas for public transport on to the agenda, whether that is opening new railway stations or reopening old ones, or investing in better buses. We have put forward ideas to the cabinet secretary to ensure that that can be made a reality.

Jamie Greene

Mr Harvie has clearly given some thought to the budget process over the next few weeks, but does he really think that hard-working families across Scotland can afford an inflation-busting rise in their council tax while facing income tax increases at the same time? Does he really believe that?

Patrick Harvie

I believe that council tax should be decided by local government—that is a point of principle. As for what people can afford, we need a tax system that includes reformed, modernised property taxes and progressive income tax, so that those who can afford to pay more do so, and I count Jamie Greene and me among them. We can do that while protecting low and middle earners.

On public sector pay, I want to reinforce the comments that were made by Iain Gray, particularly in relation to the teaching profession. If we are concerned about the problems of teacher recruitment and retention, and our wider public services as well, a below-inflation pay settlement deserves to be challenged. I agree with Kate Forbes on that—not, sadly, what she said today, but what she said on national television recently about how the pay settlement ought to be above inflation. There is a case for restoration of the lost value of public sector pay, and we also need to recognise the further impact that that will have on local government. The cabinet secretary has not yet made the case for what he proposed a few weeks ago.

I think that the Greens have made a serious contribution to shifting the debate on income tax away from asking whether to increase the basic rate and raise revenue from those on below-average incomes. We were the first party to show that we do not have to do that; we can raise revenue progressively with a larger number of rates and bands in a way that makes sure that we protect people who are on low and average incomes, and I am still committed to seeing that happen. I am pleased that the Government has moved in that direction, but I challenge the scale of what it is proposing as well as what it is describing as an anomaly on the basic rate. That is not an anomaly—it is clear that the only effect of that higher-rate threshold is to give a tax cut to high earners and there is no justification for that. We will continue to make the case for a more assertive and ambitious approach on taxation.

Sadly, I think that both Labour and the Conservatives have not grasped the new process. Tax proposals need to be put forward early enough that they can go through Government and parliamentary scrutiny and that of the Scottish Fiscal Commission. The Conservatives seem to be the only party that still believes in the magic money tree, but even if they think that future growth will raise more taxation in future, a cut in tax rates now will reduce tax revenues in the coming year and they have a responsibility to show where that revenue would come from. If we end up voting on the unamended motion, and the Conservatives support it, I am afraid that that will leave the debate looking like something of a farce—a motion talking about public services would then be supported by the party that wants to cut them by £0.5 billion.

16:53  

Jamie Greene (West Scotland) (Con)

Labour’s short motion says that

“the Draft Budget does not protect public services”

and that is a fact, but James Kelly opened the debate with some insight, although it was quite sparse in detail, into how Labour will address that issue—namely, by demanding tax rises.

I have, thankfully, quite a distant memory of Labour in government, mostly from my teenage years when I was dancing along to D-Ream. I thought that “Things can only get better” was a futuristic reference to the 2010 general election, when the UK would have to pick itself up from 13 years of Labour in government.

Let us never forget that by the time Labour left government in 2010, manufacturing in the UK had declined by 9 per cent, Britain had had the longest recession in the G20 with six consecutive quarters of negative growth and the UK had the largest deficit of any major economy. Youth unemployment was at a record high and one in five were out of work—I was one of the lucky ones. Let us also never forget that we all know Labour’s track record when it comes to tax. In its 13 years in government, it doubled the tax rate for some of the poorest in the country—it scrapped the 10p tax rate and doubled it to 20p instead.

When Labour says that it wants to increase our taxes, people can be forgiven for their suspicion—which should come as no surprise to anyone—over Labour’s ability to spend the money wisely. Scottish Labour’s current uncosted spending plans would undoubtedly see further tax rises across all rates, including those on the lowest incomes. Labour’s plans to renationalise everything that moves, including our railways, would shift millions of pounds of liability and cost on to the shoulders of the Scottish taxpayers. Labour would kick-start its term in government by spending nearly the entire Scottish budget on buying back PFI contracts alone. That is on top of the billions of pounds required for its lengthening list of freebies and giveaways—new leader, same old Labour.

It would be remiss of me to use my six minutes just to point out misgivings about Labour’s financial credibility and to let Mr Mackay off scot free, especially on the back of today’s figures—the Scottish Government’s own figures—which show that the Scottish economy continues to lag behind that of the rest of the UK. Instead of fighting for the top spot in the UK economy, we are fighting to avoid recession.

Since I was elected to this place, we have averaged just 0.1 per cent of growth. GDP remains flat in real terms in Scotland. Year on year, the Scottish economy has grown at a third of the rate of the rest of the UK. Today’s findings must make for some very grave and uncomfortable reading for the SNP Government.

Last year, Derek “Honey, I shrunk the economy” Mackay had to endure the embarrassment of financially overseeing the only part of the UK with a shrinking economy, but let us give the finance secretary credit where it is due. In the face of criticism from the CBI, the Federation of Small Businesses, Scottish Chambers of Commerce and basically anyone with a grasp of economics, he stands up and says, “Enough of your facts and figures—we’re doing things my way!” At least we know where we are with Derek Mackay.

The sad reality is that if the Scottish economy grows at its current rate, we will be nearly £17 billion worse off by 2022 than if we had matched growth rates across the rest of the UK. Can the cabinet secretary explain why?

Derek Mackay

The budget process requires the Scottish Fiscal Commission to set out its forecast, following policy analysis. What do the Tories propose to do to ensure that there are more resources for public services, which seems to be what they are arguing for today? How far do we go on the £501 million tax cut that the Tories would like to see us deliver?

Jamie Greene

The SNP talks about tax cuts for the rich; it is the SNP that thinks that anyone earning over 33 grand in Scotland is somehow rich and should see their taxes go up. We disagree with that immensely.

This is what the SNP can do—it can stop wasting money; it can grow the tax base; and it can grow the economy. That is what we think the SNP should do. If the finance secretary wants to find more cash, it is right there. We are not asking for anything magical or mystical. We are asking the SNP to grow the Scottish economy at the same rate as the rest of the UK.

There have been 11 years of sluggish growth and it is local authorities that are paying the price for it. Inverclyde Council and North Ayrshire Council are actively consulting on which public services to cut. Proposals include reducing grants to voluntary organisations; reducing employability contracts; increasing burial charges and parking charges; removing breakfast clubs; and closing public toilets, libraries and youth centres.

The draft budget will see councils up and down Scotland making such cuts. Yes, they can increase council tax, but in the case of Inverclyde, even doing that would raise no more than £3 million. It does not even scratch the surface in relation to the cuts that councils will have to make.

Responsibility for failing to grow the Scottish economy lies fairly and squarely at the door of this Government—

Ash Denham

Will the member take an intervention?

The Deputy Presiding Officer

The member is concluding.

Jamie Greene

Nicola Sturgeon and Derek Mackay cannot tax their way out of the funding black hole that they have created; nor should the Scottish taxpayers be expected to bail out their failure to grow the Scottish economy over the past decade. I am afraid that it is squeaky bum time right now for those on the middle benches and I urge members across the chamber to support our amendment.

The Deputy Presiding Officer

I am not happy about that—not happy. I am sure that you can do better.

16:59  

Derek Mackay

Presiding Officer, I am sure that we are all left with an image from which we would soon wish to move on.

Kate Forbes made a helpful point, which reflected the fact that contributions from some members today meant that the debate has been seen to be a bunfight in the chamber. That is a very sad reflection on the quality of debate. I am not saying that in a partisan way. It is a very sad reflection on the quality of debate on what is for me, frankly, as finance secretary, the most important matter—the budget.

It is fair to ask questions of Government, of course, but, equally, Opposition members cannot abdicate their responsibility to bring forward a constructive approach, so that in a Parliament of minorities we can reach a majority view that reflects the position of Scotland on the budget, tax and expenditure.

In that sense, I appreciate Willie Rennie bringing some calm and rational levelling of the debate. Equally, I have to say that the party that has engaged the most constructively so far has been the Green Party. There are—[Interruption.] The Labour Party attacks the Greens for even daring to negotiate its position with the Government. If the Tories and the Labour Party want to be in the same boat of opportunism and oppositionalism for its own sake, I do not think that that is fitting of a Parliament whose powers have matured. In response, surely all parliamentarians should engage in a constructive fashion when it comes to issues such as income tax, expenditure and the choices that we make about them.

One of the substantial choices that the Government has made is to invest in the national health service. Yes, there are huge demands on the national health service—we can see that right now. That is why there is a proposal to have an above-inflation increase for the service.

There are many other positives in the budget as well. There is an extra allocation of not just £28 million for public services but hundreds of millions of pounds more for our public services right across the board.

Of course, looking at the GDP statistic today, I think that we should do more to help grow our economy. That is one of the reasons why we are allocating a 64 per cent uplift to the economy portfolio.

While we are debating and discussing the budget, I want to re-emphasise some of its key investment proposals.

Incidentally, the amount that will be raised from the Government’s tax policy decisions—the £362 million—is a matter of fact. Some members do not seem to appreciate that what underpins our budget process cannot be the mythical growth that we would like to have; it must be the SFC forecasts.

Within that, we are investing more in the NHS—as I have said, it is an above-inflation increase. There will be more funding in total for health and sport, which will now reach more than £13.6 billion. I listened very closely to Willie Rennie. There will be more for mental health services as well.

James Kelly

With regard to where all the money is being allocated, the cabinet secretary did not answer Jenny Marra’s point. How does he expect councils to fund the uplift on public sector pay, when their budgets have been cut? As Ms Marra outlined, Dundee City Council’s budget has been cut by £15.9 million.

Derek Mackay

There seems to be a misunderstanding. The Scottish Government does not set local government pay. Our public sector pay policy is for those under our control, although it becomes a benchmark, for the NHS, for example. I explained very clearly on 14 December our position in relation to pay.

Broadly speaking, we have protected cash and resource for local government. We have increased resource in capital spending. We are doubling the funding for city region deals. We are taking housing support to over £700 million. We are expanding early learning and childcare and funding local authorities to do that. We are protecting culture and sport, responding positively to the Barclay review and the services that local government delivers, and on social care we are delivering £66 million more.

This is a Government that puts its money where its mouth is when it comes to our priorities. We are protecting the national health service, investing £4 billion in infrastructure, and expanding our economy with a huge uplift in that brief and investing more in key areas. I am coming to mental health as well, because it is important that there are also new resources for mental health to take us to the level of 800 additional mental health workers over the next five years.

There will be more in real terms for the police and fire services. There will be more for tackling the inequality of the attainment gap and supporting education directly. There will be more for culture, which I have touched on, to support big events in Scotland and mitigate cuts by the UK Government.

It was a different Tory party that we were hearing from today—one that suggests that it wants to spend more on our public services but, in fact, does not want to diverge on tax from the rest of the United Kingdom. In fact, the Tory tax policy, in addition to resulting in a £211 million cut to fiscal resource for next year, would require us to cut public services by £501 million. This Government is not willing to make that reduction in order to fund Tory tax cut policies that the Tories now appear to be running away from.

It looks as if the Labour Party and the Tory Party are in the same boat this evening, voting for the Labour Party’s motion. It tells us quite a bit about the position of the Labour Party that the Tories can support it.

In a range of areas, we are investing more in our public services and, as we said we would do, we are lifting the public sector pay cap of 1 per cent—something that is unprecedented anywhere in the United Kingdom.

Jenny Marra

How can the cabinet secretary say that the pay policy is progressive and is lifting the pay cap when councils across the country do not have the money to make that happen?

Derek Mackay

As a matter of fact, if the Labour Party wants to talk about how to treat the workforce, let us look at Glasgow today and what Susan Aitken, the leader of Glasgow City Council, has done on equal pay. We have been putting resources into local authorities and we will deliver fairness. I do not set local government pay policy but I believe that there is a fair settlement in the draft budget.

The Tories want to raise less and spend more. Ultimately, there will be a choice for both Opposition parties. I have pledged to have an open door and engage with and listen to constructive suggestions from any Opposition party. I have tried to embark in that fashion in advance of the budget and in how I conducted the income tax policy.

There will come a moment when Parliament has to choose what it is going to do at stage 3 of the budget, on the Scottish rate resolution and on the statutory instrument on non-domestic rates. I have no hope for the Tories because of their tax position, but I would have thought that other progressive parties would recognise the hundreds of millions of pounds more that we are proposing to put into our public services.

The choice that comes will be whether progressive parties want to reject a more progressive tax system, reject support for our economy, reject a pay policy that delivers for our front-line workers and reject hundreds of millions of pounds more in our front-line services. Ultimately, that will be the choice: being for or against more money for our public services.

The opportunity to shape that final budget is now. Engage with me constructively, do not play games with the people of Scotland and I will deliver for those people in a constructive and consensual fashion.

17:08  

Monica Lennon (Central Scotland) (Lab)

This has been a passionate debate, as it should be. We all depend on public services and during the budget process all our constituents are depending on us. They are depending on us to make a stand and protect public services. That is why Scottish Labour called for the debate today, and we make no apologies for that. MSPs have a chance to call out this cuts budget and its impact on public services.

When the votes are counted at decision time, we will find out whose side MSPs are on. Will they rally around Derek Mackay and his failure of a budget? His budget raises only an additional £28 million for public services, when COSLA warns—[Interruption.] That is what the Fraser of Allander institute says, cabinet secretary. COSLA warns that local government services alone need an additional £545 million just to stand still. Alternatively, will they vote on principle, vote for Scottish Labour’s motion and confront Derek Mackay with the reality of his plan?

The bottom line is that the draft budget does not protect public services. SNP MSPs looking at their whip sheet in front of them must know that that is true. Our constituents, workers and trade unionists know that that is true. It is abundantly clear that the budget will not deliver enough resources to sustain the vital public services that we rely on to keep us safe, healthy and educated, and to build strong and resilient communities where businesses can thrive and where our environment can be safeguarded for future generations. The facts speak for themselves.

Patrick Harvie

If I understand the Labour position, we would like to achieve many of the same things, although we have different approaches to try to do that. However, is Monica Lennon really asking us to vote in principle for a Labour motion that she and I can support with support from the Tories, who are the people who want to take £0.5 billion out of public services? If the Labour motion passes with Conservative support, will that not leave us looking like a bit of a farce?

Monica Lennon

I remind Patrick Harvie that James Kelly has exposed the flaws in the budget and its tax plans. [Interruption.] That is true. We recognise that there needs to be substantial tax changes in the budget, and that is why we have said that we will take the flaws out ahead of stage 1 of the bill.

I am not interested in getting Tory support; I am interested in what we have heard about our public services and how we are going to pay for them. I tell Patrick Harvie that that is a matter of principle, because the facts speak for themselves. This budget will cut a further £135 million from local government services this year, and those figures have been confirmed by SPICe.

Derek Mackay rose—

Monica Lennon

I will finish this point. On top of the £545 million that has been identified by COSLA, that is a £700 million gap in the budget for local government services next year.

Derek Mackay

Will Monica Lennon give me a clue as to when the people of Scotland, never mind Parliament, will get any sight of Labour’s tax plans to fund that so-called £700 million extra investment, which is just for councils and not for the national health service?

Monica Lennon

James Kelly has already clarified that point.

I want to make progress. How can members in the chamber who have proclaimed an anti-austerity platform think that this budget is anywhere near an acceptable deal for our local services? I do not think that the situation is funny at all. Local government has already sustained huge and disproportionate cuts—£1.5 billion in total since 2011—that have inflicted irreparable damage on our communities. SNP members do not want to hear about that, because the SNP has taken Tory austerity and more than doubled it, then passed it on to local government. The SNP is no friend of ours. The figures show that the local government revenue budget was cut more than three times faster than the Government revenue budget between 2013-14 and 2016-17.

At the heart of our motion is the underlying reason why those cuts matter, which is the human cost of austerity—£135 million from local councils this year and £1.5 billion in total from the coffers since 2011 are not just meaningless numbers on a page. [Interruption.] I say to Joe FitzPatrick that that is not funny.

We have heard a lot about the impact in Dundee and the north-east from Jenny Marra, who is an example of a tenacious MSP if ever we saw one. Those cuts have an impact on the lives of people and our communities across Scotland every day, all year round, not just in the winter crisis. As Anas Sarwar stated, integration joint boards and health boards face cuts totalling more than £1.5 billion. You should listen—not you, Presiding Officer; I mean Fiona Hyslop—to communities across Scotland as we have done and listen to exhausted nurses and carers and to local government workers, who have seen 28,000 colleagues disappear over the past seven years, leaving them to deliver more with less. We have heard loud and clear that our public services are under growing pressure.

Derek Mackay

I was listening very clearly to the list of demands that we have had this afternoon and the specific requests around health. The Labour Party has been clear about expenditure, but the resources that it would raise would be only for local government. Why does Labour not support the Scottish Government’s support for the national health service with an above-inflation increase for the NHS?

Monica Lennon

That is simply not true. I thought that the cabinet secretary was coming to his feet to talk about the fact that 28,000 jobs have been lost in local government. Where is the Government’s task force for local government? When local government workers hear Derek Mackay claim that councils are fairly funded, they cannot believe their ears. Nine out of 10 public sector job losses in Scotland have been in local government. How is that a fair deal?

We cannot continue starving public services of resources. During the time that we have been in the chamber for this debate, teachers and school support staff have been looking after our learners, preparing the next generation of nurses, engineers and entrepreneurs, and carers have been trudging through the snow to deliver personal care or an evening meal to older people in their own homes.

Councils are responsible for many of the vital public services that are too often taken for granted. They are responsible for social care for the elderly, looked-after young people, the delivery of education, our local roads, which are at a standstill, leisure facilities and so much more. Cuts to our councils mean that vital public servants have fewer resources to do their jobs, and we all suffer as a result.

That means less money for gritting the roads during the icy weather, when older people are more likely to fall and end up in hospital. As Iain Gray said—I noticed that the heads of SNP members, including the convener of the Education and Skills Committee, James Dornan, went down at that point—under this Government’s spending plans, £1.2 billion has been taken out of education since 2010. How is that going to close the attainment gap or reduce inequality?

In my region of Central Scotland, just some of the proposals for making savings due to budget cuts for the coming years are increasing primary 1 class sizes in the SNP-led South Lanarkshire Council; increasing the charges for day centres for older people; and increasing burial and cremation charges.

If the SNP is determined to continue with its unfair funding, which of all those vital services does it consider to be dispensable? The cabinet secretary told the Finance and Constitution Committee that Government is about choice and priorities. I absolutely agree, just as I agree that austerity itself is a political choice.

I think that I have been a bit too generous in taking interventions, so I will close now. The draft budget is timid, weak and fails to protect Scotland’s vital public services. We have no confidence that the cabinet secretary intends to bring forward proposals that will deliver the investment that our services need. For that reason, Labour cannot support the draft budget as it stands. A strong economy needs strong public services. Scotland needs real change to deliver that, and a Government that is willing to stand up for the public sector.