Scottish Parliament, 21 January 2015

236 contributions from 53 members. The official report.

Infrastructure, Investment and Cities

John Scott (Conservative, Ayr)

The first item of business is portfolio questions. To get as many people in as possible, I would be grateful for short and succinct questions and answers.

Ayrshire Economy (Air Passenger Duty)

Willie Coffey (Scottish National Party, Kilmarnock and Irvine Valley)

1. To ask the Scottish Government how the devolution of air passenger duty will help the Ayrshire economy. (S4O-03911)

Keith Brown (Scottish National Party, Clackmannanshire and Dunblane)

The Scottish Government’s plans for a devolved air passenger duty will greatly assist the Ayrshire economy and the wider Scottish economy. We are committed to an initial 50 per cent reduction in APD and will move to full abolition when public finances permit. That will help all of Scotland’s airports to compete more fairly and to secure new and existing routes.

Our analysis has suggested that a 50 per cent cut could deliver more than 1 million additional passengers annually. It will enable Glasgow Prestwick airport to approach airlines more confidently in the pursuit of new route opportunities. Ryanair has indicated that, if APD was abolished, it would double its passenger numbers in Scotland, which would provide significant benefits to passengers, businesses and our tourism sector as well as to the airports involved.

We have urged the United Kingdom Government to act on the Smith commission recommendation and devolve APD now. That view is shared by Scotland’s main airports, which have written to each of the Westminster party leaders to urge quick progress.

Willie Coffey (Scottish National Party, Kilmarnock and Irvine Valley)

As the cabinet secretary said, Michael O’Leary said in response to a question at the British-Irish Parliamentary Assembly that he could double the number of passengers coming to Prestwick if APD were to go. Will the cabinet secretary assure me that, if the power over APD is transferred under the Smith proposals, it will be enacted as soon as possible to maximise the benefits for the wider economy in Ayrshire?

Keith Brown (Scottish National Party, Clackmannanshire and Dunblane)

It is incumbent on us to act as quickly as possible when we have the power, but the first thing that has to happen, as Willie Coffey knows, is that the power has to be devolved. We continue to press the UK Government to devolve APD as a matter of urgency.

A number of studies in recent years have shown the negative economic impacts of APD as applied by the UK Government, and Scotland’s airports frequently tell us that APD represents a barrier to route development efforts. We have seen from the sale of slots and the withdrawal from routes the impact that APD is having on airlines. The chancellor’s recent decisions to remove the two highest APD bands from April and to abolish APD for children under 12 from May have attracted good UK media coverage, but the economic impact on Scotland is expected to be limited.

The devolution of power seems to be slow. It was first agreed in 2009, but it has followed the same kind of process as the Chilcot report—both processes started in 2009, but neither has really produced anything yet. It is not so much a breakneck pace as a brass-neck lack of action on the UK Government’s part.

Alex Johnstone (Conservative, North East Scotland)

The minister will be aware that I share his intent when it comes to the reduction or abolition of air passenger duty. However, in relation to the question that was asked, what evidence does he have to suggest that the reduction or abolition of APD would benefit Prestwick? Is there a dangerous possibility that it might boost the airline industry and other airports without benefiting Prestwick at all?

Keith Brown (Scottish National Party, Clackmannanshire and Dunblane)

I have answered that question previously. I cited the example of Ryanair, which has said that it expects a higher increase at Edinburgh airport—I think that the passenger numbers involved are about 1.5 million. Ryanair has forecast a million new passengers for Prestwick, if APD were completely abolished, and doubling the current numbers has also been mentioned.

In contrast to the comments made by Mr Johnstone’s colleague Gavin Brown, who questioned the benefit to flights going from Scottish airports of any reduction in APD, the fact is that, if we make it easier for people to reach their holiday destinations from Scottish airports, we will improve the economic performance of those airports as well as the situation of all the jobs that support the airports’ operation. The York Aviation study gives us that evidence, as does Ryanair. We are confident that, if we can get on and do it, and if the UK Government ever gets round to devolving APD, we could see huge benefits for Prestwick and all of Scotland’s airports.

Glasgow Queen Street Station (Renovation)

Hanzala Malik (Labour, Glasgow)

2. To ask the Scottish Government what action it is taking to minimise disruption to passengers and businesses during the renovation of Glasgow Queen Street station. (S4O-03912)

Derek Mackay (Scottish National Party, Renfrewshire North and West)

Network Rail and ScotRail are working together to deliver the redevelopment of Queen Street station. In addition, Transport Scotland and its industry partners are working alongside Glasgow City Council, Buchanan Galleries, Glasgow Chamber of Commerce, Passenger Focus and Strathclyde partnership for transport to develop a robust management plan that will ensure the absolute minimum of disruption to the travelling public.

Hanzala Malik (Labour, Glasgow)

I welcome the planned upgrade of the station, which is the third busiest in Scotland, as part of the Edinburgh to Glasgow improvement programme. However, the project’s construction period is planned to last for four years, until 2019, and I have concerns about the work having a negative impact on how Queen Street connects with other modes of transport and about access for disabled passengers. Will the minister assure me that passengers’ access will not be impeded in any way and that the refurbishment will go through perhaps even sooner, rather than later?

Derek Mackay (Scottish National Party, Renfrewshire North and West)

This far out from the start date, it is difficult to say that the project will go more quickly than planned, but I will commit to ensuring that there is consideration and oversight of all the relevant issues, including access, the benefits of the work, connecting with the Edinburgh to Glasgow improvement programme and the partnership with Glasgow City Council and others. We want to ensure that they are all tied in together, and I will work closely with our agencies to make that so.

There are massive benefits in the station redevelopment and they should be realised. I am sensitive to the issues of access and so on and I will make sure that we all have sight of them as we work our way through. To assist members with all the issues around the rail improvement project and the station’s upgrade, I intend to hold a presentation, at which members will be able to hear of all the factors that relate to this multimillion-pound work and how it will bring immense benefits to the country.

Sandra White (Scottish National Party, Glasgow Kelvin)

This is an exciting time for Glasgow and for Queen Street, which is in my constituency. The minister mentioned benefits. What improvements will be brought to commuters and businesses at Queen Street?

Derek Mackay (Scottish National Party, Renfrewshire North and West)

Like Sandra White, I am excited by the project, as members would expect. The benefits of the £120 million redevelopment will transform Queen Street station into a world-class, 21st-century integrated transport hub. Capacity will be future proofed well into the next decade, and passengers who use the newly redeveloped station will benefit from improved accessibility, enhanced station facilities and direct access to the Buchanan Galleries development.

Given that the work will take place on a live railway and an operational station, it is inevitable that there will be some disruption, but we will try to minimise that and maximise the benefits that emerge from this exciting project.

John Mason (Scottish National Party, Glasgow Shettleston)

Can the minister say anything about whether we can encourage passengers who are going from Queen Street to Edinburgh to use the excellent low-level service through Airdrie and Bathgate?

Derek Mackay (Scottish National Party, Renfrewshire North and West)

I agree with John Mason on that point. We will use a range of diversions to maintain as much of the network’s connectedness as possible. That is why the line there will be of such benefit, in addition to what was first envisaged. We will use everything that we can to minimise disruption to the travelling public, in order to continue to give the rail network the support that it deserves and to continue to increase passenger numbers.

Clyde and Hebridean Ferry Services

Ken Macintosh (Eastwood) (Lab)

3. To ask the Scottish Government what assurance it can provide that Clyde and Hebridean ferry services will not be privatised. (S4O-03913)

Derek Mackay (Scottish National Party, Renfrewshire North and West)

The next Clyde and Hebrides ferry services contract will comply with European law and be tendered in the same way as the current contract’s tender process was undertaken between 2005 and 2007. The contract will be awarded to the operator that submits the most economically advantageous tender. Notwithstanding the need to tender the services, the operator will have to comply with a service specification defined by the Scottish ministers and will be subject to stringent contract-management arrangements, as the current operator is. We cannot prejudge who the successful bidder will be, but I confirm to the chamber that the Clyde and Hebrides services will remain under the Scottish ministers’ control throughout the contract.

Alex Johnstone (Conservative, North East Scotland)

Hear, hear.

Ken Macintosh

I thank the minister for his answer, although I am not sure whether islanders and others who rely on the ferry services will be entirely reassured. Is he aware of the anxiety that the services might be sold off to a company such as Serco, just as the Government sold off the overnight sleeper service to London? Will he assure islanders that services will at least be retained as one bundle and will not be sold off individually so that private companies can select the most profitable elements?

Derek Mackay (Scottish National Party, Renfrewshire North and West)

The answer to the direct question that the member asks is yes—the routes will be packaged as one bundle. We will be clear in the specifications that are required to address the needs of the travelling public. I am very sensitive to islanders in my capacity as the Minister for Transport and Islands.

I do not accept in its entirety the characterisation from Ken Macintosh. The process is the same one as the Labour Party deployed when it made such decisions. We will ensure that the islanders get the best possible service and we will keep a close oversight of the tendering process. We cannot and must not prejudge the outcome of that process; indeed, it would be illegal to do so.

Stuart McMillan (Scottish National Party, West Scotland)

I welcome the Scottish Government’s commitment to these vital services. Will the minister update the Parliament on the roll-out of the road equivalent tariff for the Clyde and Hebrides ferry services later this year?

Derek Mackay (Scottish National Party, Renfrewshire North and West)

The RET for passengers, cars, small commercial vehicles and coaches will be rolled out to the remaining Clyde and Hebrides routes in October this year, as we committed to do in the ferries plan. The Scottish Government is committed to supporting our island and remote communities, and the RET underpins the Scottish Government’s commitment to providing a single overarching fares policy across Scotland’s entire ferry network. I know that delivery of the RET to the remaining Clyde and Hebrides routes will be warmly welcomed by those communities.

David Stewart (Labour, Highlands and Islands)

Further to Ken Macintosh’s question, will the minister confirm the exact timing for the tender? Will he involve the island authorities in the tender process? Does he agree that an integrated public sector operator is good news for jobs, services and fares?

Derek Mackay (Scottish National Party, Renfrewshire North and West)

I am happy to write to the member with the exact details of timescales, if that is of assistance.

There has been engagement with the island authorities and I give a guarantee that it will be on-going. I have been clear with island authorities that, as we conduct our business in the way that we propose in the prospectus for Scotland’s islands, there will be even deeper and wider engagement on such matters.

There will be more consultation. I will give David Stewart and any other member who is interested the exact specifics on the timetable for announcing the successful bidder.

North Lanarkshire Council (Meetings)

John Pentland (Labour, Motherwell and Wishaw)

4. To ask the Scottish Government when the Cabinet Secretary for Infrastructure, Investment and Cities last met North Lanarkshire Council and what was discussed. (S4O-03914)

Keith Brown (Scottish National Party, Clackmannanshire and Dunblane)

I had the chance to visit North Lanarkshire in my previous position as Minister for Transport and Veterans to witness the progress on the rail network in the area as part of the Edinburgh to Glasgow improvement programme. However, I have not yet had the opportunity to meet North Lanarkshire Council in my new role.

John Pentland (Labour, Motherwell and Wishaw)

Given that Ravenscraig is now a major national priority, will the cabinet secretary consider what more support the Scottish Government can give in order to attract investment? For example, could the growth accelerator model unlock more funding than the tax incremental financing approach? Will he agree to meet me and other interested parties in the near future?

Keith Brown (Scottish National Party, Clackmannanshire and Dunblane)

I am more than happy to meet John Pentland to discuss the issues that he raises. Some of them are impacted by the Glasgow and Clyde valley city deal that has been struck, of which North Lanarkshire Council is, of course, a key part. As the member will be aware, the council has prioritised a number of projects as part of the city deal. I have not yet seen an approach involving the growth accelerator model, but I am more than happy to discuss that with the member and others whom he wants to bring to the meeting when it takes place.

Neil Findlay (Labour, Lothian)

North Lanarkshire Council, like other councils, is experiencing service cuts and job losses because of underfunding of the council tax freeze. Does the minister agree with John Stevenson of Unison, who said last week that, if there were 40,000 job losses in any other sector, there would be calls for an inquiry from politicians?

Keith Brown (Scottish National Party, Clackmannanshire and Dunblane)

Perhaps Neil Findlay’s colleagues should not have voted for the Tory austerity programme at Westminster, because that is the source of the cuts.

Neil Findlay (Labour, Lothian)

Answer the question.

Keith Brown (Scottish National Party, Clackmannanshire and Dunblane)

Perhaps Neil Findlay could also take up the issue with his colleague Liam Byrne, who was the Chief Secretary to the Treasury and who left a note with the last word of the previous Labour Government saying, “There is no money.”

Neil Findlay (Labour, Lothian)

Just once, answer the question.

The Deputy Presiding Officer

Mr Findlay! Enough!

Keith Brown (Scottish National Party, Clackmannanshire and Dunblane)

That is the legacy that Labour left us, so perhaps Neil Findlay should apologise to those 40,000 employees for the part that Labour has played in the cuts to local government.

Rail Investment

Adam Ingram (Scottish National Party, Carrick, Cumnock and Doon Valley)

5. To ask the Scottish Government what its response is to the rail investment proposals in the Industrial Communities Alliance’s paper, “Tracks to Work”. (S4O-03915)

Derek Mackay (Scottish National Party, Renfrewshire North and West)

The Scottish Government welcomes the report and agrees with the need to rebalance the United Kingdom economy away from overreliance on London.

We also recognise the critical role that the rail industry plays in supporting our businesses and communities by connecting towns, cities and rural areas and by improving access to employment and education.

We have embarked on a five-year, £5 billion programme of railway investment across the network, including key projects such as the Edinburgh to Glasgow improvement programme, the Borders railway, Aberdeen to Inverness line improvements and the Highland main line rail improvements.

Adam Ingram (Scottish National Party, Carrick, Cumnock and Doon Valley)

I thank the minister for his response. What investment specifically is planned for the Glasgow south-western line in order to improve the frequency of the service? Also, are there any plans to add a new rail halt at Mauchline?

Derek Mackay (Scottish National Party, Renfrewshire North and West)

When rolling stock is available, from December 2017 an enhanced timetable on the Glasgow-Dumfries-Carlisle route can be operated. There will be more frequent services, better connections, on-board catering and refreshed rolling stock, plus dedicated great Scottish scenic train journeys. That demonstrates Scottish ministers’ commitment to improving rail services and connectivity across the Scottish network.

The Scottish Government has no current plans to open a railway station at Mauchline. Funding for new railway stations can be considered under the £30 million Scottish stations fund, which aims to lever in third-party funding to promote and improve the new stations. However, the responsibility to demonstrate the need for station improvements lies with the relevant promoter—for example, local authorities, regional transport partnerships or developers. I would be more than happy to work with Adam Ingram on such an application.

Mary Fee (Labour, West Scotland)

Much of the investment in rail infrastructure has been in the central belt or in city areas. Borders rail is a notable exception to that. “Tracks to Work” makes the point that reopening existing lines is a cheaper alternative to investment in new services, and that the investment generates growth through jobs—for example, 1,000 workers are employed on the Borders railway. Many of the lines that were closed in Scotland—

The Deputy Presiding Officer

And the question is?

Mary Fee (Labour, West Scotland)

Many of the lines are in rural areas where there is poor connectivity and little access to jobs, so does the minister have any plans to reopen any previously closed lines? That would give a welcome economic boost to those areas. Is that something that the minister is willing to consider in future planning?

Derek Mackay (Scottish National Party, Renfrewshire North and West)

Of course the Scottish Government would be happy to consider any approach to extend and reopen lines. The Borders railway is a great example of how we are doing that. The stations fund will also unlock opportunities to lever in external funding to open up stations, so we encourage partners to be as creative as possible, and we will happily extend and expand the rail network. However, we are bound by the financial constraints that we are presented with, largely through capital reductions from Westminster, which should be challenged.

We take a proactive and encouraging approach. I encourage everyone to bring forward proposals to extend rail because we know that it is increasingly popular and will serve Scotland well in regard to the sustainability agenda in the future.

Road and Rail Network (Aberdeenshire)

Dennis Robertson (Scottish National Party, Aberdeenshire West)

6. To ask the Scottish Government what improvements are planned to upgrade the road and rail network in Aberdeenshire. (S4O-03916)

Keith Brown (Scottish National Party, Clackmannanshire and Dunblane)

The Scottish Government is addressing years of underinvestment in the north-east. We are currently committed to schemes that include the Aberdeen western peripheral route, Balmedie to Tipperty road improvements, Aberdeen to Inverness rail improvements, Inveramsay bridge and Haudagain roundabout, and which total almost £1 billion. By 2030, the planned £3 billion investment on dualling the A96 between Inverness and Aberdeen will provide further vital improvements that will benefit the area.

Dennis Robertson (Scottish National Party, Aberdeenshire West)

I thank the cabinet secretary for that extremely positive answer. Does the cabinet secretary agree that that action is in keeping with the Government’s proposal and strategy for economic growth, that it will provide jobs for the north-east and that it is testament to the Government’s plans to secure employment in the north-east?

Keith Brown (Scottish National Party, Clackmannanshire and Dunblane)

Dennis Robertson’s question is very topical, given some of the recent developments in the north-east. The Scottish Government fully appreciates the important role that investment in road and rail infrastructure plays in the creation and sustainment of jobs in the north-east, which is demonstrated by the programme of investment that I have just outlined.

As an example of that, the construction of the AWPR alone is expected to lead to more than 14,000 jobs being generated over the first 30 years after the scheme opens, and it is estimated that it will generate more than £6 billion in additional income for the north-east by reducing cost to businesses and providing opportunities for increased sales.

We can contrast that positive action by the Scottish Government with the dithering over oil taxation that we are currently seeing from the United Kingdom Government, which demonstrates that the Scottish Government is doing the job that is necessary to ensure that we increase economic activity and job opportunities in the north-east.

Culture, Europe and External Affairs

The Deputy Presiding Officer

We move to portfolio questions on culture, Europe and external affairs. I offer my apologies to members who have questions but whom I have been unable to call this afternoon.

Broadcasting (Meeting with Ofcom)

Dave Thompson (Scottish National Party, Skye, Lochaber and Badenoch)

1. To ask the Scottish Government when it will next meet Ofcom to discuss broadcasting. (S4O-03921)

Fiona Hyslop (Scottish National Party, Linlithgow)

I am due to meet Professor Philip Schlesinger, the Office of Communications content board member for Scotland, on Wednesday 28 January, and a meeting is currently being arranged with the chair of Ofcom at her request.

Dave Thompson (Scottish National Party, Skye, Lochaber and Badenoch)

Given that the Scottish National Party is the third-largest political party in the United Kingdom, what does the cabinet secretary feel about Ofcom’s position with regard to preventing the SNP from appearing in the general election broadcasts that are currently being discussed? The SNP is being excluded, along with parties including Plaid Cymru and the Greens, but Ofcom appears to be proposing that the UK Independence Party, which is tiny in comparison with the SNP, may be given a position in those debates.

Fiona Hyslop (Scottish National Party, Linlithgow)

Ofcom does not regulate debates. I believe that Dave Thompson’s point is about consultation of the major parties. The SNP is now the third-largest party in terms of membership in the United Kingdom, and I think that the decision not to consult is both illogical and undemocratic.

I make it clear that, when I meet Ofcom, I will be doing so as the relevant cabinet secretary dealing with the SNP Government’s policy. The issues that Dave Thompson raises are quite rightly dealt with by the relevant party spokesperson.

Major Events (Promotion)

Murdo Fraser (Conservative, Mid Scotland and Fife)

2. To ask the Scottish Government what it is doing to promote major events in Scotland. (S4O-03922)

Fiona Hyslop (Scottish National Party, Linlithgow)

This year, Scotland will play host to a fantastic programme of major events, which include the world gymnastics championships, International Paralympic Committee swimming and eventing, and European judo and orienteering championships, as well as the Davis cup, the open golf championship, the Turner prize and the MOBO—music of black origin—awards.

Having further enhanced our reputation as a world-leading events destination through the highly successful delivery of last year’s major events, the Scottish Government will continue to ensure that Scotland has a rich and sustainable programme of events that are promoted effectively at home and internationally.

With the aim of maximising economic impact, major events are promoted through VisitScotland’s international and domestic campaigns using a wide range of marketing channels, including social media, public relations, television advertising and direct mailing. Last year, the VisitScotland consumer website alone had approximately 14 million unique visitors.

Murdo Fraser (Conservative, Mid Scotland and Fife)

The cabinet secretary mentioned the open golf championship, which is coming to St Andrews in July. What will the Scottish Government and its agencies do specifically to ensure that we maximise the economic opportunity for Fife that will result from that event, which will attract a worldwide audience of many millions, and to ensure that as many of those people as possible come to visit Fife in the years to come?

Fiona Hyslop (Scottish National Party, Linlithgow)

A range of activities, and not just that one event, are taking place in Murdo Fraser’s region—Mid Scotland and Fife—next year. He will recognise that I am not the minister who is responsible for tourism, but I am happy to ask the relevant minister—Fergus Ewing—to give Murdo Fraser an idea of how the Government is helping to support VisitScotland to ensure that people stay longer and spend more money in order to boost the economy and the benefits from the open golf championship

Creative Scotland (Meetings)

Neil Bibby (Labour, West Scotland)

3. To ask the Scottish Government when it last met Creative Scotland and what issues were discussed. (S4O-03923)

Fiona Hyslop (Scottish National Party, Linlithgow)

The Scottish Government and Creative Scotland have regular meetings at all levels covering a broad range of issues. Those include monthly formal update meetings through the sponsor team, and regular meetings about specific projects. I last met Janet Archer, the chief executive of Creative Scotland, last Thursday at the brilliant opening concert of Celtic Connections celebrating Martyn Bennett’s work. Last week, I announced the appointment of Richard Findlay as the new chair of Creative Scotland and I am sure that members will want to wish him well in his role.

Neil Bibby (Labour, West Scotland)

The cabinet secretary will be aware of the evidence to the Economy, Energy and Tourism Committee this morning from the film industry, which raised concerns about Creative Scotland and Scottish Enterprise. In March last year, Scottish Enterprise published a report backing a film studio, but we have heard nothing since. How would the cabinet secretary respond to concerns that there is a lack of vision and leadership for the film sector in Scotland, in contrast to the growing film sectors in Wales and Northern Ireland, and that we are missing out on significant productions?

Fiona Hyslop (Scottish National Party, Linlithgow)

The Government has provided significant support for the film and television industry. I point to the total figures for screen support from 2007 to 2013-14. We inherited a budget of £16.2 million for screen support in 2007, and that went to £21.6 million in 2013-14.

I absolutely share the focus and determination in relation to permanent film studio provision in Scotland. It is important not only to attract inward investment but to help the indigenous industry. Neil Bibby will be aware that several privately funded studio proposals are currently being consulted on and, while that is happening, it is difficult for the Scottish Government to provide public funding without breaking European Union state aid rules. He will undoubtedly be familiar with the situation in Spain, where there was significant clawback of public funding for a studio because it was seen not to comply with EU state aid rules.

Having said that, I am absolutely determined that we make progress and I look forward to discussing issues to do with the creative industries generally and, I suspect, film in particular with the relevant committee when I give evidence in the next few weeks.

The Deputy Presiding Officer

Brief questions and answers would be appreciated.

Elizabeth Smith (Conservative, Mid Scotland and Fife)

In light of what the cabinet secretary just said, in 2013 the Scottish Government made the specific commitment to the film industry of a £2 million grant; why has that money not been spent?

Fiona Hyslop (Scottish National Party, Linlithgow)

I am sure that the member will examine the budget proposals: it was not a £2 million grant; it was a £2 million loan fund. It is for the private sector to decide whether to access the loan fund. Were there to be market failure, that funding could be used differently with the public sector. However, we have made that provision and it is available for film support.

Claire Baker (Labour, Mid Scotland and Fife)

Given the strength of feeling that the film industry expressed this morning, including claims that Creative Scotland and Scottish Enterprise are not fit for purpose, will the cabinet secretary hold an urgent meeting with Creative Scotland and Scottish Enterprise to address the concerns?

Fiona Hyslop (Scottish National Party, Linlithgow)

I have yet to read the full Official Report of what was said this morning, but I have met and regularly meet a number of the people who gave evidence and I am familiar with some of the issues. There are some issues with how we balance the economic enterprise focus that Scottish Enterprise has and the lead role that Creative Scotland has in relation to the arts and screen. That is not a new issue—it is a long-standing one—but it must be resolved. I share Claire Baker’s point and the points that were made this morning that it should be resolved. I will take responsibility for achieving that.

Dennis Robertson (Scottish National Party, Aberdeenshire West)

On a point of order, Presiding Officer. Claire Baker refers to a continuing inquiry by the Economy, Energy and Tourism Committee, which is to take evidence from Creative Scotland and Scottish Enterprise next week. It is inappropriate that she raises the subject in the chamber this afternoon.

The Deputy Presiding Officer

Thank you for your point of order, Mr Robertson, but it is not a point of order. Members are free, by and large, to raise whatever issues they choose in the Parliament. That is what it is for.

Holocaust Memorial Day

Kenneth Gibson (Scottish National Party, Cunninghame North)

5. To ask the Scottish Government how it plans to recognise Holocaust memorial day and the 70th anniversary of the liberation of Auschwitz in 2015. (S4O-03925)

Humza Yousaf (Scottish National Party, Glasgow)

The First Minister will attend the national Scottish holocaust memorial event 2015 in Ayr on 27 January to commemorate the 70th anniversary of the liberation of Auschwitz-Birkenau and the 20th anniversary of the Srebrenica genocide. The Scottish Government has financially supported the development of the 2015 event through a grant of £8,000 to Interfaith Scotland. I will attend the Glasgow schools holocaust memorial event and a holocaust memorial day reception in the Scottish Parliament.

Kenneth Gibson (Scottish National Party, Cunninghame North)

Like all of us, the minister will have been appalled by the recent rise in anti-Semitism in the United Kingdom and Europe, which has led to acts of violence and indiscriminate murder. What will the Scottish Government do to help to counter anti-Semitism and ensure that Jews feel safe and welcome in Scotland?

Humza Yousaf (Scottish National Party, Glasgow)

I thank the member for that important question, and I absolutely share his concern about anti-Semitism and the horrific actions that took place in Paris, including those incidents that were specifically targeted at the Jewish community. All of us are united in our condemnation of those events and in our feelings of hurt about them. The Scottish Government values the important role that the Jewish community plays in enriching our lives in Scotland.

On the wider issue of hate crimes, it is important to say that hate crimes decreased between 2012-13 and 2013-14. However, between June 2014 and 20 January this year, there have been 57 reported incidents of anti-Semitism. That is, by this Government’s standard, 57 incidents too many.

The Scottish Government works closely with the Scottish Council of Jewish Communities and many other organisations to stamp out anti-Semitism. For example, the Scottish Government-funded speak up against hate crime programme will continue to reassure people in the Jewish community that we absolutely appreciate their contribution to Scotland and we will continue to work closely with them so that they feel safe here.

Budget Priorities 2015-16 (Culture, Europe and External Affairs)

Gavin Brown (Conservative, Lothian)

6. To ask the Scottish Government what the budget priorities are in 2015-16 for the culture, Europe and external affairs portfolio. (S4O-03926)

Fiona Hyslop (Scottish National Party, Linlithgow)

The culture, Europe and external affairs portfolio budget has been prioritised to maintain delivery of front-line services, including free access to our national museums and galleries, to deliver key capital projects in the cultural and heritage sectors and to maximise our international profile.

The full explanation of 2015-16 budget priorities for the portfolio are set out in chapter 11 of the Scottish Government draft budget for 2015-16, which was published on 9 October 2014.

Gavin Brown (Conservative, Lothian)

According to the Scottish Parliament information centre, the portfolio has gone from having 1 per cent of the total Scottish budget in 2010-11 to 0.8 per cent and now, in 2015-16, to 0.7 per cent. Why is that?

Fiona Hyslop (Scottish National Party, Linlithgow)

I am happy to provide further detail in writing after this question time. Some of the decrease is due to internal transfers between different areas in Government, such as the money that was earmarked for the years of homecoming and so on, which are precisely the areas that I have discussed with the Education and Culture Committee when I have given evidence to it this year and in previous years.

We have maintained our international development fund and have maintained the grants that Historic Scotland gives to provide for renovation, heritage and so on. We have protected our national companies and our national collections, and we have protected Creative Scotland. Actually, we have achieved a tremendous amount.

The member should reflect on the significant cuts that have been experienced by the Department for Culture, Media and Sport and the Arts Council England, which the Labour Party has said that it would maintain. If he talks to people in the culture sector in Scotland, he will see that they would far rather have a Scottish National Party Government protecting their cultural services here in Scotland, because the prospect of what is happening down south is distressing for the artistic and cultural community.

Anne McTaggart (Labour, Glasgow)

How many of the organisations that receive money from that ever-decreasing budget are living-wage employers?

Fiona Hyslop (Scottish National Party, Linlithgow)

In relation to not only this question but the next question, I would say that, as we go forward to the 2015-16 budget, there will be some increases in our budgets, with the Europe and external affairs budget rising to £17.9 million, culture rising from £150.6 million to £174.7 million and Historic Scotland rising from £37.8 million to £40.1 million.

I am happy to give the member information in relation to the organisations that she asks about. The ones that are part of the Government’s public pay policy pay the living wage. I was particularly pleased that National Museums Scotland Enterprises was one of the first organisations that is not part of the Scottish Government’s pay policy to implement the living wage for its staff.

Everybody knows that workers in all organisations in the Scottish Government’s pay policy benefit from the living wage and that those who earn less than £21,000 will benefit from an increase. That matters a lot in the culture and heritage sector, which has more people on low pay than other sectors.

Culture and Heritage and External Affairs Directorates (Staff)

Neil Findlay (Labour, Lothian)

7. To ask the Scottish Government how many of its staff work in the culture and heritage and external affairs directorates. (S4O-03927)

Fiona Hyslop (Scottish National Party, Linlithgow)

There are 50 people who work in the directorate for culture and heritage, which comes to a full-time equivalent of 47.4. There are 92 people who work in the directorate for external affairs, which comes to a full-time equivalent of 89.6.

Neil Findlay (Labour, Lothian)

Within the cabinet secretary’s wider portfolio, there are low-paid staff working in National Museums Scotland. Those who have been employed since 1 January 2011 now work in a two-tier workforce and receive up to £3,000 less than their colleagues who were there prior to that date. Will the cabinet secretary ditch the scripted rhetoric on low pay and actually do something to help some of the lowest-paid workers in her portfolio?

Fiona Hyslop (Scottish National Party, Linlithgow)

If the member had been listening to my answer to Anne McTaggart, he would realise that there have been more challenges in this portfolio than anywhere else. We have heard about the tightness of budgets but, despite that, many very dedicated people are working in our collections and in other areas of culture and heritage. The member will have seen the number of stewards at Historic Scotland properties.

We have ensured that they have a living wage, which was not provided when the Labour Party was in government. We have also ensured that those earning under £21,000 have got their uplift, too—a significant number of them operate in the sector. I have spoken to a number of trade union representatives and to the chair and chief executive officer of NMS. I want to see a resolution.

The member is misleading when he implies that people are receiving or have had pay cuts. Nobody has received a pay cut and nobody will receive a pay cut.

Iraq (International Development Support)

Bob Doris (Scottish National Party, Glasgow)

8. To ask the Scottish Government what international development support it is providing for people affected by the humanitarian crisis in Iraq. (S4O-03928)

Humza Yousaf (Scottish National Party, Glasgow)

The Scottish Government’s international development fund currently focuses on providing support in seven priority countries. In addition, over the past two years we have responded to humanitarian emergencies in the Philippines, Gaza, Syria and west Africa. We have previously assisted in Iraq, with money that was confiscated from the Weir Group. We do not have plans to extend that in the current international development funding round.

We are, of course, closely monitoring the situation in Iraq, and we are very concerned about the plight of the people who have been affected by the on-going violence carried out by the Islamic State of Iraq and the Levant—ISIL—against innocent civilians, which we condemn in the strongest possible manner.

Bob Doris (Scottish National Party, Glasgow)

The minister will know from meetings and correspondence with me that suggestions have been made about how the pharmaceutical sector could help to address the humanitarian crisis and about how Scottish Water could use its expertise in refugee camps, for instance. I wonder what formal contact the Scottish Government would consider making to the Kurdistan Regional Government to ascertain what specific, bespoke and added value could be brought to the international aid effort in Iraq and the wider region. Will the minister meet me to help to co-ordinate those efforts and to see what Scotland can do to play its part in addressing this international crisis?

Humza Yousaf (Scottish National Party, Glasgow)

I recognise the work that Bob Doris has done with the people of the Kurdish region. Since his last meeting with the then Cabinet Secretary for Health and Wellbeing, Alex Neil, officials have contacted the Association of the British Pharmaceutical Industry, which told us that the industry generally works with International Health Partners to donate medicines to places in need. ABPI has contacted IHP and is still awaiting a response but, on the back of Mr Doris’s questions, I will certainly chase that up myself.

Regarding Scottish Water, the issue has been raised previously, and the Scottish Government contacted Scottish Water to see what work it could do with the region of Kurdistan. The appropriate details were passed on to the Kurdistan Regional Government, and it would be for the KRG to liaise directly with Scottish Water to determine whether or not some assistance can be given.

I am more than happy to meet the member and to meet representatives of the KRG—which we do on a regular basis.

Pròiseact nan Ealan (Funding)

Angus MacDonald (Scottish National Party, Falkirk East)

9. To ask the Scottish Government what discussions it has had with Creative Scotland regarding long-term funding for the Gaelic arts agency, Pròiseact nan Ealan. (S4O-03929)

Fiona Hyslop (Scottish National Party, Linlithgow)

The Minister for Learning, Science and Scotland’s Languages met the chief executive of Creative Scotland on 11 December 2014 and discussed Creative Scotland’s support for Gaelic projects and initiatives. In that discussion, the role and funding of Pròiseact nan Ealan was discussed. Ministers are aware of PNE’s strong record and are keen for it to continue and to be built on in the years ahead.

Angus MacDonald (Scottish National Party, Falkirk East)

I recognise the cabinet secretary’s and the Scottish Government’s strong support for Gaelic to date. However, the decision by Creative Scotland not to award annual client funding is clearly disappointing, especially given that Bòrd na Gàidhlig submitted a letter in support of PNE’s application. PNE has now placed its staff under a protective notice of redundancy.

Given the cabinet secretary’s widely recognised support for the Gaelic language, she will appreciate the impact of the decision, so I ask her to ensure that Creative Scotland revisits the decision.

Fiona Hyslop (Scottish National Party, Linlithgow)

Creative Scotland has the role and responsibility to make its own decisions, and difficult decisions had to be made. We should remember that there were £212 million-worth of applications for an available budget of £100 million.

I reiterate that we want PNE to succeed in future. It did not previously have foundation funding; it had annual project funding, which it is still eligible for. I strongly recommend that it applies for project funding. My message is about as clear as I can possibly make it about my confidence in the organisation’s ability to succeed.

Budget (Scotland) (No 4) Bill: Stage 1

Tricia Marwick (None, Mid Fife and Glenrothes)

The next item of business is a debate on motion S4M-12101, in the name of John Swinney, on the Budget (Scotland) (No 4) Bill.

I call John Swinney to speak to and move the motion. Deputy First Minister, you have 14 minutes.

John Swinney (Scottish National Party, Perthshire North)

Parliament begins its consideration of stage 1 of the budget bill against an encouraging set of economic indicators that have been issued today. Employment is at a record high; unemployment is at the lowest rate of any country in the United Kingdom; and Scotland’s year-on-year gross domestic product grew by 3 per cent in the 12 months to quarter 3 in 2014, which is higher than growth in the UK over the comparable period.

The Scottish Government believes that our approach to economic recovery is now becoming sustained, and in this budget we take forward further measures to boost the economy and address the inequality that inhibits our progress.

Willie Rennie (Liberal Democrat, Mid Scotland and Fife)

I am sure that the Deputy First Minister would be disappointed if I did not raise the important point that that economic growth, employment growth and unemployment reduction are based on an economic plan that his party said would not work but which is working for Britain.

John Swinney (Scottish National Party, Perthshire North)

I have referred to the fact that growth in Scotland was higher than growth in the UK over the comparable period. That must mean that the measures that this Government is taking are having a more emphatic effect on economic recovery.

The Budget (Scotland) (No 4) Bill that we are debating today will give effect to the 2015-16 draft budget that I published in October and the provisions that have been announced since then. I thank the Finance Committee for its scrutiny report, which provides a comprehensive overview of the draft budget, and today I will address some of the issues raised in it and respond in full in advance of next month’s stage 3 debate.

The Finance Committee asked me to provide an update on progress with agreeing the block grant adjustment with Her Majesty’s Treasury in relation to the new devolved taxes, and I have written to the convener to confirm that we have finalised a one-year adjustment for 2015-16 at £494 million. Issues remain outstanding on the effect of forestalling and the time lag in tax collection. I am unable to confirm when those issues will be resolved, as they depend on negotiations with HM Treasury, but the high-level agreement provides sufficient certainty to allow me to finalise the Scottish Government proposals for the rates and bands for the devolved taxes.

I have prepared an updated forecast of the revenue that I expect to raise. The Scottish Fiscal Commission has endorsed the forecast as reasonable, and I have placed a copy of the letter that I have received from the commission in the Scottish Parliament information centre.

In October, the draft budget provided me with the opportunity of being the first finance minister in Scotland for 308 years to set national tax rates. Even that experience did not prepare me for the surprise of seeing the design of my national tax being replicated across the UK by the Chancellor of the Exchequer two months later.

I was clear that I intended the design of the taxes and the associated bands to be influenced by Adam Smith’s four maxims, particularly that taxes should be proportionate to the ability to pay. I also said that the taxes would be revenue neutral.

Gavin Brown (Conservative, Lothian)

If, as Mr Swinney maintains, the design has been copied exactly, why have we had forestalling?

Malcolm Chisholm (Labour, Edinburgh Northern and Leith)

For clarity, could the cabinet secretary tell us how much less overall in taxation will come in as a result of the changes compared with what he announced previously?

John Swinney (Scottish National Party, Perthshire North)

My point to Mr Brown is that the chancellor, having had years and years to reform stamp duty land tax, took two months to look at Scotland’s reforms and said, “That looks like a good idea—I’m going to do that for the rest of the United Kingdom.”

One consequence of the chancellor’s announcement in December is that the amount of revenue that I need to raise to meet the commitment to revenue neutrality is lower than was anticipated at the time of the draft budget. As a result, I have chosen to review the rates and bands for residential land and buildings transaction tax. In doing so, I will remain true to all of the principles that I established in October.

It was my priority then and it remains my priority to help first-time buyers to enter the housing market and to assist people as they progress through the property market. Consistent with the principle that tax should be proportionate to the ability to pay, the burden of taxation should fall on each according to their ability to pay.

I have designed the following rates to support the Scottish market. While in London the average house price is £510,000, in Scotland it is £170,000 and the average price of a detached house is around £244,000. With effect from 1 April 2015, to provide further support for first-time buyers, the threshold for beginning to pay tax will be increased to £145,000, which will take 50 per cent of transactions, or another 5,000 homes, out of tax altogether.

A marginal rate of 2 per cent will apply to transactions of between £145,000 and £250,000. To restore the benefit of my proposals to those who buy properties up to the value of £330,000, I will introduce an additional marginal rate of 5 per cent for transactions of between £250,000 and £325,000. For those between £325,000 and £750,000, the marginal rate will be 10 per cent. In order to ensure that we are able to provide benefits for those at the bottom of the market while retaining the principle of proportionality, the top marginal rate of 12 per cent will now affect all transactions above £750,000.

As a result of my announcement today, more than 90,000 taxpayers—nine out of 10 taxpayers—will be better or no worse off under the Scottish system than they would have been under UK stamp duty land tax; all those who buy a residential property in Scotland for £330,000 or less will pay up to £400 less tax under LBTT or will pay no tax at all; and 99.9 per cent of those people involved in residential transactions will pay less tax, or no tax at all, compared with the rates and bands that were proposed in October. Only people who buy a home for more than £945,000 will pay more in tax under our new plans compared with our draft budget proposals.

Given that 50 per cent of transactions will be lifted out of tax altogether, the measures that I propose send a very clear message. In exercising our first judgments on national taxes, this Government has put fairness, equity and the ability to pay at the very heart of the decisions that we have taken.

In October, I estimated that the taxes would bring in £558 million. The block grant adjustment has been agreed at £494 million, so the figure is the difference between those two numbers.

I will bring orders before the Parliament to set the rates of land and buildings transaction tax that I have outlined, and I can confirm that I will bring forward orders to set the rates of non-residential land and buildings transaction tax and Scottish landfill tax at the rates that I announced back in October.

Within the context of constrained public finances, in which our budget has fallen by nearly 10 per cent since 2010, our programme for government and the budget bill contain a range of measures that are focused on making Scotland a more prosperous country, tackling inequality, and protecting and reforming our public services.

The draft budget outlines and supports a range of interventions that directly deliver economic stimulus and employment opportunities, but which also deliver longer-term assets that will improve productivity and connectivity throughout the country. Through a series of measures that are supported in the bill, we will secure infrastructure investment of around £4.5 billion in 2015-16, with investments being made in housing, in schools and in health services.

Greater connectivity in our transport system will be delivered, along with a superfast broadband network to more than 95 per cent of properties by the end of 2017. The convener of the Finance Committee may wish to note that it is anticipated that communities in Arran—where I appeared before his committee during the budget process—will be able to access the new network from spring 2016.

In December, I confirmed to Parliament that I would allocate consequentials from the autumn statement in order to continue to match English poundage rates and to ensure that we continue to provide the most competitive business rates regime in the UK. We must ensure that the economic opportunities that emerge are available to all. The budget bill supports measures that reduce obstacles to labour market participation, including enhanced childcare provision, and it includes measures to create employment, education and skills development opportunities for those who are not currently in work or training.

We expect to see the draft Scotland bill published tomorrow. Although we do not believe that the proposals contained in the bill will go far enough, they will be a step in the right direction and will enable us to add to our extensive efforts to break intergenerational cycles of poverty, inequality and deprivation.

The budget bill allocates £81 million to mitigate the most harmful impacts of the bedroom tax, and we will continue to work with stakeholders and partners to ensure that the costs of delivery are kept to a minimum in order to ensure that maximum support is provided to those who are most in need.

We will invest over £390 million to deliver affordable homes, of which 4,000 will be for social rent as well. We will deliver a £30 million help to buy Scotland small developers scheme to benefit small and medium-sized enterprise developers and to increase the reach of the help to buy scheme.

We remain committed to eradicating fuel poverty in Scotland. I share the concern of the Economy, Energy and Tourism Committee that the delivery of the target will be increasingly challenging. The £94 million pounds of resources that have been allocated to domestic energy efficiency in 2015-16 will add to the hundreds of thousands of homes that are already warmer and cheaper to heat as a consequence of our investments to date.

Over the course of the spending review, we have had to make some difficult decisions in order to live within our budgets, and we have driven reform both to improve outcomes and to ensure that the public finances are sustainable. As part of that, we have had to exercise significant constraints on pay policy, but we will continue to target our pay policy at those on the lowest incomes within the tight budget constraints that we face through measures such as the Scottish living wage, and we will provide security to public sector workers through our policy of no compulsory redundancies.

Our approach to reform is about ensuring that we are able to protect public services in Scotland—services on which our people depend and in which they have confidence. It has enabled me to provide a fair settlement for local government in each year of the spending review while providing additional resources for new responsibilities.

Our approach has also enabled us to deliver, for the first time, an overall health budget of over £12 billion while exceeding our commitment to pass on consequentials from health spending in England in every year since 2010-11. This morning I had the pleasure of visiting the Glasgow south hospitals to see at first hand examples of how the additional £380 million being provided to the health service in Scotland in 2015-16 is being allocated to front-line services. It is decisions such as those that go a long way to explain why voters believe this party is the most trusted to protect the national health service in Scotland.

A key part of our approach to public service reform is the need to deliver a preventative approach. I welcome the Finance Committee’s focus on this area, and I will address the committee’s conclusions. We are making sustained progress in delivering a shift of emphasis to prevention. That is why we have provided over £170 million to support further integration of health and social care services and have taken forward the three change funds that we set out in 2011.

The approach on provision of care at home has resulted in an increase in the support to those citizens with the highest level of need, enabling individuals to remain in their homes for longer and with better support. Some 80 per cent of people receiving support at home now benefit from telecare, which increases the ability to deliver preventative services.

There are more than 400 individual improvement projects that, as part of our early years collaborative, are improving outcomes for children and families. Over 1,900 people each year have received personalised support from trained mentors through the reducing reoffending change fund, which is designed to help to reduce reoffending within our society.

The change funds, while important, do not represent the totality of the resources that we devote to prevention. We are aspiring to deliver a decisive shift, but we are also looking to address problems that surround the inequalities in our society that in some cases have existed for generations. The Scotland performs update that I published alongside the draft budget highlights examples of success in shifting to preventative interventions in Highland, Perth and Kinross, North Lanarkshire and Aberdeen City Council areas. I encourage colleagues to follow the detail that is set out in that information.

In the range of preventative interventions that we take forward, the examples may appear to be small, but the impacts on individual children and parents are significant, and they have the beneficial effect of reducing the long-term demand for public services and the challenges that we face in the current public expenditure climate as a consequence. The Government will continue to focus relentlessly on delivering that shift of emphasis to introduce more preventative interventions to guarantee the sustainability of public services in the years to come.

Over the coming weeks I will, as has been the case in all budget processes, work with colleagues from across the political spectrum to secure support for this budget. It is a budget based on the Government’s aspiration to deliver the more prosperous and fairer Scotland that our citizens so clearly demand. It sets out the basis on which the Government believes that that can be achieved.

I move,

That the Parliament agrees to the general principles of the Budget (Scotland) (No.4) Bill.

Kenneth Gibson (Scottish National Party, Cunninghame North)

It is with pleasure that I speak on behalf of the Finance Committee in this stage 1 debate on the Scottish Government’s budget bill for 2015-16 and on our draft budget report, which was published last week.

The scrutiny of the draft budget works to a tight and demanding schedule. As members will be aware, we approach budget scrutiny on the basis of four principles: affordability, the wider picture of revenue and expenditure and whether each is appropriately balanced; prioritisation, a coherent and appropriate division between sectors and programmes; value for money, the extent to which public bodies are spending their allocations well and achieving outcomes; and budget processes, the integration between public service planning and performance and financial management.

This year, we have focused our scrutiny on two of the principles: affordability and budget processes. We agreed before the summer recess that our main focus would be on affordability. In particular, we looked at Government proposals for the newly devolved taxes and at whether revenue and expenditure were appropriately balanced. We continued our commitment to scrutinising the preventative spend agenda by considering how public bodies work together to deliver services across Scotland.

We invited the subject committees to structure their scrutiny on the remaining principles of prioritisation and value for money. I thank those committees for their valuable input.

To support our scrutiny of the draft budget, the Finance Committee issued a call for evidence on the introduction of land and buildings transaction tax. We received 20 written submissions in response and took oral evidence from a range of witnesses during the autumn before taking evidence from the cabinet secretary on the Isle of Arran. As part of our Arran visit we held workshops with local businesses, voluntary organisations and public bodies. We heard first hand from them about the impact of public spending on their communities and how that spending should be prioritised.

I place on the record the committee’s gratitude to all those who assisted in our consideration of the draft budget.

Turning first to affordability, the committee considered the need for a balanced budget. As the cabinet secretary has mentioned, the Government is responsible for raising the newly devolved taxes, which are land and buildings transaction tax and Scottish landfill tax, with effect from the 1 April.

The draft budget states that the proposed rates are intended to be revenue neutral and set out the forecast receipts for the two taxes in 2015-16. The committee scrutinised the robustness of those forecasts along with commentary published by the Scottish Fiscal Commission.

On the forecasts for residential transactions, the committee identified a number of ways in which robustness and transparency could be improved. We recommended that a breakdown of expected receipts for each band is provided and published as part of future draft budgets; that the SFC produces an analysis of the behavioural response to the introduction of LBTT; and that, like the Office for Budget Responsibility, the Scottish Government should aim to produce five-year forecasts.

The committee noted the differences between forecasts made by the Scottish Government and the OBR for non-residential transactions. We recommended that updated figures relative to available outturn figures be provided alongside next year’s draft budget. That recommendation was also made in respect of forecasts for revenues raised through Scottish landfill tax.

The committee also considered evidence in relation to the proposed LBTT rates and bands. The evidence was broadly supportive of the proposed structure of the tax as it then was. However, organisations such as Homes for Scotland and the Scottish Property Federation expressed concern that the rates might have a detrimental impact on those considering moving to larger residential properties, particularly those in property hotspots such as Aberdeen or Edinburgh. Proposals for alternative rates and bands were made to address those concerns.

As members are aware, changes to UK stamp duty land tax were announced in the chancellor’s autumn statement. I listened with great interest to what the cabinet secretary said on the subject and look forward to hearing others’ views later in the debate.

The committee expressed serious concern that a permanent agreement between the two Governments has not yet been reached on the block grant adjustment. The topic has been on the committee’s radar for some time—years in fact—and we have previously taken evidence from both Governments on the subject. Indeed, we expressed concern in October 2013 about the lack of available detail, and we found then that

“there remains a considerable lack of transparency in relation to the adjustment of the block grant.”

Almost 18 months on, our report on the draft budget stated that the committee

“finds it unacceptable that the Parliament is being asked to consider the Draft Budget without knowing what impact the block grant adjustment may have on the Government’s spending proposals.”

The committee considered that the adjustment must

“be agreed and fully explained to the Parliament prior to Stage 3 of the Budget Bill.”

I am glad that some progress has been made and the figure of £494 million has been presented to us, but we would like further information in the run-up to stage 3.

Our report highlighted the need for greater transparency from both Governments and sufficient time for effective parliamentary scrutiny of adjustments to the block grant. We noted that both Governments have agreed that an interim adjustment will be put in place for 2015-16 only and we have made clear our disappointment at the lack of a long-term solution. However, as there is now no alternative, given the pressing deadlines for considering the draft budget, we recommended that there should be a reconciliation with outturn receipts.

The committee shared the cabinet secretary’s concerns about the proposed inclusion of a “constraining factor”, which would attempt to calculate what the devolved taxes would generate up to 2030 and adjust the block grant accordingly to ensure that neither Government was any better or worse off. The committee agreed that that would totally defeat the point of devolving the taxes. That concern and others that have been expressed about the slow pace of progress on the adjustment become even more important in light of the expected devolution of further fiscal powers following the deliberations of the Smith commission. We look forward to discussing that and related issues in our evidence session with the Chief Secretary to the Treasury next Wednesday.

We considered the preparation for the collection of devolved taxes in detail. The committee has taken a keen interest in the progress that has been made towards ensuring that Revenue Scotland and its partners are fully prepared for the devolved taxes going live, and we will continue to monitor that closely as we approach 1 April.

Regarding prioritisation, we invited the subject committees to consider whether there was a coherent and justifiable division between sectors and programmes. Audit Scotland said that a priority-based approach should focus on delivery of priority outcomes and allocation of money to services that make the greatest contribution to delivering those outcomes. For that reason, we recommend that subject committees continue to focus on prioritisation as part of their budget scrutiny. That should include the extent to which public bodies within their respective remits are adopting a priority-based budgeting approach.

A related subject is ensuring value for money in achieving outcomes that have been designated as Government and public agency priorities. The committee’s consideration of last year’s draft budget focused on the national performance framework. Our expectation is that public bodies should be able to demonstrate how their aims, objectives and activities contribute to national outcomes. We heard in evidence from Audit Scotland that the NPF is a major step forward and that there is evidence of its impact in the alignment of resources and action across different parts of the public sector in certain policy areas.

However, Audit Scotland also considered that

“the Scottish Government needs to demonstrate a more systematic approach to implementing its outcomes approach by clarifying the links between longer-term outcomes, its priorities and performance measures across all policy areas.”

The committee endorsed that view. We believed that there is much scope for the Parliament and its committees to use the data in Scotland performs to hold the Government and public bodies to account for the delivery of outcomes. On a related theme, we recommended that much greater emphasis be placed on examining the impact of spending on outcomes.

I wish to touch on the committee’s continued scrutiny of the Government’s commitment to

“a decisive shift towards prevention”,

which is a subject that we have taken an interest in for several years now, and which the cabinet secretary touched on earlier. In addition to the previously announced funding for change funds, including those related to the early years, care for older people and reducing reoffending, the Government stated that community planning partnerships would play a “decisive role” in the shift towards prevention.

Nevertheless, we remain concerned by the lack of progress that has been made to date on driving public sector reform in that respect. We support the Government’s intentions in seeking that “decisive shift” and we recognise that there has been progress, particularly in relation to integrated working. However, we expect to see significant progress over the next year. I am heartened by Mr Swinney’s comments earlier today.

The committee also considered a variety of issues from the impact of welfare reform and fuel poverty to the Government’s progress towards achieving its climate change targets and realising predicted savings through its police reform programme.

When we visited Arran, we heard about the impact of the lack of broadband connectivity on businesses in rural and island communities. We also heard about issues to do with the availability of affordable housing. The Government is well aware of the importance of those matters, which the relevant committees have addressed in greater detail in their reports. I am sure that members will pick up on some of those themes later in the debate.

As I said, the committee’s budget scrutiny focused on affordability, although we also sought to monitor progress in relation to preventative spending, prioritisation and value for money. I hope that I have succeeded in giving a flavour of the broad range of subjects that we considered. I look forward to the Scottish Government’s response and to hearing members’ speeches.

Jackie Baillie (Labour, Dumbarton)

I think that this is the first time that a woman has occupied the post of shadow finance secretary or finance secretary for any party since the Parliament’s inception. [Applause.] If you hang around for long enough, it all comes to you in the end.

It is a privilege and a challenge to be asked to do this job. I am sure that John Swinney agrees that nothing is more important than the stewardship of the nation’s finances, to ensure that we have the money to spend on our priorities.

Growing the economy, encouraging aspiration, tackling inequality and delivering social justice are all at the centre of our positive vision for Scotland. I want us to be ambitious for the country and for our people.

In that regard, I want people to have trust in their Parliament and their Government when we make financial and economic projections, irrespective of our parties, because we need to be serious about how we do that. Labour is proposing that we establish a Scottish office for budget responsibility—an independent watchdog that would scrutinise the budget and have oversight of economic and fiscal projections. That is more important than ever. Budget debates used to be all about how we would spend the money that the UK Government allocated; now and in future we will have the power to raise a substantial proportion ourselves. We will have new powers over taxation, welfare and job creation. We will have to balance the books, rather than concern ourselves only with one half of the balance sheet.

With that additional responsibility comes the need for better scrutiny, transparency and forecasting. The Finance Committee thinks so, respected economists think so, and the Smith commission thinks so.

I say with the greatest respect to the cabinet secretary that the Scottish Fiscal Commission is a pale imitation of what is required. I have enormous regard for the people who serve on the commission, but the truth is that they are not independent of Government. Two members are on the Government’s Council of Economic Advisers. It is not possible to both scrutinise and advise Government without there being a clear conflict of interest. The commission’s remit is limited, the resources that are available to it amount to £20,000 and, although the cabinet secretary will tell us not to worry because the commission will evolve and be put on a statutory footing, there is no evidence of that and no bill in the legislative programme to do it.

What we want for Scotland is a powerful Scottish OBR, which draws from experience around the world. We should have no fear of transparency and scrutiny. The matter is urgent, because we need to build capacity in Scotland for an OBR that can provide an effective scrutiny mechanism from day 1.

The Scottish Government produced three oil and gas bulletins prior to the referendum. One bulletin was published with the heading “Oil Analysis shows boom years ahead” and suggested that the price could exceed $150 a barrel. The white paper on independence suggested $113 a barrel. The oil price is now consistently below $50 a barrel.

That is the biggest threat to jobs in Scotland since Ravenscraig, and the loss of revenue would take £6 billion a year out of our finances—the equivalent of every doctor and nurse in our national health service. The Scottish Government did not see the threat coming. We need to be confident that what the Government is predicting is as accurate as it can be.

John Mason (Scottish National Party, Glasgow Shettleston)

Will the member give way?

Jackie Baillie (Labour, Dumbarton)

I will give way in a second.

A Scottish OBR is a modest measure, which will not cost a lot of money, but it is such a critically important bit of the infrastructure that we need to set it up now.

Labour thinks that we need to establish a resilience fund of at least £10 million in light of the crisis in North Sea oil and gas. That is not an oil fund, as some people would have members believe, but an emergency fund, to help areas that are affected by significant job loss.

I have been astonished by the Scottish National Party’s glacial pace in reacting to the economic storm that is being caused by the falling oil price.

Fergus Ewing (Scottish National Party, Inverness and Nairn)

Will the member give way?

Mark McDonald (Scottish National Party, Aberdeen Donside)

Will the member give way?

Jackie Baillie (Labour, Dumbarton)

SNP members are not glacial in getting up now. [Interruption.]

Elaine Smith (Labour, Coatbridge and Chryston)

Order, please.

Jackie Baillie (Labour, Dumbarton)

I say genuinely to SNP members that everyone in the chamber owes it to the oil workers and their families across Scotland to strain every sinew to provide help.

I will make a couple of observations on land and buildings transaction tax. It is the first Scottish tax in 308 years, so this is a moment of record. Let me echo John Swinney’s surprise for slightly different reasons. Having announced his intentions at the tail end of last year to make the tax fair and progressive, it took him just 100 days to change his mind. That must be the fastest U-turn in history. I feel for the SNP members of the Finance Committee who voted against the Tory proposal only to find now that the cabinet secretary had aligned himself with the Tories. That is, of course, something that they have been very comfortable doing in successive budgets since 2007.

Mark McDonald (Scottish National Party, Aberdeen Donside)

I am curious as to whether Jackie Baillie has examined the proposal that Gavin Brown put forward in the Finance Committee versus what Mr Swinney has outlined if she is seriously trying to suggest that they are the same thing. Does she agree that what Mr Swinney has outlined is progressive taxation?

Jackie Baillie (Labour, Dumbarton)

I am very happy to look at the detail of John Swinney’s proposal, which was, in fairness, outlined in his speech today. [Interruption.]

The Deputy Presiding Officer

Order, please.

Jackie Baillie (Labour, Dumbarton)

We will support anything that helps home owners and, indeed, the house building industry, so we will examine the detail of what John Swinney said today.

I do not remember the cabinet secretary mentioning this, but he used to tell us that local government got an increasing share of funding. He does not do so any more because it is not true. In 2010-11, local government received 38 per cent of the Scottish Government budget; I understand that the figure now is 32 per cent, which is 6 percentage points less. If local government were to achieve the same share, it would be in line for an extra £1.8 billion. Every single local authority in Scotland has had a real-terms cut. [Interruption.]

The Deputy Presiding Officer

Order, please.

Jackie Baillie (Labour, Dumbarton)

There are now 40,000 fewer public sector workers. The Joseph Rowntree Foundation tells us that local government spending in Scotland will have fallen by 24 per cent in real terms by 2015. That is the funding for our schools and social care. In Edinburgh, the council needs to make £67 million in cuts over the next three years and cuts of £22 million in the next year alone. It is talking about cutting 1,200 jobs. In Glasgow, the figure is a staggering £29 million from the budget in one year alone. In Dundee, the council needs to make cuts of £30 million in the next three years, and it is talking about closing schools and cutting spending on textbooks. It is not alone; it is the same for East Renfrewshire Council, West Dunbartonshire Council and Renfrewshire Council. Such unpalatable decisions are affecting all local authorities, whatever their political complexion. This is, after all, about our children. Are we giving them the best start in life when we limit their opportunities in education?

Kevin Stewart (Scottish National Party, Aberdeen Central)

Will the member give way?

Jackie Baillie (Labour, Dumbarton)

No.

Are we taking care of our older people when they are forced to cancel community alarms because they cannot afford to pay for them? [Interruption.]

The Deputy Presiding Officer

Order, please.

Jackie Baillie (Labour, Dumbarton)

I know that Mr Swinney and, indeed, the First Minister are shouting about the cuts that are visited on the Scottish Government by the Conservative and Liberal Democrat coalition. In part, they are right, but that is not the full picture.

Kevin Stewart (Scottish National Party, Aberdeen Central)

Will the member give way?

The Deputy Presiding Officer

Mr Stewart, Ms Baillie said that she was not giving way to you.

Jackie Baillie (Labour, Dumbarton)

The cuts that have been passed on to local government are not just austerity; they are austerity plus from the Edinburgh Government. In October, the cabinet secretary wrote to every council to tell them that the level of cuts that the Scottish Government had experienced since 2010-11 was 10 per cent, but he did not tell them that the scale of the cuts that he was passing on would be greater still. To use his own figures and analysis, the cut in Renfrewshire was 17 per cent and the cut in Edinburgh was 20 per cent. The cabinet secretary may shake his head, but that is what those local authorities are saying.

The Scottish Government has set up a commission to consider local government finance, which we welcome, but the changes will not happen until 2016. There is an urgent need now to act to protect our schools and care services. [Interruption.]

The Deputy Presiding Officer

Order, please, First Minister.

Jackie Baillie (Labour, Dumbarton)

The issue is too big to be resolved by the rough and tumble of debate in the chamber, but I ask the cabinet secretary to take the matter away and work with local government to see what he can do in the interim to alleviate the cuts.

Nicola Sturgeon (Scottish National Party, Glasgow Southside)

I have a simple question for Jackie Baillie. I am hearing that she wants to give more money to local government. Before she ends her speech, can she tell us what part of the Scottish Government budget she proposes to cut?

Jackie Baillie (Labour, Dumbarton)

I said that the issue is too big to be resolved—[Interruption.] It absolutely is.

The Deputy Presiding Officer

Order.

Jackie Baillie (Labour, Dumbarton)

We are talking about £1.8 billion of funding—[Interruption.]

The Deputy Presiding Officer

Order. Ms Baillie, please stop. Can I have order in the chamber, please? Ms Baillie, I will recompense you—[Interruption.] Order. Ms Baillie, please sit down for a moment. Can we have order in the chamber, please? Ms Baillie, I will now give you another minute to finish your speech, because of all the interruptions.

Jackie Baillie (Labour, Dumbarton)

Thank you, Presiding Officer.

I say to the First Minister and the Deputy First Minister that the scale of the cut in local government is so significant that a solution is not achieved by the rough and tumble of debate in the chamber. It is about taking the issue away and looking at it in partnership with local government. We stand ready to help in that process but, unfortunately, it does not seem that the Government cares—[Interruption.]

The Deputy Presiding Officer

Order, Mr Bibby.

Jackie Baillie (Labour, Dumbarton)

—about funding local government to provide those front-line services.

I will spend my remaining time focusing on health, because the pressure on our NHS is obvious this winter. The Cabinet Secretary for Health, Wellbeing and Sport agreed to put £100 million into the NHS over the next three years to deal with delayed discharge. That is welcome, but the Scottish Government must recognise that it is a drop in the ocean. There are other pressing issues in the care sector that ministers will be aware of. Levels of unmet need are rising. We fund crisis rather than funding prevention so, although I hope that the money makes a difference, I fear that we will need to return to a debate about social care soon.

Equally, the problems in our NHS are not caused just by delays—

The Deputy Presiding Officer

Ms Baillie, you must conclude.

Jackie Baillie (Labour, Dumbarton)

—in getting people out of the back door of hospitals; there are serious pressures on the front line too. Thousands of Scots are waiting too long at accident and emergency or are having planned operations cancelled at the last minute because of a lack of beds. It makes no sense to have unused capacity in our NHS, so today we are calling for another £100 million in the coming year—

The Deputy Presiding Officer

Please conclude, Ms Baillie.

Jackie Baillie (Labour, Dumbarton)

The remaining Barnett consequentials could establish a front-line fund to increase the capacity of NHS services to operate seven days a week. In conclusion, Presiding Officer, that means extending capacity to build planned surgery—

The Deputy Presiding Officer

I am sorry, Ms Baillie, but you really must close.

Jackie Baillie (Labour, Dumbarton)

It is my final sentence. We need planned surgery at the weekends and diagnostics in the evening, to free up beds so that people can be seen more quickly. Every day brings new stories about the pressure on our NHS. Our staff, who dedicate their careers—

The Deputy Presiding Officer

Please finish, Ms Baillie.

Jackie Baillie (Labour, Dumbarton)

—to saving lives, are overshadowed and underresourced. They need a front-line fund—

The Deputy Presiding Officer

Ms Baillie, I am sorry. You must sit down.

Jackie Baillie (Labour, Dumbarton)

—to support staff and to support patients.

Gavin Brown (Conservative, Lothian)

I guess that the Deputy First Minister must be licking his lips at this stage, because getting the Labour Party on board to support his budget will be fairly easy. All that he has to do is rename the fiscal commission the Scottish OBR, and suddenly he has 40 votes in the bag. He will have to work a little harder to get the Conservatives’ full support, and I can say categorically—to spare Mark McDonald’s blushes—that the proposal that I put to the Finance Committee is slightly different from the proposal that the Deputy First Minister made today.

In all sincerity, I praise some of the actions that the Deputy First Minister has taken so far, because he has been particularly accessible in the past couple of weeks and has been in listening mode. I know that, while he has been speaking to other parties, he has also engaged with stakeholders and has tried carefully to take the temperature on the ground in relation to the residential rates of the land and buildings transaction tax. I shall praise elements of his proposal before outlining areas where I still have concerns and want to work with the Scottish Government to make progress before stage 3.

First, the Deputy First Minister ought to be applauded for coming to Parliament today with an early announcement. It is fairly typical in the budget process of almost every Parliament to wait until the final stage to pull a rabbit out of the hat to generate some news and make something happen at stage 3. I urged him—and I know that others did too—to say something earlier and to try to ameliorate the position because of the displacement that was happening and the forestalling that we know was projected by a number of agencies. The fact that he agreed to make an announcement today should be welcomed and applauded.

Secondly, I welcome the fact that, in relation to the rates that he proposed in October, what the Deputy First Minister proposes now is a tax cut. If my maths is correct, the figures that he gave Malcolm Chisholm show a reduction in the region of £64 million, which means £64 million less in tax in April than would have been the case if the Deputy First Minister had not made changes. As a Conservative, I welcome that.

John Swinney (Scottish National Party, Perthshire North)

In the interests of completeness, does Gavin Brown accept that I gave the firm commitment to Parliament and the Finance Committee that the introduction of the tax would be revenue neutral for the changes that the UK Government applied? The issue for me has been to remain true to that commitment to revenue neutrality as the driver of the sum of money that was to be raised through taxation.

Gavin Brown (Conservative, Lothian)

When I referred to a tax cut, I meant one relative to the rates in October; I was not trying to paint the change as an overall tax cut. The Deputy First Minister’s exact wording was:

“I have decided that the taxes raised should be revenue neutral, raising no more or less than the taxes that they replace.”—[Official Report, 9 October 2014; c 39.]

That is what he said on day 1 and has said on most occasions since then. It is a matter of public record that that is what he said.

We welcome the increased threshold. We called for it to be increased to £140,000 and it has been increased further than that—to £145,000—which will make buying easier for first-time buyers. The final thing that we welcome is the 5 per cent rate. The tax does not go immediately from 2 to 10 per cent; it is more gradual—it goes from 2 to 5 per cent and then to 10 per cent.

For all those reasons, I am happy to praise publicly the actions taken, but we still have concerns, which I hope that we can tackle and make progress on in the coming weeks. We will consider the changes carefully. I intend not to make snap judgments but to review the numbers and engage with experts and stakeholders, as I have done over the couple of months since the rates were announced.

I have some concern that we still have a sharp increase: a jump to 10 per cent at a lower level than in the rest of the UK. The tax rises to the 10 per cent rate at £325,000, which at first blush still strikes me as a particularly low point at which to move up to 10 per cent.

We acknowledge the Scottish Government’s point that the housing market in London is different from that in Scotland but, at the UK level, the tax does not go up to 10 per cent until £925,000. In our proposal, we capped the 5 per cent rate at £500,000 to try to recognise the difference. I am a bit concerned that the tax goes up to 10 per cent at £325,000. That is better than it going up to 10 per cent at £250,000, but we will work hard to make progress on that.

It is still a tax on aspiration, although to a lesser degree than it would have been. The crossover point is a little higher than it was in October, but there is still scope to push it up further, not just to help people to get the family home of their choice but because of the impact that that could have on the market. There is still the possibility for distortions to occur. If the £325,000 to £500,000 segment of the market is penalised, that does not have an impact just on that segment; there are reverberations around the housing market and there could be a wider economic impact.

I get to give our closing speech today, so I will come on to various points then. On revenue neutrality, the number of sales required in the modelling that I have seen is about 84,000, whereas the Scottish Government predicts 100,000. I wonder whether the Scottish Government has been slightly conservative in its estimates and whether it could get to revenue neutrality with further changes to the tax rates and bands, which we will push for over the next couple of weeks. I will leave it there.

The Deputy Presiding Officer

Because we are incredibly tight for time, speeches will be a maximum of six minutes.

Mark McDonald (Scottish National Party, Aberdeen Donside)

I welcome the strong economic performance that the cabinet secretary outlined, with employment at record levels and the lowest unemployment rate in the UK. I also welcome the Scottish Government’s continued support for agencies such as Skills Development Scotland, Scottish Enterprise, Scottish Development International and the Scottish Council for Development and Industry, many of which deliver excellent work and support for organisations and people in my constituency in north-east Scotland. Last year, I held a jobs fair in my constituency at which SDS provided a workshop on CV writing and interview skills, which helped a number of my constituents from an area of Aberdeen in which—although the city’s economy has been buoyant—there have been particular issues with getting people into employment. That was despite the local Labour Party objecting to SDS having any involvement in the process.

Those agencies’ role in the north-east has been in sharp focus in recent months because of the on-going issues affecting the oil and gas sector. I welcome the Scottish Government’s establishment of the energy jobs task force, which recognises that intervention is needed to ensure that those who face redundancy or potential redundancy get support, alongside the work that the partnership action for continuing employment—PACE—teams will do in the area.

That underlines the point that the key interventions that are needed in the area must come from Westminster. Alongside the endorsement of the Scottish Government’s budget today and the impact that it will have in supporting the work in north-east Scotland, we must be clear and unite in calling for fiscal intervention from Westminster where it is required, whether that is through a reduction in the supplementary charge, the introduction of an investment allowance for marginal fields or tax credits for exploration. That could boost exploration activity and ensure that, when the price recovery happens, as experts predict it will, the industry is in the most advantageous position to capitalise on it.

I would have a degree more sympathy for the positions that some politicians have outlined if they first acknowledged that they campaigned for the UK to remain responsible for the oil and gas sector and to have control of the fiscal regime in the North Sea and then pointed in that direction in calling for the key interventions that are required. We have heard again today talk of a resilience fund. At least a rough figure has now been stuck to it, but we still do not understand exactly where the funding is supposed to come from and nor do we understand who it is supposed to be given to directly, how it would be disbursed or what purpose it would serve.

It will be of great interest to the many communities across Scotland that have undergone economic shock in recent times that it is only now and in specific circumstances that the Labour Party has decided to call for a resilience fund.

Lewis Macdonald (Labour, North East Scotland)

I recognise the point that the member makes about working out the detail, but does he at least acknowledge the value of the principle of an intervention fund for industries that suffer sudden shocks to the system, as has happened to the oil and gas industry in Aberdeen, and will he call on his ministerial colleagues to endorse that principle?

Mark McDonald (Scottish National Party, Aberdeen Donside)

Until I understand exactly what the fund is to be used for and where it is to be directed, it is difficult for me to say anything about the broad principle of such a fund. Having a pot of money is all well and good, but it needs to be targeted. The Scottish Government’s intervention to establish a jobs task force is right, because it has been established with a defined purpose to support individuals and companies for which redundancies are arising or have the potential to arise.

Fergus Ewing (Scottish National Party, Inverness and Nairn)

Is Mr McDonald aware that, during the 13 years of the Labour Party’s period as the United Kingdom Government, successive Labour Governments received in total in taxation from oil not £10 million but £93,000 million and that not one penny was set aside for Scotland, whether in a resilience fund or an oil fund?

Mark McDonald (Scottish National Party, Aberdeen Donside)

I absolutely acknowledge that. Anybody who has cast a cursory glance over the letters pages of The Press and Journal in recent weeks will have seen that people in the north-east are not being hoodwinked.

Jackie Baillie said that she would be interested to look at the detail of the cabinet secretary’s announcement on tax. To compare what was proposed at the Finance Committee and what the cabinet secretary has announced, she had to do only two things. One was to read the annex to the Finance Committee report, which outlines what Gavin Brown proposed, and the other was to write down what the cabinet secretary announced on the bandings. I would not have thought that that would be a stretch for her.

If Jackie Baillie had done that, she would have found that the threshold up to which people will not pay tax has been increased, which will help more first-time buyers, and that the upper threshold for the 5 per cent rate has been reduced from the £500,000 that Gavin Brown proposed to £325,000, as the cabinet secretary outlined, which will ensure that those who buy properties at the higher end of the market pay a fair share of taxation on those purchases. She can put out her pre-prepared lines if she wants, but she should at least take cognisance of what has happened in the debate before she does so.

I will have to be brief, because I took two interventions. On adjustment to the block grant, we need to learn lessons from what the UK Government has dragged its heels on. That applies to future taxation and to late announcements—an issue that has been highlighted by, for example, Professor David Heald.

The Deputy Presiding Officer

I am afraid that you must finish, Mr McDonald.

Mark McDonald (Scottish National Party, Aberdeen Donside)

While we have to consult and announce our proposals early, the Treasury and the chancellor have the ability to pull the rug out. The chancellor attempted to do that with stamp duty and it could happen again in relation to income tax and assignation of VAT.

The Deputy Presiding Officer

Mr McDonald, we have no time.

Mark McDonald (Scottish National Party, Aberdeen Donside)

We have to ensure that there is a fair financial playing field when it comes to devolved taxation in the future.

The Deputy Presiding Officer

I warn members that, if they take interventions, they must do so in their own time. We have no extra time.

Jenny Marra (Labour, North East Scotland)

We know that there is a crisis in our accident and emergency departments in Scotland. We need only to open a newspaper to see exactly how bad things are. Over Christmas, we heard reports from across the country of the pressures on our NHS. The Victoria infirmary in Glasgow used a portakabin for casualty patient overflow. A man waited on a trolley in A and E for more than 20 hours at the Royal Alexandra hospital in Paisley. Ninewells hospital in Dundee admitted to delaying treatment because it was too busy and, in Aberdeen, the Royal infirmary had to cancel 80 operations in the first week of 2015. Yesterday, Raigmore hospital closed a ward.

We are seeing a similar strain on our other front-line services. Last weekend, a surgical ward at the Southern general hospital in Glasgow was left without heating or hot water for more than three days. Nurses were working in their coats and patients were sleeping with scarves and hats on, in Dickensian conditions. I am sure that the cabinet secretary will agree that having no hot running water on a surgical ward is unacceptable. The Scottish Government promised to invest in real terms in our front-line care—in helping those to the fore of our NHS—but still patients have to cope with unacceptable conditions and staff have to deal with a lot of pressure.

Yesterday provided further evidence that the Scottish Government is running to catch up when it comes to the NHS. The Cabinet Secretary for Health, Wellbeing and Sport showed a tacit disregard for all members in the chamber when she chose to go to the press before declaring a new piece of policy to the Parliament. However, perhaps she did not think that coming to the chamber was necessary because, as with the £65 million that was announced following the Christmas A and E crisis, the £100 million to tackle delayed discharges was simply a reannouncement of funds that were already allocated to health.

Joe FitzPatrick (Scottish National Party, Dundee City West)

Can the member tell us whether this is new money or a reannouncement of money? What is her view? She cannot have it both ways.

Jenny Marra (Labour, North East Scotland)

My understanding of the Government announcement yesterday is that there is £30 million of Barnett consequentials and then £35 million, and £35 million the following year, from the Scottish Government budget. I do not know whether that clarifies the minister’s own Government policy for him, but I am sure that he will let me know if it does not.

We know that there is just £30 million this year—a fact that was downplayed in yesterday’s Government announcement. It took the cabinet secretary seven weeks to decide where the allocated health consequentials were to go, although she claims to know what the problems are in the NHS and she claims that tackling delayed discharge has been her top priority since coming into the job. That is seven weeks of planning time—an element that is crucial in helping our NHS and our local authorities to tackle delayed discharge and to plan as the integrated boards come into being on 1 April.

We will go into more detail on the NHS tomorrow, during the Government’s debate on its 2020 vision for health. However, as Jackie Baillie said today, Labour is calling on the Scottish Government to deliver a front-line fund for our NHS. The Scottish Government keeps reannouncing health consequentials, but we would like it to put Barnett consequentials into health and social care, because health and wellbeing are crucial to communities across Scotland.

Mark McDonald (Scottish National Party, Aberdeen Donside)

Will the member give way?

Jenny Marra (Labour, North East Scotland)

I will just finish this point and then I will come to the member.

That means not just the currently unallocated £29 million from health but the £71 million of general consequentials, too. An NHS front-line fund would allow hospitals facing extra pressure to move to a seven-days-a-week operation. That would mean that hospitals could better deliver care, with planned surgery at the weekend and diagnostics in the evenings.

The Government has said that it will plan and run a 24/7 service, and it has put pilots in place, but I do not believe that it has made any progress on that in the past couple of years. Time is running out, and there is severe pressure on our NHS, which is why we are calling today for action.

Mark McDonald (Scottish National Party, Aberdeen Donside)

I understand from Jim Murphy’s comments that the resilience fund to which front-bench Labour members have referred would come from non-health consequentials. Jenny Marra appears to suggest that all consequentials, including non-health consequentials, should go towards that front-line fund. I seek some clarity on that.

Jenny Marra (Labour, North East Scotland)

No—I said that £71 million of general consequentials should be allocated to the front-line fund.

Giving £100 million to a front-line fund would free up beds and ensure that patients receive a quicker diagnosis and better care. We would tackle patient flow through our hospitals. We are calling for that because A and E departments are having to put out calls for untrained volunteers to help with the waiting time crisis. The winter crisis in the NHS is becoming an everyday crisis for the people of Scotland. Everyone, from Audit Scotland to the Royal College of Nursing, is telling us that our NHS needs that investment.

The Government and the Opposition have correctly identified delayed discharge as the biggest challenge in our health service. That money is needed to inject more movement, improve patient flow and free up evening and weekend capacity in our hospitals, which will bring about the modern health service that the Scottish people expect. I hope that the cabinet secretary will consider that proposal for his budget.

Linda Fabiani (Scottish National Party, East Kilbride)

What has always been distinctive about the budgets that have been put forward by John Swinney—and by the SNP Government—is that they are cohesive and look at the overall picture, and propose actions for a purpose. The Government draws up its budgets with partners, where appropriate, whether they are businesses or trade unions. The budgets are based on three main strands: making Scotland a more prosperous country, tackling inequality and protecting and reforming public services.

Again, John Swinney has come forward at this stage of the budget process with a cohesive budget. Unfortunately, the main Opposition party has not been able to rise to the challenge and say, “Okay—we think that there are other things that could be done to bring about fairness and equity in our society.” As always, Opposition members look for something that they perceive to be a political weakness, then harp on about it.

With regard to Jackie Baillie’s speech I say that it takes some brass neck for a Labour politician to accuse others of making overoptimistic fiscal forecasts. Gordon Brown managed to get his borrowing predictions wrong by more than £400 billion and during Labour’s time in office the national debt almost trebled.

Jenny Marra (Labour, North East Scotland)

Does Linda Fabiani agree that it is a good idea to free up capacity on evenings and weekends in our hospitals in order to improve patient flow?

Linda Fabiani (Scottish National Party, East Kilbride)

I have total confidence in the ability of the Scottish Government’s health team to look at the health service in the round, to work with its partners and to come up with the best possible solution. It is not about picking things out of a hat to get a headline on the front of the newspaper.

We have a good baseline from which to start on our pledge to make Scotland a more prosperous country. Scotland’s economy is on track this year to record its strongest performance since 2007, and we are leading the way with the highest employment and economic activity rates and lowest unemployment rate among all the nations in the UK. In addition, business start-ups in Scotland are at a record high.

Some credit must be given to the Deputy First Minister for managing that in spite of what the Institute for Fiscal Studies has described as spending cuts “on a colossal scale”. The OBR has noted that, under the coalition Government’s plans, total public spending would fall to 35.2 per cent of GDP by 2019-20, to what would be its lowest level in about 80 years.

There are many quotations from many respected agencies. For me, the most telling quotation comes from Ed Miliband who—backed up by his troops marching through the lobby to vote for the Tories’ austerity cuts—confirmed that the Labour Party, too, is wedded to austerity.

Jackie Baillie (Labour, Dumbarton)

Labour and Tory spending plans are very different. Does Linda Fabiani know that the Institute for Fiscal Studies shows that Labour’s plan is to spend more or tax less than the Tories to the tune of £43 billion? That is before additional revenue streams from the mansion tax and the increase to the top rate of income tax. Is not what she just said more spin than substance?

Linda Fabiani (Scottish National Party, East Kilbride)

The Westminster MP in my constituency clearly does not understand what he did last week. I had thought that the Labour Party in Scotland would understand the implications of that vote. Is Jackie Baillie aware that it also endorsed George Osborne’s welfare spending cap?

Tackling inequality is a real priority for the Government because, in common with many economists throughout the world, we believe that equality and cohesion are good for growth as well as for individuals. The ability to share that growth is important. That is why the Scottish Government has taken the steps that it has taken in relation to the Council of Economic Advisers and poverty impact assessments of all its policies.

We are doing what we can to mitigate Westminster’s welfare cuts, with more than £100 million having been committed to that in 2015-16. However, preventative spend is the real issue. Kenny Gibson talked about it as convener of the Finance Committee, but in the previous parliamentary session, when Malcolm Chisholm and I were members of that committee, we did studies about the importance of preventative spending, especially in the younger years. It is a long-term issue. We cannot change such matters overnight.

If we can do one thing for Scotland—even if we cannot agree on its constitutional future or the powers that we should have—it is surely to agree that the important thing is to make Scotland a fairer, better and more prosperous country. Businesses are coming on board with that, and trade unions have always believed it and are working well with the Scottish Government towards that end. Surely the Labour Party in particular—with a history in what used to be a movement—can recognise that in the longer term our country does not need political sniping, but needs us to work together and to agree certain principles on which we can all move forward, regardless of other arguments about the constitution or the results of elections. That is what is important.

We talk about the new politics in Scotland. That is what people expect. An awful lot of people who used to value the Labour Party expect it too.

Fergus Ewing (Scottish National Party, Inverness and Nairn)

Danny Alexander has suggested that most of, if not all, the Barnett consequentials should be spent on upgrading the A9 and the A96. Is that Liberal Democrat policy in Scotland?

Willie Rennie (Liberal Democrat, Mid Scotland and Fife)

We fully support capital spend on the upgrade of the A9. Despite making repeated promises, the Scottish Government has been backward at progressing that project, and we would like to see it accelerated, certainly on the capital side. However, today, I will talk primarily about the revenue side, which the bulk of additional Barnett consequentials will provide for.

First, we know that the national health service is under extraordinary pressure; we heard from Jenny Marra earlier about some of the pressures. I argue that the SNP took its eye off the ball during the referendum. Cancer waiting times have been missed, accident and emergency departments have been pushed to the limit and there are insufficient funds to prevent the latest charges. I welcome some of the announcements in recent days to try to address some of that, but we also need to ensure that we get the right priority for mental health as well, because that is often the poor relation in the NHS. We have additional funds from the Barnett consequentials, which we would like to be invested in the health service to deal with those particular difficulties.

Our second priority concerns childcare, which the Deputy First Minister has heard me discuss in previous debates. Last year, we made some progress, and we now have 15 per cent of two-year-olds getting 15 hours of nursery education every week. That figure will rise to 27 per cent in August. However, in England, the figure is at 40 per cent. I would like Scotland to catch up with that level, for the very reasons that Linda Fabiani talked about in relation to ensuring that that early intervention can make a real change in the lives of children, especially those from impoverished backgrounds. That is the best education investment that we can make, and that is why we advocate it.

It is with a degree of trepidation that I discuss the next item, which is student loans. It is a brave area for any Liberal Democrat to venture into these days. However, if it is the right policy to advocate, I will certainly do so.

The Deputy Presiding Officer

You are in your final minute.

Willie Rennie (Liberal Democrat, Mid Scotland and Fife)

We advocated that there should be no tuition fees in Scotland. We know that there is a difference south of the border in terms of Government policy, but that is what we argued for. Now, we also want the threshold for the repayment of student loans to be raised. In Scotland it is £16,910 and in England it is £21,000. We want that gap to be closed. We understand that the resource accounting and budgeting charge was underspent in the past year, and we want the flexibility that that would create to be used to raise the threshold to £21,000. We think that that would benefit Scottish students, and so it is something that we support.

The Deputy Presiding Officer

I am afraid that you must conclude, or else I will have to drop the last speaker from the debate.

Willie Rennie (Liberal Democrat, Mid Scotland and Fife)

We advocate general care, the NHS and ensuring that people with student loans get that extra support. We will work with the Deputy First Minister on those issues.

Malcolm Chisholm (Labour, Edinburgh Northern and Leith)

This budget debate is marked by the first-ever tax-setting proposals by a Scottish Government, by the Finance Committee’s very useful commentary and by serious, clear and strictly prioritised choices from the Labour Party. I will deal with those three issues in reverse order.

One of the most important suggestions that was made by Jackie Baillie was about setting up an office for budget responsibility. I note that the proposal was rubbished a few days ago, but not so much in today’s debate—perhaps because people realised that the Finance Committee itself had recommended that

“the Scottish Government should consider the option of inviting the SFC to produce the official macro-economic and fiscal forecasts for Scotland”.

Of course, those are the key distinguishing features of the Office for Budget Responsibility. The suggestion was supported a few days ago by the very distinguished economist Angus Armstrong and also by David Bell, who told the committee that

“A Scottish forecasting body would help ensure ... a critical mass of independent economic analysis ... in Scotland.”

The proposal has very high-level backing, and the Scottish Government should certainly take it more seriously than it did a few days ago.

Labour’s choices, which come in two parts, are strictly prioritised and clear; in fact, the choices have never been as clear and prioritised as they are today. Contrary to the Twitter storm about Jackie Baillie contradicting something that she said about the oil fund, the £10 million resilience fund is not an oil fund. They are completely different funds; the resilience fund is an emergency fund to help areas that are affected by job losses. Again, I hope that the proposal will command the support of the whole Parliament.

Fergus Ewing (Scottish National Party, Inverness and Nairn)

Mr Chisholm always argues from principle, so on a point of principle, why is it that—given that the UK has for four decades been the recipient of all the £300,000 million of tax revenue—Scotland with its fixed budget for fixed functions, which do not include oil or energy, should have all the liability for setting up that fund?

John Mason (Scottish National Party, Glasgow Shettleston)

It is worth restating at the start some of the Scottish Government’s positive successes, which we have now become used to but which not all parties have always supported. The freezing of the council tax for the eighth year is certainly helping some of my struggling constituents, and the absence of prescription charges means that there is no demeaning means testing. The free bus travel that is being provided for the over-60s improves mental and physical health, and the fact that there is free personal and nursing care removes the worry that many people have about older age.

We would all like to spend more money on something. For example, Shelter, the Chartered Institute of Housing in Scotland and the Scottish Federation of Housing Associations would like more to be spent on housing; many of us would like that to happen, too. Scottish Care would like higher fees to be charged for care homes so that the staff could be paid the living wage. Again, many of us would like that, too.

However, we need to emphasise that money can be spent only once. If Opposition members want to say that we should spend more on health and less on education, they are perfectly entitled to do so. However, despite what Malcolm Chisholm said, quite a few different spending desires have been mentioned and the Opposition will not be taken seriously if it says that we should spend more on health, education and local government while refusing to tell us where the money should come from.

Jackie Baillie (Labour, Dumbarton)

Will the member take an intervention?

It was on an earlier subject. As we have in fact outlined during the course of my speech, and as others have covered, the NHS front-line fund and the resilience fund would both be funded through autumn consequentials.

The Deputy Presiding Officer

You are in your last minute now, Mr Mason.

John Mason (Scottish National Party, Glasgow Shettleston)

I am not sure whether we heard how local government was to get extra money, but there we go.

Another problem with the whole system has been the problem with the block grant adjustment. That was meant to be agreed long ago and was meant to be a solid system that would last for years. Such a system is in place for the Scottish rate of income tax from 2016, but it is still not in place for those relatively small taxes. The Finance Committee has become increasingly frustrated at the slow rate of progress; we are having to make do with a one-off adjustment for 2015-16.

The whole point of devolving a tax is that we in Scotland make our own decisions and live by the consequences, for better or for worse. Yet it has seemed that Westminster wants to design a system whereby Scotland could never win, however well we manage things ourselves. It is a real concern for the Finance Committee, looking ahead to future years, if that level of Westminster thrawnness continues.

In conclusion, many of us would like to see higher expenditure on a range of subjects, but we have to live within our means—something that Westminster has regularly failed to do. John Swinney is to be commended for his success in managing our finances.

Murdo Fraser (Conservative, Mid Scotland and Fife)

The Deputy First Minister started his speech this afternoon with his usual summary of the economic situation. He was right to say that there is good news. There is an old saying that success has many fathers. In this chamber we have got used to the tussle between Mr Swinney, trying to claim credit for the economic successes, and representatives of the coalition parties, on this occasion represented by Mr Rennie, trying to state that it was all down to decisions taken in Westminster, where most of the macroeconomic levers are held.

However, Mr Swinney was a little bit partial in his quoting of today’s statistics. We saw two new economic indicators published today, one of which was the unemployment figure. Mr Swinney is right to say that the level of unemployment is still lower in Scotland than in the UK as a whole, but unemployment in Scotland went up 7,000 in the period from September to November. We also saw the economic growth figure published, and although the rate of economic growth in Scotland is still rising—it is 0.6 per cent—it is now lower than the figures for the two previous quarters and, for the first time in 2014 statistics, it is lower than the figure for the rest of the UK.

Those two economic indicators for the third quarter of 2014 suggest that we are not doing as well as we were or as well as the rest of the UK. What event happened—uniquely in Scotland—in the third quarter of 2014 that may have had that economic impact? We have, incidentally, seen the same economic impact on retail figures, house prices and economic confidence among small businesses. Perhaps, in trying to claim credit for successes, the Deputy First Minister needs to reflect on the fact that the referendum, which was his party’s initiative, may not have been entirely beneficial to the Scottish economy.

Mark McDonald (Scottish National Party, Aberdeen Donside)

I am interested in the point that the member raises. Aberdeen and Grampian chamber of commerce has said that its members say that the referendum did not have a significant impact on their businesses. Is the member just engaging in the usual idle speculation and scaremongering that have become associated with the Scottish Conservatives?

John Scott (Conservative, Ayr)

Many thanks for finishing timeously. We are very tight for time. I ask for speeches of up to five and a half minutes. We will be writing to some members as well.

Jackie Baillie (Labour, Dumbarton)

We did, in fact, set out clearly that it would come from the proceeds of the mansion tax. That would fund the additional 1,000 nurses.

Sandra White (Scottish National Party, Glasgow Kelvin)

Actually, that was not the question that I was asking. Labour did not really set it out. It became a kind of bidding war. We promised 1,000 and then the Labour Party came in with an extra 1,000 on top of ours. If we had promised 50, it would have put forward another 50. The question that I was asking—I said that I would stand to be corrected—was where the £100 million was coming from. I recollect that Jackie Baillie mentioned something about autumn consequentials, but I would like confirmation. I look forward to getting confirmation on that point, because the policy of 1,000 extra nurses in the debate last week came from Jim Murphy. They were pulled out of the air all of a sudden. I just want to clarify that it is not another creeping Westminster policy or Jim Murphy policy coming into the Scottish Parliament.

The Deputy Presiding Officer

You have 20 seconds remaining.

Sandra White (Scottish National Party, Glasgow Kelvin)

If we could get that clarification in writing, I would like that.

I wanted to touch on various other areas, but I know that we are tight for time. The budget will bring a fairer society here in Scotland and I thank the cabinet secretary very much for it.

John Swinney (Scottish National Party, Perthshire North)

I will make one point to Patrick Harvie. The key consideration for me has been the question of the commitment that I gave to Parliament on revenue neutrality. That is what drove my decision. I would not want Patrick Harvie to interpret the decision as being that we commit ourselves in all circumstances to replicate whatever is done within the United Kingdom.

Patrick Harvie (Green, Glasgow)

I guess that the question is: neutrality compared to what—the situation when the initial proposals were made or the situation as it will be after UK changes?

Let us be clear: before we get the wider taxation powers, there is no path through UK austerity without either handing on cuts to the public services that people depend on or raising taxation on those who can afford to pay it. People who are on very high incomes, such as us in the chamber, can afford to pay it. Let us hear no nonsense about a tax on aspiration. Nobody is taxed for aspiring to own great wealth; people should be taxed for actually owning great wealth or having very high incomes. That is a feature of a decent society.

On the additional issues that we have sought to raise with the Deputy First Minister, there will be no great surprise about our returning to the theme of energy efficiency. We have done that over many years. Although the Deputy First Minister mentioned in his speech the figure of £94 million, if I remember rightly, it is clear from the WWF submission that it has recently called for at least £125 million a year. It said:

“Given previous under-funding, we now think substantially more will be needed.”

Greater progress is required if we are going to get anywhere close to our targets on fuel poverty or climate change.

We have also raised the issue of unconventional gas and fracking. Whatever position we take on that issue in Scotland and on whether that industry should have a role in Scotland, it is clear that unless the UK Government halts the current licensing round—we will call on it to do that—local authorities may find themselves under pressure to deal with very many complex, novel and challenging planning applications.

If we want local authorities to be in a position to defend Scotland and its people against unwelcome developments of that nature, we need to resource them properly. Such an approach was taken in relation to wind farms—additional resources were made available—and we think that the same should happen in relation to unconventional gas.

The Deputy Presiding Officer

You should draw to a close, please.

Patrick Harvie (Green, Glasgow)

I will be brief.

We have also raised issues to do with sustainable transport, air pollution hotspots in particular, and our on-going interest in the wave and tidal sector.

We look forward to seeing progress being made on all those issues. If it is, we will be able to vote in favour of the bill at stage 3. We will not oppose it tonight.

Mike MacKenzie (Scottish National Party, Highlands and Islands)

John Maynard Keynes was once the hero of the Labour Party, but even Churchill was a grudging admirer of that great English economist. He once said that whenever he asked three economists for an opinion he invariably got four answers—two from Mr Keynes. That seemed to perplex Churchill, but it points to an essential quality of the good economist—the capacity to understand the sometimes counterintuitive nature of economics. That goes hand in hand with understanding that economics is not a zero-sum game, which in turn is a vital part of understanding wealth creation.

The link between public finances and the economics of wealth creation is a fascinating one, and one that Mr Swinney understands perfectly. To date, there has been no greater wisdom on the subject than that provided by Mr Keynes. However, as things stand, the finances of present-day Scotland have been a zero-sum game. The all-important feedback loop that rewards good economic stewardship by increasing the taxation take has been missing, and that is the key fact missed from the unionist parties’ perspective.

It took an economist of Mr Keynes’s stature to reveal the often counterintuitive nature of economics and to develop his countercyclical wisdom for Governments, and it is the difficulty of that concept and lack of public understanding of counterintuitive economics that the unionist parties often rely on. That is why they are so united in persevering with their failing austerity agenda.

All the more credit is therefore due to the Deputy First Minister and Cabinet Secretary for Finance, Constitution and Economy, not only for delivering a balanced budget year on year but for doing so within that constraint, following the wisdom of Keynes and proving it in practice. Keynes’s advice was that countercyclical Government spending should concentrate on infrastructure and capital spending. That was the medicine that he prescribed for the ailing economy, and it works.

It is notable that the Scottish economy has outperformed the UK economy—as Murdo Fraser acknowledged—across the whole range of indices since Mr Swinney first put those principles into practice, compared with the 30 preceding years, when it underperformed compared with the UK economy.

It is well known that the multiplier effect enhances the effect of capital spending on infrastructure significantly. It is well known that infrastructure spending creates new jobs and supports existing jobs. It is well known that those effects spread throughout the supply chain and keep on spreading.

What is sometimes not appreciated is how the improved infrastructure in itself helps to improve our long-term economic performance, our productivity and our competitiveness. That is why I am so pleased to see the budget setting out our plans for a further £1 billion extension to the non-profit-distributing pipeline of infrastructure projects. That is why I am so pleased to see projects such as the Forth replacement crossing being delivered so successfully and under budget, as well as projects such as the new south Glasgow hospitals and the ambitious schools for the future building programme, which is investing £1.8 billion in 91 new schools by March 2018. A new school recently opened in Kirkwall, and new schools are planned for Lerwick and Oban, and such projects support jobs across the Highlands and Islands and across Scotland.

That is why I am so pleased about the budget delivering an extra £125 million for housing, bringing this year’s expenditure for housing to £390 million, and that is why I am pleased that we are on target to fulfil our manifesto commitment of delivering 30,000 affordable new homes. That is why I am so impressed that Mr Swinney has been able to deliver such projects against the backdrop of a 26 per cent cut to our capital budget—a very unwise cut.

The Scottish public have had an education as they have observed those enlightened policies in action. They now have an enhanced understanding of the nature of economics and the part that public finances play in that. No longer will the Opposition parties be able to continue pulling the wool over the public’s eyes; no longer will they swallow medicine that is killing and not curing the patient; and no longer will they believe the zero-sum myth of austerity economics.

Mr Swinney is due great credit, not just for delivering a wise and balanced budget once again but because he has followed such wisdom in the knowledge that it is the best stewardship of Scotland’s economy.

Lewis Macdonald (Labour, North East Scotland)

Another year, another budget, but we can truly say that 2015 is a year like no other. The first new national taxes set in Scotland since the act of union will come into force this year and the first phase in the devolution of income tax will come into play next year, with a lot of work still to do. Tomorrow, we will have the first draft of the next Scotland act, which will take forward the next phase of income tax devolution and much more besides.

The stage could hardly be better set for the current Scottish Government to show how it would use increased powers if it had the opportunity to do so. However, the story of the budget will not be about John Swinney boldly delivering a distinctive Scottish agenda; instead, it will be about how the Deputy First Minister changed his tune on tax policy, apparently not in response to the views of Scottish taxpayers but in response to changes elsewhere that were brought in by a Tory chancellor.

It is one thing to claim that the Scottish Government is constrained in what it can do because powers are reserved to Westminster, but it is more surprising to hear that ministers will use their new tax powers to stay in step with the UK Government rather than setting a bold new course of their own. Gavin Brown and Murdo Fraser of course offered a welcome from the Tory benches for the changes that Mr Swinney has made, which certainly speaks for itself.

Mark McDonald (Scottish National Party, Aberdeen Donside)

The member’s colleague Malcolm Chisholm said that he thought that the changes that the cabinet secretary has made will mean that the tax is progressive. Does the Labour Party support or oppose the system that the cabinet secretary has outlined?

Lewis Macdonald (Labour, North East Scotland)

That is an interesting point. Mr Swinney said in October that his policy would be driven by the maxim that taxes should be proportionate to the ability to pay, and he repeated that point today. He said:

“In exercising its first judgments on national taxes, this Government has put fairness, equity and the ability to pay at the heart of what it has done. That is the benefit of putting decisions about Scotland’s future in Scotland’s hands.”—[Official Report, 9 October 2014; c 40.]

However, the change today will cut by half the proposed level of tax on properties that are worth a quarter of a million pounds. That will of course be welcome to those taxpayers, but it is hardly proportionate to the ability to pay and it hardly seems to be making Scottish decisions in the Scottish Parliament. Mr Swinney could have made many other choices without missing his target of remaining revenue neutral. The changes that he has chosen to make to his original proposals are telling.

The question of how to decide on devolved taxes is not just about this year’s budget. The challenge for the Scottish Government on the transfer of tax powers is surely not just to be revenue neutral. If ministers want to make full use of new powers, as they say they do, they will have to make tough decisions. As Patrick Harvie said, that will only get harder from now on. John Swinney signed the Smith agreement, as did Mr Harvie, so he knows better than most just how tough it will be in future for Scotland’s devolved Government to avoid taking responsibility for tough decisions.

Derek Mackay (Scottish National Party, Renfrewshire North and West)

I do not think that Mr Macdonald answered the previous question. Can he explain exactly what the Labour Party’s position is on the rates that have been proposed for land and buildings transaction tax?

Lewis Macdonald (Labour, North East Scotland)

Mr Mackay will recall that, like members of his party, Labour members voted in favour of Mr Swinney’s original proposals, or at least we voted against the Conservative amendments to them. That is where we start from. In the process of further budget discussions, we will be very interested to hear how the Government explains the social equity and justice that lie behind its proposals.

We know that the more decisions on taxation are taken at Holyrood in future, the more future Scottish Governments will have to balance the competing interests of different voters and different taxpayers. That will mean making decisions that some people will not like. If the Scottish National Party has to think again about the first tough decision on raising taxes, the Scottish Labour Party will lay out an alternative direction for both the Scottish Government and the Government of the UK.

We want more front-line funding for health, of course, as has been said today. Perhaps there at least we can find common ground on how best to use Barnett consequentials. We also want a mansion tax on the most expensive properties across the United Kingdom to pay for 1,000 extra nurses in Scotland and to boost the NHS. We want a resilience fund for the Scottish economy, to help when particular sectors in particular places face a severe short-term challenge from workplace closures or job losses. That is within the remit of the Scottish Government and its stewardship of the Scottish economy. A budget of £10 million, as we have suggested, would be enough to allow for meaningful interventions, yet apparently ministers do not want to do that because they do not think that they should be responsible for saving jobs in the oil industry. [Interruption.] I will of course be very interested in hearing from Mr Ewing if he wants to intervene. I heard his point that, as the UK Government had had the benefit of tax revenues, why on earth would the Scottish Government want to pay for economic intervention to protect oil industry jobs?

Fergus Ewing (Scottish National Party, Inverness and Nairn)

Can we cast aside partisan politics and agree that what the industry needs above all is the tax action on the basis of the measures that I set out in my statement to Parliament? Will the Labour Party specifically support those measures?

Lewis Macdonald (Labour, North East Scotland)

As I am sure that Fergus Ewing will know from Ed Balls’s visit to Aberdeen yesterday, the Labour Party has made clear its support for major fiscal changes to support the oil industry. We have yet to hear from the Scottish Government what resource it will put into its responsibility of stewarding the Scottish economy in light of the falls in the price of oil. We also need real action on energy prices. Introducing a cap is the kind of action that a Labour chancellor would take at the earliest opportunity.

When it comes to using the Scottish Parliament’s new powers over income tax, decisions will have to be made that will not be popular with every voter. However, I am hopeful that—although we may not agree on all those issues—the Scottish Government will support our proposals for a Scottish office for budget responsibility. John Swinney signed up to the wise words of the Smith agreement that

“the Scottish Parliament should seek to expand and strengthen the independent scrutiny of Scotland’s public finances in recognition of the additional variability and uncertainty that further tax and spending devolution will introduce into the budgeting process.”

Scottish Labour’s proposal of a Scottish OBR offers the chance to achieve just that.

A fiscal commission with a limited remit, no matter the eminence of those whom Mr Swinney appoints, will not meet the letter or the spirit of the Smith agreement. That will take a truly independent body with scope to assess economic policies in advance and to make the link between raising revenues and spending them. That, of course, is also recommended in the Finance Committee report. The Scottish Government will be responsible not just for making decisions about raising taxes but for the complex business of balancing the books while adjustments are made to the block grant in view of the new circumstances. That will all require new levels of expertise and scrutiny.

Here we are, entering a new era for the Scottish Parliament for the raising and spending of revenues in Scotland. What we need now is not just a Government that responds to Tory tricks from Westminster but a Government that sets out a bold agenda of its own. Perhaps, indeed, the only way to deliver the letter and the spirit of the Smith agreement is to have a Scottish Government that believes in it; then we can really make devolution work.

John Swinney (Scottish National Party, Perthshire North)

Mr Macdonald said that the Scottish Parliament is entering a new era, and it certainly is. I have sat in this place for nearly eight years now, dealing with the budget bills, and today is the first time that Michael Russell has contributed to a budget debate. It was worth the eight-year wait, because we heard from him—in that familiar magisterial style to which we have become accustomed—a thoughtful and substantive analysis of the tax approach that the Government has taken based on the principles set out by Adam Smith. Mr Russell set out his analysis eloquently, and placed the Government’s approach in the context of the challenges that we will face in exercising the wider responsibilities that we will acquire as a result of the Smith commission proposals and the subsequent expansion of the Parliament’s financial powers.

Mr Russell made the point that significant constraints will remain on what the Scottish Government is able to achieve, even with the powers that will be deployed as a result of the Smith process, given that wider powers will remain reserved to the United Kingdom. That observation must underpin our analysis of all the budget questions.

During the debate, a number of members from other political parties set out the propositions that they will advance in the budget negotiations. I take the opportunity at the outset of the spring budget revision process to reiterate what I said in my letter to the spokespeople from the Opposition parties: that I will, along with the Minister for Parliamentary Business, take part in good faith in dialogue on the budget.

Patrick Harvie spoke about the necessity of ensuring that local authorities are properly resourced to consider, assess and take decisions on applications for fracking or other unconventional energy schemes, and I am sympathetic to that point. He also raised points about energy efficiency and sustainable travel, which the Government will consider seriously.

Willie Rennie made points about health and childcare, on which the Government will of course engage. On his point about student loans, I say to him that the Government is already considering issues with regard to the threshold. However, some of the mechanisms for undertaking any changes require Treasury consent as they would affect the annually managed expenditure budgets, over which I have no control. Although I may think that the changes are a good idea, I would have to persuade some Liberals in the Treasury to give their consent. Willie Rennie will know to whom I am referring.

I will, of course, engage in discussion with the Conservatives and the Labour Party on the budget, as I have done already. I will say a bit more on some of the priorities that we have heard about so far.

A number of points have been made on the importance of preventative interventions. Sandra White and Linda Fabiani made strong contributions on prevention, as did Gavin Brown in his closing remarks. The convener of the Finance Committee outlined the committee’s long-standing work on advancing that area of policy, which the Government welcomes.

I will make two points at this stage. First, we all support the shift towards prevention, but I think that we accept that these things take time and will not be delivered overnight. We need to set out clearly to the committees of the Parliament the progress that is being made on prevention. Secondly, we must accept the centrality of preventative interventions to budget sustainability in the long term. The Government views the shift to prevention as critical in dealing with the financial challenges that we will face as a result of the interaction between diminishing public expenditure and our country’s demography, as we need to ensure that quality public services are delivered effectively.

I will say a few words about land and buildings transaction tax and the changes that I have announced today. First, I encourage Parliament to get beyond the somewhat pathetic posturing in the debate. In October, I set out to Parliament the principle that revenue neutrality would be the maxim for taking forward the implementation of the tax. If I had come back today not having observed revenue neutrality, Labour and Conservative members would have accused me of a breach of faith; that is what Labour members do at the slightest opportunity.

Lewis Macdonald (Labour, North East Scotland)

Will the cabinet secretary take an intervention?

John Swinney (Scottish National Party, Perthshire North)

I will give way to Mr Macdonald in a minute. Revenue neutrality was the driver of my position, not a desire to follow the actions of the Conservative Government. I remain true to the commitment that I gave to Scotland about revenue neutrality.

Lewis Macdonald (Labour, North East Scotland)

Does Mr Swinney accept that many options were available to him to achieve revenue neutrality in amending his original proposals other than the option that has followed the Conservative proposals so closely?

John Swinney (Scottish National Party, Perthshire North)

Mr Macdonald has fallen into to same trap as Jackie Baillie. Jackie Baillie attacked the whole proposal and then said, “I must go and look at the detail.” That summed up for all of us the beautiful preparation that Jackie Baillie had done for today’s debate.