Scottish Parliament, 4 November 2015

342 contributions from 53 members. The official report.

Dundee City Council (Funding)

Jenny Marra (Labour, North East Scotland)

1. To ask the Scottish Government when the Cabinet Secretary for Finance, Constitution and Economy last discussed funding for public services with Dundee City Council. (S4O-04728)

John Swinney (Scottish National Party, Perthshire North)

The Scottish Government engages regularly with all local authorities in Scotland, including Dundee City Council, on a wide range of issues.

Jenny Marra (Labour, North East Scotland)

The cabinet secretary will be aware that Dundee City Council has announced that it is to make £28 million in cuts over the next two years. Coupled with the £27 million in cuts that NHS Tayside is to face, that means that we have a £55 million black hole in our finances. Given the relatively high deprivation, deep-rooted health inequalities and low employment in my city, does the cabinet secretary believe that it is fair for his Government to ask Dundee and NHS Tayside to make such deep cuts? What impact does the Government believe those cuts will have on my community?

John Swinney (Scottish National Party, Perthshire North)

The first point to make to Jenny Marra is that, during the past five years, the Scottish Government budget has reduced in real terms by 10 per cent. In that context, the Scottish Government has worked assiduously to protect and deliver public services. That has resulted in a real-terms increase in the health service budget and we have guaranteed that increase for the remainder of the current parliamentary session and for the next parliamentary session.

For local government, it has meant a fair financial settlement in comparison with the significant reductions in public expenditure that local authorities south of the border have faced. The Government will co-operate with public authorities in Scotland as we work through the implications of the spending review on 25 November to ensure that we put in place a sustainable budget that meets the needs of the people of Scotland, including those in the city of Dundee.

Housing Market

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

2. To ask the Scottish Government what action the Cabinet Secretary for Finance, Constitution and Economy is taking to help stimulate the housing market. (S4O-04729)

John Swinney (Scottish National Party, Perthshire North)

Our planned investment of more than £1.7 billion in affordable housing over five years has significantly benefited the many house builders across Scotland who win the contracts to build those homes. Innovative funding and delivery models using charitable bonds, pension finance and guarantees have complemented our traditional affordable housing programme such that we are well on our way to achieving our target of having 30,000 affordable homes built by March 2016.

We have also supported sustainable home ownership with £305 million investment over three years going to the help to buy (Scotland) shared equity scheme, including the £30 million help to buy (Scotland) small developments scheme.

Since 2007, our popular low-cost initiative for first-time buyers, or LIFT, schemes have helped more than 10,000 people on low to moderate incomes to get a foot on the property ladder. For 2015-16, we have allocated £70 million to our open market shared equity scheme.

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

I thank the cabinet secretary for that very detailed answer. Will he confirm that the actions taken by the Scottish Government are helping thousands of Scots to purchase their own homes? Is he further able to confirm that the number of houses sold in Scotland has reached its highest level for more than seven years?

John Swinney (Scottish National Party, Perthshire North)

It is some achievement to see the volume of transactions continue to increase. The data that was released on 27 October shows that 28,019 residential properties were sold, which is an increase of 6.5 per cent on a year ago.

There is no doubt that our actions have assisted that increase. Since 2007, LIFT and the shared equity scheme have helped more than 10,000 people on low to moderate incomes to get a foot on the property ladder. However, we also note that volumes are still well below pre-recession levels and we will continue to work with the industry to maintain the upward trend that we are experiencing.

Kenneth Macintosh (Labour, Eastwood)

Does the cabinet secretary agree with the findings of the commission on housing and wellbeing that Scotland is facing a housing supply crisis, and that we are building fewer houses than we have done for 70 years? Does he also agree with the commission’s provisional target that we should build 23,000 homes a year?

John Swinney (Scottish National Party, Perthshire North)

Mr Macintosh and I have gone over these issues many times in the past few years, and the first point that I would make is that when the Government’s capital budget is reduced by 25 per cent, there are constraints on the capital expenditure that we would like to deploy. For that reason, we have resorted to innovative funding and delivery models, which have helped us to achieve what many people thought was a significant target of 30,000 affordable homes by next March. As I said in my answer to Mr Coffey, we are well on our way to achieving that target by that date.

Of course, there is further unmet demand for housing in Scotland. That is precisely why the First Minister has said that if this Administration is returned in the election next May, we will commit ourselves to a target of 50,000 affordable homes over the lifetime of the next Parliament, as a significant contribution to addressing the demand that is clearly illustrated for housing in Scotland.

Sustainable Economic Growth in Towns

Margaret McCulloch (Labour, Central Scotland)

3. To ask the Scottish Government how it is supporting sustainable economic growth in towns. (S4O-04730)

Fergus Ewing (Scottish National Party, Inverness and Nairn)

Scotland’s town centre first principle, agreed with the Convention of Scottish Local Authorities, and the range of measures that are set out in the town centre action plan set the conditions for and underpin activity that is designed to tackle key issues such as empty shops and diversifying the town centre offer, thereby attracting a range of businesses and services to locate there.

We deliver the most competitive business tax environment in the United Kingdom, with more than two in five rateable properties in Scotland paying zero or reduced rates under the Scottish Government’s small business bonus scheme alone, and further relief is available under our fresh start and new start schemes.

In addition, to support local authorities that remain responsible for local economic development, we have also introduced a substantial new power under the Community Empowerment (Scotland) Act 2015, which gives councils more control over business rates and an opportunity to tailor them to their local area and circumstance. It could be applied in order to attract new investment into our town centres.

Margaret McCulloch (Labour, Central Scotland)

GVA James Barr’s sixth annual report on Scotland’s town centres highlights some encouraging signs of growth. However, it also says:

“Many policies continue to discourage non-retail uses within centres unfairly, despite our research finding that it is these uses that are lifting levels of activity in high streets”.

Given the emphasis on mixed-use town centres in the town centre action plan, what can the Scottish Government do to ensure that town centres thrive once again not just as places to shop but as places to live, learn, visit and invest?

Fergus Ewing (Scottish National Party, Inverness and Nairn)

The member makes a good point. We want a variety of uses in town centres, not only retail. I will undertake to examine the report to which she referred. I think that she has made a useful and constructive suggestion.

I alluded to the fact that powers are being created for local authorities to establish a town centre investment zone, using discretionary rates relief. That is one tool.

It is relevant that, under our reforms of empty property relief, the fresh start relief scheme offers a 50 per cent rates discount for the first years of occupation of certain long-term empty premises. That has been done precisely to provide an incentive to bring empty premises back into use and to encourage diversification of town centres.

Mike MacKenzie (Scottish National Party, Highlands and Islands)

Does the minister agree that the significance of the small business bonus scheme is sometimes understated and is not properly appreciated, and that there has been a year-on-year increase in the number of businesses taking up the available discounts, with 99,000 properties across Scotland now benefiting from the scheme?

Fergus Ewing (Scottish National Party, Inverness and Nairn)

I agree that understatement of the benefits of the small business bonus scheme is a mistake that has been made, although not by me. I have always emphasised that small businesses deserve a better deal. When we became the Administration in 2007, the finance secretary delivered that better deal. Ever since then, the number of small businesses that benefit from the arrangement has risen inexorably and now stands at almost 100,000.

That is providing a lifeline for many businesses, including the Victorian market in Inverness in my constituency. Without the benefit of that reduction in, or elimination of, business rates, I suspect that many of those businesses would not have been able to continue in business. Our pledge is to continue the scheme, and I am grateful to Mr MacKenzie for his campaigning on the issue as always.

European System of Accounts 2010

Malcolm Chisholm (Labour, Edinburgh Northern and Leith)

4. To ask the Scottish Government what discussions it has had with the Office for National Statistics regarding the implications of the European system of accounts 2010. (S4O-04731)

John Swinney (Scottish National Party, Perthshire North)

Scottish Government officials have been working closely with the Office for National Statistics on the implications that the introduction of the European system of accounts 2010 will have for a wide range of issues across the public sector.

Malcolm Chisholm (Labour, Edinburgh Northern and Leith)

Have the discussions led the cabinet secretary to believe that it will be possible to unlock the delayed capital investment without a massive hit on up-front capital expenditure? Have his officials had discussions about university funding, about which there is considerable concern? I believe that Universities Scotland has had discussions and has come to conclusions that are quite different from his.

John Swinney (Scottish National Party, Perthshire North)

The work on the classification of non-profit distributing and hub projects is still under way. We are still involved in discussions with the Office for National Statistics on that point and await the ONS’s decisions. I will advise Parliament, as I have promised to do, when I have that information.

I assure Mr Chisholm and Parliament that a tremendous amount of effort is going into resolving the issues because I want to ensure that the construction projects to which he refers are able to take their course. They are essential to strengthening the Scottish economy, as the economic data have demonstrated.

On the classification of universities, the Scottish Government is clear that universities are autonomous bodies. We do not believe that there is anything in the Higher Education Governance (Scotland) Bill that contravenes the ONS indicators of control. The Government has set out those opinions clearly to Parliament in recent debates.

John Scott (Conservative, Ayr)

The Deputy First Minister will be aware of the concerns of South Ayrshire Council and other local authorities about delays to school building programmes. In my constituency, those delays are affecting Ayr academy and Queen Margaret academy. When will those matters be resolved and how does he intend to resolve the problem with the ONS to allow concerned local authorities such as South Ayrshire Council to proceed with their planned school building projects?

John Swinney (Scottish National Party, Perthshire North)

The Government has undertaken a significant amount of school rebuilding and refurbishing to date. We are working our way through the conditions report on schools to ensure that we have a school estate that is appropriate for the 21st century. A great deal has been achieved already.

The question was about the issues that we face on the forward programme. I assure Mr Scott that the Government is working with all its energy to resolve the issues that the Office for National Statistics has raised. The ESA rules have changed since we commenced our programme and we are exploring and examining the best way to respond to that. We have made proposals to the ONS and we await the outcome of its deliberations on those points. I assure Mr Scott that the issue will be resolved as quickly as it possibly can be and, once it is resolved, I will take action to advance the programme in the most appropriate way in light of the ONS’s decisions.

Land and Buildings Transaction Tax

Murdo Fraser (Conservative, Mid Scotland and Fife)

5. To ask the Scottish Government how much it has collected in land and buildings transaction tax. (S4O-04732)

John Swinney (Scottish National Party, Perthshire North)

The land and buildings transaction tax monthly statistics that are published by Revenue Scotland show that £183 million was raised from the tax in its first six months of operation.

Murdo Fraser (Conservative, Mid Scotland and Fife)

Is that figure in line with, higher or lower than the sums that the Scottish Government expected to raise?

John Swinney (Scottish National Party, Perthshire North)

I will put a caveat on the figure that I shared with Mr Fraser: there is an unresolved issue in relation to the first six months of the financial year, given the effects of forestalling because of the interaction between the tax that we raise and the predecessor tax that the United Kingdom Government put in place.

Such issues have become the subject of discussions with the UK Government. We estimated that land and buildings transaction tax would raise £381 million in the course of this financial year. In my view, the tax that has been collected to date is in line with that estimate and we will continue to monitor that for the remainder of the financial year.

Jim Eadie (Scottish National Party, Edinburgh Southern)

Is the cabinet secretary able to confirm whether receipts of LBTT on the sale of properties for less than £330,000 will show that the doom-mongering of the Conservatives has been completely and utterly without foundation?

John Swinney (Scottish National Party, Perthshire North)

The figures that Registers of Scotland published last week show that house sales in the most recent quarter reached the highest volume for any quarter since April to June 2008, which is very encouraging. A number of commentators have recognised the positive effect that LBTT is having on the Scottish housing market. Christine Campbell, who is Your Move’s managing director in Scotland, recently stated that LBTT has given

“the middle and the lower tiers of the market a new lease of life.”

She added that the

“rapid recent growth in Scotland is grounded in the new LBTT rates, which are stimulating demand at the bottom and middle rungs of the property ladder.”

That is exactly what I intended to do as a consequence of the rates that I set.

Local Authorities (Business Rates)

Hugh Henry (Labour, Renfrewshire South)

6. To ask the Scottish Government whether Renfrewshire Council or any local authority that decides to reduce its business rates would have to pay an equivalent amount to the Scottish Government. (S4O-04733)

John Swinney (Scottish National Party, Perthshire North)

Any reduction by a council of non-domestic rates in its area, under part 11 of the Community Empowerment (Scotland) Act 2015, would be fully funded by that council and its reported rates receipts would not be affected.

Hugh Henry (Labour, Renfrewshire South)

I think that the cabinet secretary just avoided giving an answer, because my understanding—he can correct me if I am wrong—is that any reduction will be funded by the councils but they will have to pay the Scottish Government for the amount by which they reduce business rates. Will he confirm that that is the case and, if it is, does he think that it is acceptable that council services such as education and home care will have to be reduced to make sure that the Scottish Government does not lose a penny?

John Swinney (Scottish National Party, Perthshire North)

I am a bit surprised by Mr Henry’s response to what I thought was a very clear answer. I indicated that the reduction by a council of non-domestic rates in its area would be fully funded by that council and its reported rates receipts would not be affected. That is the answer that I gave him, which clearly addresses the question that he raised with me.

I point out to Mr Henry that local authorities welcomed the granting of the power. The Convention of Scottish Local Authorities gave it a warm welcome, which I think represents the view of local authorities that want to exercise control to make their areas more attractive for investment. I encourage local authorities to take up the opportunity that the Government has created.

Dalzell and Clydebridge Steel Plants (Jobs)

James Kelly (Labour, Rutherglen)

7. To ask the Scottish Government what action it is taking to protect jobs at the Dalzell and Clydebridge steel plants. (S4O-04734)

Fergus Ewing (Scottish National Party, Inverness and Nairn)

I am—as, I am sure, all members are—concerned about the impact that the proposed mothballing of Tata Steel’s operations at Clydebridge and Dalzell would have on the workforce, their families, the local communities and the steel industry in Scotland.

Immediately, when the announcement was made, the First Minister convened a multi-agency task force, of which James Kelly is a member. I chaired the first meeting on 29 October and we will meet again on 13 November, given the urgency of the action that is needed to find an alternative operator for Tata Steel’s plants at Dalzell and Clydebridge. The primary purpose of the task force is to find an alternative operator. The Scottish Government is determined to help to secure a viable future for both plants.

James Kelly (Labour, Rutherglen)

I thank the minister for that answer. Last week, the minister told Parliament that Transport Scotland is working to identify public infrastructure projects that would be relevant to Clydebridge and Dalzell. That stream of work is absolutely urgent in order to secure the future of the plants. What relevant projects has Transport Scotland identified? Also, have any other public agencies identified projects that would be relevant to work that is carried out at Clydebridge and Dalzell?

Fergus Ewing (Scottish National Party, Inverness and Nairn)

I confirm that Transport Scotland is carrying out a review to ascertain what more can be done. It is important to point out that Tata Steel produces rails at the Hayange works in north-east France, so it would not be possible for Clydebridge or Dalzell to provide steel for railway tracks.

However, there are possibilities in shipbuilding. In October we awarded two contracts to Ferguson Marine Engineering Ltd, so there is a possibility in that respect, although not in the immediate future.

Just yesterday I made a personal private visit to Dalzell and had a long discussion with the management and with the trade union and workforce. During that discussion, there was a useful suggestion made that bridges for road projects could use steel that is rolled at Dalzell and quenched and tempered at Clydebridge. That suggestion is being pursued.

Michelle Rennie of Transport Scotland is to visit Tata for a similar discussion. She will take with her experts in procurement for that particular aspect of road works. All other potential aspects are being pursued by Transport Scotland, and a full report will be made to the task force a week tomorrow.

Clare Adamson (Scottish National Party, Central Scotland)

Does the minister share my disappointment that the Scottish Government is being excluded from the European Union talks to discuss the industry’s future?

Fergus Ewing (Scottish National Party, Inverness and Nairn)

I wrote to Sajid Javid on 2 November expressing my disappointment at not having been given the opportunity to participate in a crucial EU-level meeting. I say that simply because I feel that we have a strong case to make, informed by the benefit of a full parliamentary statement and input from across the chamber, in which there was unanimous support, and by a reasonable amount of knowledge that has been garnered from the benefit of speaking to the management, the trade union and individually to members of the workforce.

However, I do not want to dwell on that in a political sense. I am pleased that a European Council emergency competitiveness council will be held on Monday 9 November to discuss the situation, and I have asked that our director for economic development be included as a member of the UK delegation. I hope that that request will be acceded to.

Taxation (Devolution of Powers)

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

8. To ask the Scottish Government what additional powers over tax it considers should be devolved. (S4O-04735)

John Swinney (Scottish National Party, Perthshire North)

The Scottish Government believes that the Scottish Parliament should have full control of all taxes raised in Scotland.

As we set out in “More Powers for the Scottish Parliament” in October 2014 and “Beyond Smith—More Powers for the Scottish Parliament” in June 2015, full fiscal autonomy remains our preferred package of powers, short of independence.

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

Does the cabinet secretary agree that the recent debate on tax credits in Westminster gives a sense of urgency about devolution of those powers to this Parliament so that we can deal with the matter in a humane and sensible way?

John Swinney (Scottish National Party, Perthshire North)

The arguments for ensuring that we can exercise full financial responsibilities are important, not only because that would enable us to ameliorate the challenges that vulnerable people face as a consequence of welfare reforms in the United Kingdom, but because it would give us the ability and the capacity to grow and strengthen the Scottish economy. In my view, one of the considerable weaknesses of the Smith commission proposals remains that they do not give us sufficient powers to grow and expand the Scottish economy. That balance of powers is required to enable us adequately and fully to address the needs of the people of Scotland.

Superfast Broadband

George Adam (Scottish National Party, Paisley)

9. To ask the Scottish Government whether it will provide an update on the roll-out of superfast broadband. (S4O-04736)

John Swinney (Scottish National Party, Perthshire North)

The Scottish Government’s digital Scotland superfast broadband programme is investing more than £410 million of public and private sector funds to extend the coverage of fibre broadband to 95 per cent of Scottish premises by the end of 2017, with an interim milestone of 85 per cent coverage by March 2016.

The programme is progressing through two regional projects: one that is led by Highlands and Islands Enterprise, and another that is led by the Scottish Government. The DSSB programme is a key step in the Scottish Government’s aim for Scotland to become a world-class digital nation by 2020.

We are less than half way through the physical roll out. However, we are already more than half way towards our 2017 target of 750,000 homes and businesses, with more than 460,000 premises now having access. That is the fastest deploying network in the United Kingdom, and we are enabling an average of 7,000 homes and businesses each week throughout Scotland. Without the intervention programme, only 66 per cent of Scotland’s homes and businesses would have access to fibre broadband services.

We have also set up community broadband Scotland to work with communities that are unlikely to have superfast coverage delivered through the DSSB programme and to support them to design and implement sustainable broadband solutions.

George Adam (Scottish National Party, Paisley)

I thank the cabinet secretary for that detailed answer. A number of my constituents have contacted me regarding exchange-only lines. Can he outline how digital Scotland and its partners are working to deal with exchange-only lines?

John Swinney (Scottish National Party, Perthshire North)

A number of homes and businesses throughout Scotland are connected directly to their local exchange via an exchange-only line. Those lines present a greater engineering challenge to address than those that are connected via roadside cabinets. However, the good news is that a number of solutions are available under the Scottish Government’s digital Scotland programme. Those technical solutions are often complex and time consuming and they are significantly more expensive than standard solutions, but the programme will always look to deploy the solution that is best suited to each situation, while maintaining our value-for-money criteria. Digital Scotland has already enabled more than 80,000 exchange-only homes and businesses across Scotland, and the number is increasing every week.

Elaine Smith (Labour, Coatbridge and Chryston)

There are a number of supplementary questions. I will try to take them all if the questions and answers are brief.

Lewis Macdonald (Labour, North East Scotland)

The cabinet secretary will be familiar with the superconnected cities broadband voucher scheme, which the United Kingdom Government closed six months early the other week, no doubt as a result of high demand from small and medium-sized enterprises in our major cities. What discussion has the Scottish Government had with the UK Government about reopening or replacing that scheme in due course?

John Swinney (Scottish National Party, Perthshire North)

A number of developments in the superfast broadband programme are currently under consideration. As I have reported to Parliament, the Government has a gain-share element of the contract, which is enabling us to extend the roll-out in the existing contract. We will continue to explore every opportunity to support the roll-out of superfast broadband. It is particularly important that businesses become engaged in the process, because there is a strong platform for competitiveness in the years to come.

Liam McArthur (Liberal Democrat, Orkney Islands)

The cabinet secretary referred to Highlands and Islands Enterprise taking forward the programme, which I very much welcome. He will be aware that the target for coverage across the region is around 84 per cent. He may also be aware that, in places such as Orkney, coverage is likely to fall short of that, at around 75 per cent. Does he believe that it should be a priority, both for community broadband Scotland and for any additional investment, to bring areas such as Orkney that fall below the regional average up to that regional average and beyond?

John Swinney (Scottish National Party, Perthshire North)

I recognise the importance of the issue to Mr McArthur’s constituents. I have set out that our target is to get to 95 per cent of Scottish premises by the end of 2017 under the DSSB programme. The remaining 5 per cent are still very much in my sights, in terms of how we can find solutions for those individuals and premises. Community broadband Scotland has a particular role to perform in working with communities to identify the most appropriate solutions, and I know that many projects are already in scope with community broadband Scotland to enable that to happen.

I assure Mr McArthur and his constituents that finding solutions to the challenges for people who are outwith the core programme that we are rolling out remains uppermost in the Scottish Government’s mind and in the design of the programme. We will ensure that every opportunity is taken to get those services delivered as speedily as possible to some constituents who currently cannot see where their services will come from.

The Deputy Presiding Officer

I apologise to the other members who wanted in, but I am afraid that I need to move on.

Partnership Action for Continuing Employment (Professional Footballers)

Mark Griffin (Labour, Central Scotland)

10. To ask the Scottish Government what support the PACE team can provide to unemployed professional footballers who have been released by their club. (S4O-04737)

Fergus Ewing (Scottish National Party, Inverness and Nairn)

Partnership action for continuing employment is a Scottish Government initiative that is dedicated to helping individuals and employers with the advice and support that they need when faced with redundancy. That support is also available to individuals whose contracts have not been renewed, and PACE support is therefore available to unemployed professional footballers who have been released by their club.

PACE offers free and impartial advice and support that is tailored to meet individual needs and local circumstances. That includes one-to-one counselling; information on rights, entitlements—including benefits entitlements—and tax calculation; help with job search, writing CVs, application forms and covering letters, and preparing for interviews; and help with identifying learning and training opportunities, starting up a business, making the most of one’s money, and coping with redundancy-related stress.

Mark Griffin (Labour, Central Scotland)

Hundreds of young footballers are signed by clubs every year on professional youth contracts. It has been suggested that up to 95 per cent of those young players fail to make the grade and are released. What arrangements does the Scottish Government have with the Scottish Football Association or the Scottish Professional Football League to support young people who find themselves unemployed and who may not have considered an alternative career? Will he ask the PACE team to investigate the situation and offer support for retraining and seeking alternative employment?

Fergus Ewing (Scottish National Party, Inverness and Nairn)

Mr Griffin has raised a serious and relevant issue. I can assure him that—as I think he well knows—both football clubs and the football authorities take very seriously their responsibility to all their employees, paying particular regard to the fact that many of those employees may leave their employment at an early age.

As Mr Griffin has raised the matter in the chamber today, I assure him that I will ask PACE specifically to seek to engage with both the SPFL and the SFA to check that there is nothing more that can be done. If there is more that can be done, I am sure that PACE will be ready to do it.

English Votes for English Laws

Bill Kidd (Scottish National Party, Glasgow Anniesland)

11. To ask the Scottish Government what analysis it has carried out on the possible impact on its finances of English votes for English laws. (S4O-04738)

John Swinney (Scottish National Party, Perthshire North)

The Scottish Government is concerned that the EVEL procedures will exclude Scottish MPs from key decisions on bills that will affect Scottish finances through the Barnett formula. Having received evidence from the Scottish Government, the Procedure Committee at the House of Commons has highlighted Barnett consequentials as an issue to be examined when it reviews the operation of standing orders.

Now that the House of Commons has adopted EVEL procedures, effective inter-governmental co-operation on all Westminster bills is even more crucial.

Bill Kidd (Scottish National Party, Glasgow Anniesland)

Many of my constituents share worries that cuts by the Westminster Government to areas of responsibility that come under EVEL will be reflected in the Barnett consequentials that come to the Scottish Government. Can the cabinet secretary tell me whether any debates or discussions have been arranged to address the issue?

John Swinney (Scottish National Party, Perthshire North)

The issue will be pursued through existing intergovernmental machinery. Many such issues would be better protected if we had greater provision in the Scotland Bill on the entrenchment of procedures under the Sewel convention, which is the proper statutory approach to consideration of questions on the subject. I assure Mr Kidd that the issue will be assiduously monitored by the Scottish Government, as we determine the implications of that significant change to parliamentary procedures.

Chancellor of the Exchequer (Meetings)

Bob Doris (Scottish National Party, Glasgow)

12. To ask the Scottish Government when the Cabinet Secretary for Finance, Constitution and Economy last met the Chancellor of the Exchequer and what issues were discussed. (S4O-04739)

John Swinney (Scottish National Party, Perthshire North)

I last met the Chancellor of the Exchequer on 8 June 2015. We discussed matters relating to the fiscal framework and the economy. I have also met the Chief Secretary to the Treasury on four occasions since June to progress negotiations on the fiscal framework for Scotland.

Bob Doris (Scottish National Party, Glasgow)

I ask the cabinet secretary to draw to the United Kingdom chancellor’s attention the 250,000 working families in Scotland who will lose at least £1,500 a year due to tax credit cuts. Those cuts are particularly relevant to my constituents, given that 60 per cent of Glasgow kids stay in households that rely on tax credits. I ask the cabinet secretary to redouble his efforts and to urge the UK Government to scrap this pernicious attack on the working poor in Glasgow and across Scotland.

John Swinney (Scottish National Party, Perthshire North)

The chancellor will be well aware of the difficulties that are being created by his tax credit proposals, given the decisions of the House of Lords last week. We await the outcome of the spending review at the end of the month, which will determine the final form of the proposals that are taken forward, and the response of the UK Government.

I agree with Mr Doris about the pernicious effects of the changes. They will cause hardship to people who are working very hard to get on in life, and I associate the Government with his remarks about the need to ensure that the chancellor does not progress changes of this nature.

Onshore Coal and Gas Extraction Licensing (Devolution)

John Wilson (Independent, Central Scotland)

13. To ask the Scottish Government what meetings it has had with the United Kingdom Government regarding the devolution of onshore coal and gas extraction licensing. (S4O-04740)

Fergus Ewing (Scottish National Party, Inverness and Nairn)

All coal extraction licensing, including for underground coal gasification, is the responsibility of the UK Coal Authority and is therefore a reserved matter. The devolution of coal licensing has not been discussed with the UK Government at this time.

If the member is referring to conventional onshore gas extraction, I can confirm that the licensing process for all onshore gas extraction is due to be devolved to the Scottish Parliament, in line with recommendations from the Smith commission. The Scottish Government continues to engage with the UK Government about the plans for devolution and the Scotland Bill 2015, but there have been no recent discussions about this specific matter.

John Wilson (Independent, Central Scotland)

As the minister will be aware, I have submitted a number of written questions to the Scottish Government that relate to this issue, which is one that I and a large part of the Scottish public are concerned about. What consultation does the Scottish Government plan to have with local authorities and community groups on the transfer of licensing powers over gas extraction? When are those powers expected to be transferred to the Scottish Government?

Fergus Ewing (Scottish National Party, Inverness and Nairn)

I can confirm that the member has raised the matter on a number of occasions.

We engage regularly with local authorities about the discharge of all our responsibilities in so far as they affect local interests. This particular interest will be no exception. I can advise the member that in the near future I will be meeting Stephen Hagan, the economic development spokesperson for the Convention of Scottish Local Authorities, and I will certainly be raising these matters with the local authorities. We need to do so in preparation for the transfer of licensing powers, whenever that occurs. I am not sure that the precise date of transfer has yet been settled by the Westminster Parliament, but I hope that it will be settled soon.

The Deputy Presiding Officer

Sarah Boyack has a brief supplementary; please provide a brief answer.

Sarah Boyack (Labour, Lothian)

How will the minister ensure that the research that comes under the remit of the Scottish Government’s moratorium will apply to projects that are currently under licence or under planning?

Fergus Ewing (Scottish National Party, Inverness and Nairn)

The research programme that we have set out is extremely comprehensive in relation to unconventionals. The research will cover all aspects of such matters as the possible impact on the environment, on transport and on traffic as well as the economic issues thereanent.

There have been no planning applications for hydraulic fracturing, so far as I am aware, so I do not think that there are any current applications or matters for which the research would need to consider the position in Scotland. Certainly no applications have been granted. It is difficult to see how the research can encompass developments that have not yet taken place.

If I have in any way misunderstood the question, or if the member has any other matters to raise, she should not hesitate to write to me and I will endeavour to reply as quickly as possible.

Social Enterprise Businesses (Financial Support)

Chic Brodie (Scottish National Party, South Scotland)

14. To ask the Scottish Government what plans the Cabinet Secretary for Finance, Constitution and Economy has to provide financial support for businesses in the social enterprise sector in the south of Scotland. (S4O-04741)

John Swinney (Scottish National Party, Perthshire North)

Scotland is regarded as world leading in the support that it provides to social enterprise. The Scottish Government is committed to supporting and investing in the sector as part of the development of a capable, sustainable and enterprising third sector. The Scottish Government has maintained funding of £24.5 million to the third sector in 2015-16. The detail of our forthcoming spending plans will be set out in the Scottish budget.

Chic Brodie (Scottish National Party, South Scotland)

Social enterprise in Scotland is thriving, with 5,200 companies now operating—a 42 per cent increase in the past 10 years—and a net worth of more than £3 billion. The cabinet secretary is to be congratulated on his personal commitment to the sector’s success. Will the Scottish Government expand its commitment to social enterprises by asking local authorities in the south of Scotland to further engage with those enterprises by outsourcing to them and having them provide non-core local services and activities and, in doing so, secure community involvement?

John Swinney (Scottish National Party, Perthshire North)

I agree very much with Mr Brodie’s suggestion. There is an opportunity for us to redesign public services to involve social enterprises in a fashion that makes a real impact on the lives of individuals in Scotland, particularly in some of the isolated locations in the south of Scotland that are represented by Mr Brodie. I encourage all public authorities to engage constructively with social enterprises to find ways in which the sector can make a more profound contribution to our economy and to the delivery of public services.

National Health Service Boards (Funding Formula)

Nanette Milne (Conservative, North East Scotland)

15. To ask the Scottish Government what assessment the Cabinet Secretary for Finance, Constitution and Economy has made of the future funding formula for NHS boards. (S4O-04742)

John Swinney (Scottish National Party, Perthshire North)

The national resource allocation committee formula is used to inform funding for NHS boards. It is calculated independently. Although NRAC shares are regularly subject to revision and refinement, there are no current plans to change the use of that formula in the future. We remain committed to moving all boards to being no greater than 1 per cent below NRAC parity. That commitment is reflected in the £420 million that has been invested by the Scottish Government in parity funding since 2012-13.

Nanette Milne (Conservative, North East Scotland)

Given that NHS Grampian has been underfunded per head of population in all but one year of the Parliament, what assurance can the cabinet secretary give that the health board will not fall behind again in the foreseeable future?

John Swinney (Scottish National Party, Perthshire North)

As I explained in my earlier answer, the Scottish Government has taken action to address the issues where boards are more than 1 per cent below NRAC parity. That will remain our position in forthcoming years. Grampian has had a total of £29 million allocated to it in 2015-16 specifically to accelerate movement to NRAC parity. The Government will of course consider all those issues as part of the budget process that follows the United Kingdom spending review.

The Deputy Presiding Officer

Thank you, cabinet secretary. That concludes question time.

Supporting Scotland’s Children

Elaine Smith (Labour, Coatbridge and Chryston)

The next item of business is a debate on motion S4M-14688, in the name of Jackie Baillie, on supporting Scotland’s children.

Jackie Baillie (Labour, Dumbarton)

Today is a historic day for the Scottish Parliament and a defining day for devolution. The members of this Parliament are going to look ahead to the future and lay out their plans to transform the lives of people in this country using the new powers that are coming to the Parliament. I have to say that, if the Scottish National Party does not support our motion today, that will confirm once and for all that the politics of grievance is more important to the SNP than helping working families in Scotland.

We have the power to make change; we have the money to pay for that change. The question is, does the SNP have the political will? Scottish politics is about to get real and it is not before time. At the Scottish Labour conference in Perth last weekend, Kezia Dugdale outlined Labour’s plans to protect working families. Scottish Labour will restore in full the money for tax credits.

Scottish Labour will make different choices on tax from the SNP Government in Edinburgh and different choices from the Tory Government in London. We would not implement the Tory tax cut for higher-rate earners; we would not implement the SNP’s tax cut for airlines. Tax cuts actually cost money. The SNP spends money to cut a tax, but we would spend that money differently. We would use that revenue to restore the money lost from tax credits for families in Scotland, using the new powers that are coming to the Scottish Parliament through the Scotland Bill.

Murdo Fraser (Conservative, Mid Scotland and Fife)

Will Jackie Baillie spell out how much money will be raised by the tax changes that she proposes?

Kevin Stewart (Scottish National Party, Aberdeen Central)

Will Ms Baillie give way on that point?

Jackie Baillie (Labour, Dumbarton)

I will, in a second.

The SNP wants to hide behind the constitution. Stronger for Scotland? The SNP is not stronger for working families. The First Minister said that she wants our country’s motto to be “Can-do Scotland”. I agree with that, too. It is a pity that she leads a can’t-do Government.

Kevin Stewart (Scottish National Party, Aberdeen Central)

In 2013, Ms Baillie said:

“I’m not saying that, y’know, we can’t develop our own welfare system; I’m saying we shouldn’t develop our own welfare system.”

What has changed her mind and why does she not want all the welfare powers to be devolved to this Parliament?

Jackie Baillie (Labour, Dumbarton)

It is typical of SNP members to hark back to the past. Fifty-five is greater than 45—they did not win the referendum. The people of Scotland’s settled will is to have a partnership with the UK Government.

Let me talk about tax credits. [Interruption.]

The Deputy Presiding Officer

Order, please, particularly on the Government front bench.

Mark McDonald (Scottish National Party, Aberdeen Donside)

How?

Jackie Baillie (Labour, Dumbarton)

Clause 21 of the Scotland Bill gives us to the power to do that. I quote the Scotland Office:

“Holyrood will be able to top up payments to people in Scotland who are entitled to a reserved benefit. These payments will be in addition to the reserved benefits and will allow the Scottish Government to provide extra money to people on reserved benefits where they consider it necessary.”

The independent experts at the Scottish Parliament information centre agree that there is the power to top up tax credits, as do the independent experts at the House of Commons library. [Interruption.]

Fiona McLeod (Scottish National Party, Strathkelvin and Bearsden)

Is Ms Baillie not aware that the top-up of reserved benefits can happen only in cases of severe hardship and that if someone has had their benefit taken off them, the benefit can no longer be topped up? [Interruption.]

The Deputy Presiding Officer

I will give you the time back.

Jackie Baillie (Labour, Dumbarton)

Thank you, Presiding Officer.

What is fascinating is that the member clearly does not understand the detail that is there. [Interruption.]

The Deputy Presiding Officer

Order, please.

Jackie Baillie (Labour, Dumbarton)

How many times does she need to be told? The UK Government, SPICe and the independent experts at the House of Commons library all say that we can top up reserved benefits.

Let us talk about independence for a minute, because I know that SNP members are keen to do that. It was just over a year ago that the SNP tried to claim that an independent Scotland could share the administration of welfare with the rest of the UK. Now it is trying to claim that a devolved Scotland with powers over tax and welfare cannot restore the money for tax credits. How absurd is that? A party of Government that claimed that after independence it would be able to run a different welfare system using the UK system now pretends that it is impossible to run a different system inside the UK, even when the UK Government is offering to allow it to do just that. Alex Neil should be embarrassed to be peddling such nonsense. He should be especially embarrassed, given that he is doing it to avoid protecting working families.

Politics is about priorities and values. Joe Biden said:

“Don’t tell me what you value. Show me your budget and I’ll tell you what you value.”

Instead of hiding behind the constitution and peddling the familiar politics of grudge and grievance, the SNP should try something new. Maybe it should show us the money. Alex Neil should just tell us what is more important to him, his party and his Government—the incomes of working-class families or the price of a business-class flight.

The SNP has the power and the money, but does it have the political will?

I move,

That the Parliament believes that the UK Government’s proposed changes to tax credits would leave working families worse off and calls on the Scottish Government to restore tax credits to families using the new powers being devolved.

Alex Neil (Scottish National Party, Airdrie and Shotts)

Last night, Jackie Baillie voted with the Tories to spend £167 billion on replacing Trident and building a new generation of weapons of mass destruction. I find it incredible that, less than 24 hours later, she is still leading for Labour as a spokesperson on public services. How can Labour have any credibility on public services when its cheerleader in this debate voted to spend £167 billion on warfare instead of on welfare?

To be fair to Jackie Baillie—I am always fair to Jackie Baillie—her colleagues in London also failed to oppose the Tories’ Welfare Reform and Work Bill. Indeed, the then acting leader of the Labour Party, Harriet Harman, wanted to vote for it. At the end of the day, Labour eventually agreed merely to abstain, but at no point did I hear Jackie Baillie criticise Harriet Harman for wanting to vote for that Tory bill.

Jackie Baillie (Labour, Dumbarton)

Will the cabinet secretary take an intervention?

Alex Neil (Scottish National Party, Airdrie and Shotts)

No. [Interruption.]

The Deputy Presiding Officer

Order.

Alex Neil (Scottish National Party, Airdrie and Shotts)

Jackie Baillie made it clear during the referendum that she is opposed to social security powers coming to this Parliament. Had Jackie Baillie had her way, with the result that no powers would be coming to this Parliament, we would not now be getting the power to reverse the Tory tax credits cuts—

The Deputy Presiding Officer

Would you sit down please, cabinet secretary? Rhoda Grant has a point of order.

Rhoda Grant (Labour, Highlands and Islands)

I would like to ask for your guidance, Presiding Officer. I thought that members had to speak to the motion for debate and that it is not in order to speak to the motion for the previous day’s debate.

The Deputy Presiding Officer

Thank you, Ms Grant. The cabinet secretary is opening with debating points. He is speaking about welfare, and it is entirely up to me whether I stop him.

Cabinet secretary—continue to speak to the motion.

Alex Neil (Scottish National Party, Airdrie and Shotts)

Right, Presiding Officer. Labour members do not like the truth.

If we had listened to Jackie Baillie and this Parliament was therefore to be denied social security powers, we would not be in the position that we are in now, whereby we will be able to undo the dirty work of the Tories on some tax credits. [Interruption.]

The Deputy Presiding Officer

Order, please.

Alex Neil (Scottish National Party, Airdrie and Shotts)

It is no wonder that the Scottish Labour Party has no credibility when it comes to fighting the Tory cuts. Unlike the Labour Party, the SNP has fought the welfare cuts tooth and nail at every opportunity while Labour has tried to get into bed with the Tories.

The Deputy Presiding Officer

Cabinet secretary, could you address your remarks through the chair, please?

Alex Neil (Scottish National Party, Airdrie and Shotts)

I am doing so.

Unlike the Labour Party, we will not run up the white flag while there is still a realistic chance of forcing the Tory Chancellor of the Exchequer to amend drastically his proposals for tax credits cuts when he makes the autumn statement. Those cuts will do enormous damage to the living standards of some of the poorest working people in Britain. We estimate that in Scotland the impact of the proposed changes will be that 250,000 working households will lose an average of £1,500 a year in tax credits.

Johann Lamont (Labour, Glasgow Pollok)

Will the cabinet secretary give way?

Alex Neil (Scottish National Party, Airdrie and Shotts)

That impact is just from the changes that are to be brought in next April. In the longer term, if the full set of cuts were to be implemented, low-income households with children could lose an average of £3,000 a year. That is against a backdrop of a cumulative total of £6 billion having been lost to the Scottish social security budget through previous cuts.

Johann Lamont (Labour, Glasgow Pollok)

Will the cabinet secretary give way?

The Deputy Presiding Officer

The cabinet secretary is not giving way, Ms Lamont.

Alex Neil (Scottish National Party, Airdrie and Shotts)

This year alone, there will be cuts of just under £2.5 billion in Scotland. Unlike Labour, the SNP will continue to demand further amendments to the Scotland Bill to give the Scottish Parliament power over all tax credits policy. I hope that Labour members will not listen to Jackie Baillie again but will agree that it is too dangerous to leave tax credits under the control of the Tories at Westminster.

Labour has to give a clear commitment to support the SNP’s amendments to the Scotland Bill to ensure that the Scottish Parliament gets the power to do what Labour says it wants to do. If Labour does not support those amendments, it will have no credibility in relation to tax credits policy.

That said, I also welcome the new amendments that the UK Government has tabled today, which go much closer to what we had asked for in terms of the powers that are required. As the Scottish Parliament information centre has confirmed, until the new amendments, which Jackie Baillie clearly did not know about—[Interruption.]

The Deputy Presiding Officer

Order, please.

Alex Neil (Scottish National Party, Airdrie and Shotts)

Until the new amendments were placed on the order paper in the House of Commons, the reality was that we would not have had the power to do all that Labour wants.

Jackie Baillie (Labour, Dumbarton)

Will the cabinet secretary give way?

Alex Neil (Scottish National Party, Airdrie and Shotts)

Jackie Baillie would not take an intervention from me.

Jackie Baillie (Labour, Dumbarton)

The cabinet secretary did not ask for one.

The Deputy Presiding Officer

Order, Ms Baillie. The cabinet secretary is not taking an intervention.

Alex Neil (Scottish National Party, Airdrie and Shotts)

I will not be drawn down by them, Presiding Officer.

Three weeks from today—

Murdo Fraser (Conservative, Mid Scotland and Fife)

Will the cabinet secretary give way?

Alex Neil (Scottish National Party, Airdrie and Shotts)

I will give way in a minute.

Members: Oh!

Three weeks from today, we will find out whether George Osborne will revise or refine his tax credits proposals when he makes his spending review statement in the House of Commons. The SNP will continue to demand total reversal of the tax credits cuts in the autumn statement, but if the Tories continue to force through changes that are to the detriment of hard-pressed working families in Scotland, the Scottish Government will not stand by idly and watch the living standards of our poorest families fall off a cliff. Once we know the facts, the shape and the content of the chancellor’s final tax credits proposals, we will consider carefully what action needs to be taken to protect the living standards of our most vulnerable children and families. [Interruption.]

The Deputy Presiding Officer

Order, please.

Alex Neil (Scottish National Party, Airdrie and Shotts)

We will give urgent serious consideration to the consequences for the people of Scotland that will arise from the chancellor’s statement on 25 November. We will consider what corrective action needs to be taken on tax credits, when it needs to be taken and how it should be funded and administered. [Interruption.]

The Deputy Presiding Officer

Order, Ms Baillie.

Alex Neil (Scottish National Party, Airdrie and Shotts)

I will now take Murdo Fraser’s intervention.

Murdo Fraser (Conservative, Mid Scotland and Fife)

I am very grateful to the cabinet secretary for giving way. In relation to the point that he made just a moment ago, can he confirm his understanding that the new amendments to the Scotland Bill that he has mentioned will, if agreed to, give this Parliament the power, if it chooses, to replace in full any reduction in tax credits?

Alex Neil (Scottish National Party, Airdrie and Shotts)

The amendments that were tabled today should give the Scottish Parliament that power. However, none of the amendments that were tabled before today would have done that. [Interruption.]

The Deputy Presiding Officer

Ms Baillie!

Alex Neil (Scottish National Party, Airdrie and Shotts)

That has been confirmed by various people, including the great John McTernan from the Labour Party.

We will properly address the needs of people who will be affected by cuts in tax credits. We will look at new claimants, which Labour has not done, and we will look at the time gap between the implementation of tax credits changes and the date from which the Scottish Parliament will have the power to fill the gaps, which Labour has not done. For example, the policy levers that Labour has referred to will not be devolved to us until next year, the power to set the higher rate threshold for income tax will come to the Scottish Parliament from April 2017 at the earliest, and responsibility for air passenger duty will not be devolved until 2018.

Labour has not done its homework. It has tried to work things out on the back of a postage stamp. As a serious Government, we will do the job properly. We will establish the most effective way to administer top-ups to tax credits, we will properly cost our proposals before we bring them before the Parliament, and we will identify where any additional funding will come from. Unlike Labour, we will not draw up our proposals on a whim without proper research and consideration. We will ensure that we get it right for the people of Scotland. [Interruption.]

The Deputy Presiding Officer

Order, please, while we hear the cabinet secretary conclude.

Alex Neil (Scottish National Party, Airdrie and Shotts)

Unlike many people in the Labour Party, we will continue to fight against the Tory tax credits cuts and other unfair cuts in social security benefits. Unlike Labour, we will deliver for the people of the Scotland.

I move amendment S4M-14688.3, to leave out from “and calls on” to end and insert:

“welcomes the action that the Scottish Government has already taken to offset UK Government welfare cuts, including mitigation of the so-called bedroom tax and the establishment of the Scottish Welfare Fund; notes that there is currently no proposed power in the Scotland Bill that would enable the Scottish Government to restore all tax credits; calls on all parties in the House of Commons to vote for an amendment that would devolve full responsibility for child and working tax credits to the Scottish Parliament at the report stage of the Bill; further notes that Labour’s sums simply do not add up and that it plans to pay for its policy using money that it has previously earmarked for education, and agrees that the Scottish Government will set out credible, costed proposals to further mitigate these Conservative welfare cuts following the comprehensive spending review”.

Johann Lamont (Labour, Glasgow Pollok)

Will the member give way?

Murdo Fraser (Conservative, Mid Scotland and Fife)

I will give way in a second.

The changes that are being introduced by the current Conservative Government, coupled with the introduction of the national living wage and record increases in the income tax personal allowance, mean that eight out of 10 working households will be better off in 2017-18 by an average of £130.

Johann Lamont (Labour, Glasgow Pollok)

I do not accept Murdo Fraser’s premise in relation to tax credits. However, can he explain to me why, in this period of transition to a high-wage, low-welfare economy, the poorest families in our communities have to suffer right now?

Murdo Fraser (Conservative, Mid Scotland and Fife)

I will respond directly to that point, which is the same challenge that Jackie Baillie made.

We accept that there is an issue with the transition as the national living wage kicks in. That is exactly the point that Ruth Davidson raised some weeks ago; she has raised it in public and in political cabinet on a number of occasions. It has also been raised by other people in the Conservative Party, among them the leader of the Welsh Conservative Party, the Mayor of London and a number of Conservative back benchers, to whom Jackie Baillie referred. We look forward to the autumn statement and to hearing from the chancellor how he will address those concerns, many of which we share.

Today, however, we see Labour’s solution.

Jackie Baillie (Labour, Dumbarton)

Will the member take an intervention?

Murdo Fraser (Conservative, Mid Scotland and Fife)

No. I need to make some progress.

Labour’s solution is to propose a hike in taxes solely for people in Scotland, which will put us at a competitive disadvantage in relation to the rest of the United Kingdom. We see Labour planning to reintroduce a 50 per cent top rate of tax—but in Scotland only. How much money would that raise? Not even Kezia Dugdale seems to know the answer to that question. In that august publication, Holyrood magazine, she told its editor, Mandy Rhodes, that it would raise

“up to £100 million. But bluntly, Mandy, it could also raise zero.”

Jackie Baillie (Labour, Dumbarton)

Will the member take an intervention?

Murdo Fraser (Conservative, Mid Scotland and Fife)

Yes. Maybe Jackie Baillie can tell us the answer to the question, because her leader does not seem to know.

Jackie Baillie (Labour, Dumbarton)

She does know, actually. We were encouraged—as I hope Murdo Fraser will be—by HM Revenue and Customs’s comments about pursuing high earners who might, through behavioural change, seek to pay their taxes elsewhere. The estimated haul from that rise would be £80 million to £100 million. I hope that the member will accept that. However, might I ask him whether he agrees with the Institute of Fiscal Studies’s comments about the national minimum wage?

The Deputy Presiding Officer

Hurry up, please, Ms Baillie.

Jackie Baillie (Labour, Dumbarton)

The key fact is that the increase in the minimum wage simply cannot provide—

The Deputy Presiding Officer

Ms Baillie—hurry up, please.

Jackie Baillie (Labour, Dumbarton)

—full compensation for the majority of losses that will be experienced by tax credits recipients. That is just arithmetically impossible. Does Mr Fraser agree?

The Deputy Presiding Officer

I will give Murdo Fraser a minute back.

Murdo Fraser (Conservative, Mid Scotland and Fife)

Thank you, Deputy Presiding Officer.

I suggest to Jackie Baillie that she read the article in Holyrood magazine to which I referred, in which her leader said that she does not know how much money would be raised. That just makes clear the level of Labour’s economic literacy: by the Labour leader’s admission, Labour is proposing, in order to pay for its spending commitments, a measure that might well raise nothing. [Interruption.]

The Deputy Presiding Officer

Order.

Murdo Fraser (Conservative, Mid Scotland and Fife)

There are only some 14,000 higher-rate taxpayers in Scotland, many of whom operate businesses on a cross-border basis. The impact of an additional 5 per cent hike in their tax would be enough to send a large proportion of them south of the border, which would potentially leave us—as Kezia Dugdale is prepared to admit—with zero. However, it could actually be worse than that, because we could end up raising less money by losing all the revenue from those high earners if they were to relocated elsewhere. Once again, Labour is—true to form—completely clueless when it comes to understanding taxation and how the issues should be approached.

However, to give Labour credit, at least it is setting out its stall. Labour realises that this Parliament is at last getting new powers over tax and welfare. Labour is setting out how, as an old-style socialist party, it will use those powers to hike taxes in order to increase public spending. I think that Labour is fundamentally wrong in aiming to do that. I believe that Labour would put Scotland at a serious competitive disadvantage. However, at least Labour is making a case.

We now need to hear from the SNP what it is going to do. Will the SNP stand with the Labour Party in hiking taxes in Scotland in the knowledge that that will reduce the tax-take and leave public services in Scotland short-changed, or will the SNP stand with us in resisting further tax rises and seek to create a more competitive Scotland that welcomes entrepreneurs and aims to grow businesses and personal wealth?

The Deputy Presiding Officer

Draw to a close, please, Mr Fraser.

Murdo Fraser (Conservative, Mid Scotland and Fife)

I listened carefully to what the cabinet secretary had to say on the issue, and he used the words “will consider carefully” and “urgent serious consideration” about it. He cannot hide for much longer. Sooner or later we will know the answers, and on which side the SNP stands.

I have pleasure in moving the amendment in my name.

I move amendment S4M-14688.1, to leave out from “believes” to end and insert:

“considers that, under the last Labour UK administration, nine out of 10 working families with children became eligible for tax credits while spending spiralled out of control; believes that this growth went far beyond what was envisaged when the current system of tax credits was introduced and has contributed to the subsidising of low wages; welcomes proposals to reduce expenditure while seeking to build a high wage, lower tax and lower welfare society; anticipates announcements in the Autumn Statement on what more can be done to ensure that changes are applied in the fairest way possible; considers that Scotland’s children would be best supported by growing up in a thriving economy with high levels of employment, good-quality education and appropriate provision for childcare, and calls on the Scottish Government to reject proposals that would increase the burden of taxation in Scotland and put the country at a competitive disadvantage relative to other parts of the UK”.

James Kelly (Labour, Rutherglen)

On a point of order, Presiding Officer. I seek your guidance on the competence of the SNP amendment, specifically the statement

“there is currently no proposed power in the Scotland Bill that would enable the Scottish Government to restore all tax credits”.

Given that during his speech Mr Neil acknowledged that the bill would have the power to restore tax credits, I ask you whether the amendment is still competent to be considered at decision time tonight.

The Deputy Presiding Officer

Thank you, Mr Kelly. I will check that point and come back to the chamber.

Jackie Baillie (Labour, Dumbarton)

I will do so in the course of my speech.

I wonder whether I can get Mr Fraser to reflect on the words of Tory member of Parliament David Davis, who said:

“The Government needs to look at this again. For three million families losing £1,000 doesn’t mean cancelling your holiday, it means an empty pantry. I hope this doesn’t turn out to be our Poll Tax.”

When Murdo Fraser opens the debate for the Conservatives, will he say whether he agrees with David Davis?

Labour will use the new powers that are coming to this Parliament to fulfil its historic mission to stand up for working people. I promise members that no one will pay more tax than they are paying now under Labour’s plans to restore the money that is lost from tax credits—not one penny more.

We would use the air passenger duty of £250 million to help working families, rather than give a tax cut to airlines, as the SNP proposes to do. We would not increase tax thresholds for those earning more than £42,000, as the Tories propose to do. That will give funding of £440 million, to answer Murdo Fraser’s question. There is more than enough from both those sources to fully fund the policy and even a bit more.

The SNP really does need to keep up. The claim that our funding has already been committed for education is absolute nonsense. Unlike the SNP, we do not spend the same amount of money over and over again. As Kezia Dugdale said at the weekend, we will use the powers that are coming to Scotland to set a 50p top rate of tax on those who are earning more than £150,000 a year, to invest in education. Specifically, we will create a fair start fund for our poorest pupils—an idea that was praised this week by the commission on school reform, which criticised the SNP’s lack of urgency in closing the attainment gap between the richest and the rest in our classrooms.

The Government’s amendment is factually wrong, but I do not imagine that that will bother Alex Neil much. Why let the facts stand in the way of his spinning yarns? I fully expect from him a pantomime dame performance to distract us from the paucity of the SNP’s position. The SNP’s amendment says that we do not have the power. What rubbish! John Swinney says that we do not have the money, but I have just demonstrated that we do. This is about political will. Alex Neil has over 5,000 families in his constituency who are in receipt of tax credits; today, he has turned his back on them, offering them a pitiful excuse rather than real action. He is putting grudge and grievance with the United Kingdom before action that will help working families, and he is using the constitution simply as a distraction and an excuse.

Like the SNP Government, Alex Neil is very good at talking but not so good at doing. Just last Sunday, Alex Neil—who knows that I hang on his every word—said:

“Tax credits can be a lifeline for families on low incomes that rely on them to get through daily life, put food on the table, heat their home and pay their bills.”

I agree. He said:

“Removing this vital support from thousands of families will widen the gap in inequalities and push even more people into poverty.”

I agree with that, too. He also said:

“The UK Government’s plans are a clear attack on low income working families and those families must be protected as a matter of urgency.”

Alex Neil can claim the match ball, because that is a hat trick of things that I agree with him about. Both Alex Neil and I oppose Tory austerity; the difference between us is that I am willing to do something about it instead of simply wringing my hands and telling everybody how bad it is.

Let us take action, see the possibilities of devolution and use the power to do good. I am willing to unlock the potential of devolution and use the powers of this Parliament for the purpose of standing up for working-class families.

Tax credits work. They boost people’s earnings in a targeted way to really tackle inequality. They lift hundreds of thousands of children out of poverty and allow families to aspire to more than just making it to the end of the month or the end of the week. David Cameron has broken his promise not to cut tax credits, and working families are paying the price. In Scotland, nearly 350,000 families rely on the money from tax credits, with the average family being more than £100 a month worse off as a result of the cuts that are planned by the Tories. It is a rise in tax on the working poor, and 70 per cent of the money saved by this rise in tax on working people will come from the pockets of working mothers. In a few weeks, just before Christmas, families are due to receive letters on their doormats telling them how much they will lose. What a cruel way to break a promise.

I never thought that I would say this, but thank God for the House of Lords. Labour, working alongside cross benchers, led the defeat of the chancellor’s plans in the House of Lords, and he has been forced to think again. We must keep the pressure on the Tories to cancel their plans to cut tax credits but, if they ultimately refuse, we will stand up for Scottish families come what may. It was not just the Tories who made a promise to the people of Scotland. Both Labour and the SNP promised working families a break from Tory austerity. That is why we should use the new powers that are coming to the Scottish Parliament to restore the money lost from tax credits for working families.

Few members in this chamber could have been as vocal about this Parliament taking on more financial responsibility as the leader of the Scottish Conservatives. I have no doubt in my mind that, next year, the Tories will run on a ticket of tax cuts. However, they cannot claim, as they appear to want to, to be caring or compassionate Conservatives if they let George Osborne cut tax credits for working families. If Ruth Davidson does not intervene to stop that, she and her party will stand accused of introducing a measure that is even worse than the poll tax in Scotland. Anything short of that and the mask slips, and we will know that compassionate Conservatism is simply a sham.

We have been here before: the Tories make a cruel decision at Westminster, the Scottish Tories look awkwardly at their shoes, and the SNP does anything at all to avoid taking responsibility. That past decision was, of course, the bedroom tax, which is mentioned in the SNP’s amendment. For months, the SNP said that protecting vulnerable Scots from the bedroom tax just could not be done, despite Scottish Labour saying repeatedly that it could. We had the money and the power then, but the SNP did not have the political will to do anything about it. Vulnerable people had to wait a year for action by the SNP.

John Swinney—where has he gone?—has elected not to speak in a debate this afternoon about the tax choices that this Government faces. He eventually admitted that he could mitigate the impact of the bedroom tax, but he did not want to do that because it would let Westminster off the hook. What a shameful thing to say when he claims to be anti-austerity.

The reality is that the SNP set up constitutional excuses to avoid blocking the bedroom tax for as long as it possibly could. It had to be dragged kicking and screaming into this chamber to a decision by Scottish Labour. It is shameful that the SNP is attempting to play the same red herring yet again, but it should be careful: people saw through that the first time, and they will see through the SNP again.

The SNP Government is trying to claim that we cannot restore tax credits and protect working families, but we can. It is trying to claim that the new powers that are coming to Scotland will not allow us to make fairer choices on tax credits, but they will.

Murdo Fraser (Conservative, Mid Scotland and Fife)

I warmly welcome Jackie Baillie’s return to the Labour front bench. As she knows, I am very fond of her, so I was more than a little concerned yesterday about her future career prospects, given her unaccustomed role in being banished to the back benches. I feared that she had gone from her normal position of loyal front-bench stalwart to that of rebel back bencher. Fortunately, the true Scottish Labour leader—Mr Findlay—has hauled her back into line and we now see her restored to her rightful place. Long may she reign on the Labour front bench and have the good sense to continue to vote with the Conservatives.

It was Hallowe’en on Saturday. As I took my children guising around the streets of Perth, they were terrified by the endless procession of hideous misshapen creatures from the underworld—the procession of ghastly ghouls and the undead stalking the streets. I am sure that it was only a coincidence that the Scottish Labour Party conference was being held in our city at just that time. What we saw at the weekend was the zombie figure of 1970s-style socialism, which we all thought had long since been consigned to its grave, hauling itself back from the earth and coming back to strike fear and alarm into the people’s hearts.

Today, we see the first fruits of the decisions that were taken at that conference at the weekend and of the announcements that have been made under the new Corbynite Labour Party. We see the Scottish Labour Party taking a step back in history to a time of tax-and-spend economics and of higher taxes clobbering working families.

Let me deal with the tax credits issue and try to respond to some of the points that Jackie Baillie made. We in the Conservative Party have been very clear that we want to move Britain from being a high-welfare, high-tax and low-wage economy to being a lower-welfare, lower-tax and higher-wage economy. The reality is that, under Labour, the tax credits bill was allowed to spiral out of control. The cost trebled in real terms in 10 years: from a system that cost £4 billion in its first full year to one that cost £30 billion in 2015. Under Labour, nine out of 10 working families with children were eligible for tax credits, including those of a number of members of Parliament, who by no definition could be described as poor.

The whole thing has become an absurd extension of the welfare system. Members should not take my word for that, because even a former Labour chancellor, Alistair Darling, said that tax credits were

“subsidising lower wages in a way that was never intended.”

Willie Rennie (Liberal Democrat, Mid Scotland and Fife)

The Labour Party is to be congratulated on taking the initiative in having a real debate about powers that the Parliament will have. That is a refreshing change, which I welcome. I would have thought that the SNP would also welcome it.

What is disappointing is the SNP’s response—a groundhog day debate about powers. Faced with a choice between taking action to help low-paid workers and continuing with its constitutional obsession, the SNP simply cannot help itself. So much for accepting the result of the referendum.

I am not in the slightest bit surprised that the SNP is not going to back Labour up today; I am just surprised that Labour is surprised. The SNP has a track record on this. If we look back to the independence white paper, we will remember that John Swinney’s plans for the welfare budget in the first year of independence were to match exactly the spending by Iain Duncan Smith—there would not have been one penny more.

The SNP spent years arguing with, debating with and condemning the Westminster Government for its £2.5 billion cut in welfare spending but, when the opportunity came, no SNP members condemned John Swinney for not including extra finance in the white paper. The SNP has a track record. It often complains but, when it comes to moving away from the rhetoric and taking action, it refuses to act.

I felt sorry for Alex Neil today.

Members: Aw.

I know. Having a Liberal Democrat feel sorry for him must be painful for Alex Neil. He has been sent out to deliver stirring rhetoric, to lambast the Opposition and to pump up the ever-loyal back benchers. However, the most confused and contradictory speech that I have ever heard from him is the speech that I heard today.

Alex Neil started by saying that the SNP Government does not have the powers and by demanding that this Parliament should have the powers so that we can make the decisions. By the end of his speech, he had conceded that we have the powers after all and that he might actually take action. That was the most confused and contradictory contribution from a man whom I hold in high regard.

We should not forget that we are here today because of my former coalition colleagues in the Conservative Party. These ideologically driven cuts will directly affect 250,000 Scottish families and 300,000 children. Alex Neil is right about the financial impact that the cuts will have on those families. Someone who has an MSP’s salary could probably cope with a £1,000-plus cut, but for a family who are living on the breadline and finding it really difficult to make ends meet, £1,000 could be a lifeline. I deeply regret that the Conservatives continue to argue for such a cut.

Despite the warm words from the leader of the Scottish Conservatives, the words of the Conservative amendment wed the party completely to the tax credit cuts. Murdo Fraser finished his speech by refusing even to consider making up the difference on the tax credits when we have the powers over them here.

We know where the Conservatives stand. They sent Annabel Goldie down to the House of Lords to vote for the tax credit cuts. David Mundell, who is a member of the Cabinet, voted for the cuts in the House of Commons. Today, the Conservative MSPs will vote for tax credit cuts; we just heard it from Murdo Fraser.

The Liberal Democrats spent many years in the coalition Government cutting taxes for those on low and middle incomes. The aim was to make work pay so that people would be incentivised into work. We did not do all that work over five years just for the Conservatives to undo it all in one year with a £1,000-plus cut to people on low incomes. We did not want that to happen, and many people will condemn them for that.

I want to move towards a low taxation and high wages regime, with—in the meantime—a tax credit regime to support families who are in need. Despite the rhetoric, we know exactly where the Conservatives stand today.

Who would have believed that the House of Lords—that age-old, unelected institution that I want to get rid of—would be more representative of the British people than the newly elected Government and would speak up for working people? The new champions of working people are in the House of Lords, not the Conservative Party. That shows us what a topsy-turvy world we now live in.

We will vote against the SNP amendment. That is easy, because we have the powers and, if we choose to do so, we should be able to act on the choice to help working people. However, I urge the Conservatives in the Scottish Parliament, if they have any influence over the Conservative Cabinet—to date they have shown that they have none—to send the message out from today that the tax credit cuts should be reversed. That is the priority and that is the message. That is what we need to change.

I move amendment S4M-14688.2, to leave out from “and calls on” to end and insert:

“; notes that these cuts are being proposed by the UK Conservative administration despite them not being in its manifesto and the Prime Minister explicitly ruling out tax credit cuts if the Conservatives won the general election; believes that economic reasoning is now being used as a pretext to mask ideologically-driven welfare cuts, many of which were blocked by the Liberal Democrats in the previous UK administration; is deeply concerned that 250,000 families in Scotland and 300,000 children would be affected by the proposed cuts; believes that the priority should be blocking any proposals that leave these people, among three million on low incomes across the UK that would be affected, more than £1,000 worse off, pushing more families into poverty; urges the UK Government to listen to the House of Lords and to come back with plans to balance the books that do not attack working families already struggling to get by; welcomes that, if all else fails, Scotland will be able to use its welfare powers to assist people affected by the cuts, but believes that this course of action remains an inferior solution compared with stopping the tax credit cuts wholesale across the UK”.

The Deputy Presiding Officer

We come to the open debate. Some time has been lost through points of order and other issues, so I will allow speeches of six minutes—members must keep to that time limit.

Mark McDonald (Scottish National Party, Aberdeen Donside)

We must distinguish between principle and practicality. The principle of supporting and assisting the most vulnerable in our society is not in question, and we have seen the Scottish Government take steps in that direction. The question has always been about practicality and effect.

The amendment that has been tabled at Westminster today—I do not think that anyone had seen it before today, although perhaps certain people had—would perhaps give the Scottish Government the ability to do what the Labour Party suggests. However, the SPICe paper that Jackie Baillie quoted contains two important caveats. The first is that it talks about a situation in which tax credits are accepted as a benefit. At the moment, tax credits are administered through HMRC, not the Department for Work and Pensions, so there would need to be a discussion about whether they were classified as a benefit under the devolution settlement. However, if the Westminster amendment that has been tabled today allows that to happen, we can take that as read.

The second important caveat in the SPICe paper is that top-up of benefit is possible only when benefits are being received. In the changes that the Chancellor of the Exchequer is proposing, a significant number of people will lose all entitlement to tax credit—they will not receive any tax credit whatsoever. The question in that case is whether a top-up power could be used. Obviously, we cannot top up a non-existent benefit. The question is therefore how we administer a system that enables those who, because of a change in 2016, will not receive tax credits to subsequently receive them. Given that the powers that are being proposed in the Scotland Bill will come into play in 2017 or 2018—or possibly later; that depends on the technicalities of disaggregating some of the functions in areas of shared competence—there will be a significant gap for the families and individuals who will lose out.

The cabinet secretary is entirely correct when he says that the important thing is to consider the detail and then consider the possibilities that arise as a result. We do not yet know the final picture or what the Chancellor of the Exchequer is going to propose, having been given a bloody nose by the House of Lords. I am no fan of the House of Lords, but I welcome the decision that it took. I still think that the place should be abolished, because it is a democratic and constitutional anachronism, but a stopped clock is right twice a day, so there is no reason why the House of Lords cannot occasionally get a decision right, too.

The Chancellor of the Exchequer has been sent home to think again, so the question is: what comes back? I want to ensure, and we as a party are trying to ensure, that all guns are blazing so that the chancellor reverses the decision and we convince enough rebels to back the Opposition. I hope that the Labour Party will oppose the decision 100 per cent in Westminster alongside the SNP and that rebels will be attracted to ensure that we do not have to consider the matter further.

Johann Lamont (Labour, Glasgow Pollok)

I take it from what Mark McDonald says that this is now an issue of timing. Of course Labour Party members want to do everything that they can to stop the cuts going through, but is it not reasonable to ask the Scottish Government, with all the power and support that it has, to interrogate every option that is open to it to protect people? Instead, it has spent the past few days explaining to everybody how it cannot do anything to support the affected families.

Mark McDonald (Scottish National Party, Aberdeen Donside)

The cabinet secretary stated clearly that considering the options is exactly what the Government is doing and will do. It will consider how it can deliver support for the most vulnerable.

The vehicle for delivery is important. To offset the bedroom tax, we were able to use discretionary housing payments. The cap required to be lifted for that to be done, which required negotiation with Westminster. On council tax benefit, we had to create a mechanism to replace the 10 per cent reduction and ensure that we could fully fund council tax reductions with the moneys that we were given. Again, some creative thinking had to be applied to enable that to happen.

Last week, the Finance Committee took evidence from HMRC on the Scottish rate of income tax. HMRC said that, if the Scottish rate of income tax were set differently from the UK level, that would more than double the administration costs that HMRC incurred. If we are to consider establishing a different approach in Scotland, the fact that there is a cost per transaction for tax credits—as opposed to a global administrative sum, as there is for the Scottish rate of income tax—begs the question of where the administrative costs for those transactions will fall and whether they are factored into the calculations that Jackie Baillie laid out.

There is no member who does not recognise the impact on the vulnerable in society, but our record—whether on the establishment of the welfare fund, council tax reduction or discretionary housing payments—shows that, where we can, we take action to support the most vulnerable in society. However, devolution is supposed to be about our priorities and setting our own policy agenda; it should not be about continually being handed a pig’s ear by Westminster and being expected on limited resources to fashion it into a silk purse.

Malcolm Chisholm (Labour, Edinburgh Northern and Leith)

I will spend the first part of my speech dispelling Tory myths about tax credits and the second part exposing SNP myths about why nothing can be done.

Tax credits were one of the great achievements of the previous Labour Government. The IFS said in 2003 that they were

“a substantial reform”

whose

“distributional impact is fully in keeping with that of past Labour reforms, with the largest gains going to the poorest families”.

The tragic fact of the matter is that the families who are having the highest losses as a proportion of income now are precisely those poorest families, as the threshold for reductions is plunging from £6,420 to £3,850 and the taper is increasing from 41 to 48 per cent. The threshold and the taper apply to child tax credits as well, which is completely against what David Cameron promised during the general election campaign.

We should all reflect on the fact that 43 per cent of in-work recipients of tax credits are in households that earn less than £10,000 a year. On average, they will lose more than £1,000 in appallingly regressive cuts. The raising of the income tax threshold that Murdo Fraser mentioned is irrelevant to those families, because they are nowhere near it.

We should reflect also on the national living wage, which the Conservatives and others always invoke in this context. To quote the IFS again,

“even under the ‘better case’ scenario”,

that would result in £140 extra a year. Crucially, the IFS says that that would offset 11 per cent of the tax credit losses.

Elizabeth Smith (Conservative, Mid Scotland and Fife)

Does the member agree with Alistair Darling, who has said that the Labour policy on tax credits expanded to such an extent that it put intense pressure on public spending and therefore had a detrimental effect on economic growth?

Malcolm Chisholm (Labour, Edinburgh Northern and Leith)

The fact of the matter is that there are fewer people on tax credits now than there were under the Labour Government. I accept that, but Murdo Fraser should have acknowledged that, at this moment—before the cuts—less than 50 per cent of working families are on tax credits. In a way, we have already moved on from Alistair Darling’s comment from a few years ago. Torsten Bell of the Resolution Foundation summed that up perfectly when he said:

“Tax cuts and the living wage cannot compensate for these tax credit changes. That is not an option ... The answer to tax credits is tax credits.”

We also have the massive work disincentive in the changes: the withdrawal rate of 80p in the pound for any extra money earned, and 93p in the pound if people are on housing benefit.

What are we to do if there is no change from the UK Government? At a recent Devolution (Further Powers) Committee meeting, Judith Paterson of the Child Poverty Action Group Scotland said:

“the question to be asked is what will happen if Scotland does not use the powers to top up tax credits ... It has been forecast that, if it does not do that, many more children and families will fall into poverty over the next few years, which would have associated impacts on children’s health, education and prospects.”—[Official Report, Devolution (Further Powers) Committee, 8 October 2015; c 7.]

As we all know, although some of us forget—not me personally—politics is about choices. Today, Labour is making it clear that we are making a different choice from the SNP—certainly in relation to APD—and a different choice from the Conservatives in relation to the higher-rate tax threshold. That might be a different choice from the SNP; it has not told us about that.

Bruce Crawford (Scottish National Party, Stirling)

I recognise Malcolm Chisholm’s sincerity and I acknowledge what he says about choices. However, in coming to that decision, did Labour take into account the administration costs that the DWP will charge? As he will know, because he is a member of the Devolution (Further Powers) Committee, the DWP is entitled to do that under the legislation. If Labour took those costs into account, what did it estimate them to be?

Malcolm Chisholm (Labour, Edinburgh Northern and Leith)

Our costings are in excess of what is required to restore tax credits. We have made a choice and we will always make choices that lead to improvements for working families and a more equal society. We should remember that the choice involves no extra tax increases; it just means a different choice from other parties about tax reduction.

The amendment from the SNP Government says that this cannot be done—wrong. The amendment from the SNP Government says that the money has already been “earmarked for education”—wrong. The SNP amendment is all over the place. It says that more powers are required; the SNP is hiding behind the constitution as usual. The changes can be made with the powers that we are going to get. If Alex Neil did not know yesterday when he lodged the amendment that those powers are coming to Scotland, he should have done, because we certainly knew.

The SNP is thrashing about, looking for excuses not to do what is self-evidently just, fair, achievable and necessary. It is trying to be all things to all people, which is its way.

Alex Neil (Scottish National Party, Airdrie and Shotts)

As things stand, the tax credit cuts will take effect next April but we will not get the income tax powers until at least the following year and we will not get the APD powers until the year after that. What is the start date for implementing the Labour proposals?

John Scott (Conservative, Ayr)

Briefly, please, Mr Chisholm.

Malcolm Chisholm (Labour, Edinburgh Northern and Leith)

It is interesting—

Alex Neil (Scottish National Party, Airdrie and Shotts)

You do not know.

The Deputy Presiding Officer

One at a time.

Malcolm Chisholm (Labour, Edinburgh Northern and Leith)

It is interesting that the Government is thinking up new arguments that it obviously had not thought about for its amendment.

The Deputy Presiding Officer

Close, please, Mr Chisholm.

Malcolm Chisholm (Labour, Edinburgh Northern and Leith)

My last word is that the SNP may think that being all things to all people is a good strategy for building support for a referendum, but it is a useless strategy for creating a fairer and more equal society and, for some of us, that is the purpose of politics.

Clare Adamson (Scottish National Party, Central Scotland)

Earlier in the debate, Murdo Fraser spoke about zombie figures. I am afraid that we are discussing this issue today purely because of the outdated dinosaur politics of the Tory party and a discredited zombie ideology that fails to learn the lessons of the global financial crisis and continues to wage war on the poor and increase inequality, thereby damaging the economy that the Tories claim to care so much about.

Mr Fraser does not need to take my word for it—he can take the word of Standard & Poor’s, which warned in 2014 that growing income inequality in the United States was slowing growth in the world’s biggest economy. It stated:

“Aside from the extreme economic swings, such income imbalances tend to dampen social mobility and produce a less-educated workforce that can’t compete in a ... global economy.”

It went on to say:

“This diminishes future income prospects and potential long-term growth, becoming entrenched as political repercussions extend the problems.”

When we make families in our society more unequal, we increase borrowing, which takes us back to the very problems that caused the global financial downturn in the first place. When incomes keep falling and borrowing is kept at the same rates, households eventually run into brick walls. That is where the Conservative Party is taking the poorest people in our society.

In lowering incomes and attacking low-income families, the Conservatives are putting more people in poverty, thereby damaging the future of this country.

Kezia Dugdale (Labour, Lothian)

Will the member give way?

Clare Adamson (Scottish National Party, Central Scotland)

No, sorry—I think that we are pressed for time.

Unequal societies are less functionally capable, less socially cohesive and less economically sound, and they perform worse than more equal countries. Growing inequality is probably the most pressing global economic crisis that we face, yet the Tory party fails to realise what its policies are doing in that area.

More than half a million children in this country rely on tax credits to make ends meet, and 350,000 of them will feel the impact of the Tory cuts that will strip away much-needed tax credits from more than 200,000 low-income working families. The figures from SPICe show that 197,200 families in Scotland, with a total of 346,000 children, have been hit by those changes from the Tory party.

We have to do something about that. I wonder what people who are scared of what is going to happen to their futures will think when they watch the debate this afternoon. There should be more that joins us than divides us on this issue, and we should not be arguing about semantics or principles, because we are on the same page on this matter. [Interruption.]

The Deputy Presiding Officer

Order.

Clare Adamson (Scottish National Party, Central Scotland)

The difference is that this Government, unlike Labour, will not write a blank cheque but will look for a costed and practical way to tackle the policies of the Tory Government.

Kezia Dugdale (Labour, Lothian)

Will the member give way?

Clare Adamson (Scottish National Party, Central Scotland)

No, I am not taking an intervention—I am sorry.

The decision on who to trust on the issue will lie with the voters. It will come down to who they trust to deliver a commitment to do as much as possible to stop the Tory ideology and to create a new system in Scotland. Labour seems to have been content to grab a headline on the issue rather than produce a reasonable and costed manifesto that can make progress for the people of Scotland. I say to Labour members that they should think very hard about that, because people do not have short memories. They do not forget that, in the past, Labour promised things in its manifesto and then, within weeks, changed its stance on policies, as it did when it said that the decision on the council tax freeze was wrong.

Neil Findlay (Labour, Lothian)

Will the member give way?

Kezia Dugdale rose—

Clare Adamson (Scottish National Party, Central Scotland)

Let us not forget that many of those families have already been affected by the abolition of the 10p tax rate, which hit part-time low-income workers. They will not forget that that is Labour’s record on delivery, unlike the record of this Government, which has committed £90 million since the introduction of the bedroom tax to fully mitigate the impact and help more than 70,000 people in Scotland.

With the councils, the Government has committed more than £40 million to help more than half a million people in Scotland to receive council tax benefit, protecting them from the UK Government’s cuts. It has provided more than £1 million to combat food poverty in Scotland through the emergency food action plan, and an extra £9.2 million of the Scottish welfare fund, giving a total of £33 million for each of the three years from 2013 to 2016.

It is a matter of trust, and the people of Scotland will trust this Government, which has a track record of standing up for the poor and vulnerable and for delivering on policies that, unlike the Tories’ policies, seek to level our country and reduce inequality. As I have said, inequality is the most pressing issue of our times and I am glad to stand behind a costed and well-put-together plan by the Government to do everything that it can to reduce inequality in future.

Stuart McMillan (Scottish National Party, West Scotland)

Before I start, I want to refer to Malcolm Chisholm’s comments of a few moments ago. He referred to the powers that we are going to get to deal with the situation, but I am sure that Jackie Baillie, in her opening remarks, spoke about the powers that we already have. That highlights the fact that, once again, Labour is all over the place.

Education represents an investment not just in our children but in our culture, society and economy. Quality education helps young people to be successful learners and to grow into confident individuals, responsible citizens and effective contributors to society. A highly skilled population leads to higher wages, better jobs and economic growth, and benefits the health and wellbeing of each of us, but a child in poverty is a child who has yet one more barrier to learning. A child whose home life is chaotic, or who is hungry, cannot do their best, and a child who worries about the future of their family is a child who is distracted from fulfilling their potential.

Johann Lamont (Labour, Glasgow Pollok)

If Mr McMillan is concerned for the wellbeing of that child, why would he prioritise a cut of £250 million in air passenger duty? Does he think that that was the right choice, and how much interrogation of the possibilities of that tax did the Scottish Government do before it made that decision, as it cannot make one on tax credits?

Stuart McMillan (Scottish National Party, West Scotland)

I reiterate a point that I made in the chamber yesterday. I have heard Labour members speak in this Parliament about cutting APD not because it is a bad thing but because it threatens the airports in the north of England. That is more of an issue for the Labour Party to address than it is for anybody on this side of the house.

The main tools for tackling poverty and for tackling the attainment gap lie in the tax and benefits system and in the employment services. All need to play their part in a coherent system that delivers for children, allows parents to work and boosts family income. Currently, unfortunately, those tax and benefits powers are under the control of Westminster. Under the Scotland Bill as it stands, the Scottish Parliament cannot restore all tax credits and does not have the power to reimburse all those who will be affected.

The UK Government is using those tools not to tackle poverty or to promote work in Scotland but to cut welfare. The Tory tax credit cuts will lead immediately to £1,500 being taken from the pockets of 250,000 Scottish working households next April. Across Scotland, the number of children affected will be almost 350,000. In Inverclyde, where I stay, 5,500 children will be affected. Those figures should help anyone who has not yet grasped the scale of the cuts to understand just how many families in Scotland are being hit and how many children are being affected.

It is time for those powers to be transferred to Scotland, allowing us to take real action to tackle poverty, support working families and give our children all the support they need rather than continuing on the UK Government’s course, which will push even more children into poverty.

The SNP has today tabled amendments at Westminster to devolve working tax credits and child tax credits in full to the Scottish Parliament. The amendment to the Scotland Bill that the cabinet secretary highlighted in his opening speech will enable the Scottish Parliament to set its own tax credit system, including eligibility, thresholds and tapers, allowing the Scottish Government to determine the level of tax credits in Scotland and to protect households from Tory tax credit cuts.

Holyrood should send a united message to George Osborne that the cuts are completely unacceptable. Unlike Labour, the SNP has voted against the proposals at every possible opportunity, and we will continue to do so. Willie Rennie has now left the chamber, but he mentioned the House of Lords. Unfortunately, on the fatal motion that was before the House of Lords, Labour peers sat on their hands.

The SNP Government has mitigated some of the worst aspects of the UK Government’s welfare cuts, and we are already spending £296 million over three years to mitigate the damaging effects of those cuts. The Scottish Government will set out clear, credible and costed plans to support low-income households following the comprehensive spending review and the outcome of the amendments that have been tabled to the Scotland Bill. Who knows what is going to happen with those amendments? However, one thing that is clear is that the Scottish Government is the one that is credible and competent—something that the Labour Party clearly knows very little about.

The SNP is standing up for Scotland in government here in the Scottish Parliament, and we are the only ones who are providing an effective Opposition to the Tories at Westminster. We will continue to fight austerity and to oppose Trident, and we aim to ensure that George Osborne’s tax credit cuts are stopped in their tracks.

For as long as powers over working-age benefits remain in the hands of the likes of Iain Duncan Smith, Scottish families and Scottish children will bear the brunt. We will continue to fight the cuts and to demand that the Tories protect the poorest from the worst impacts.

Jackie Baillie (Labour, Dumbarton)

Will the member take an intervention?

The Deputy Presiding Officer

I am sorry, but the member is in the last minute of his speech.

Stuart McMillan (Scottish National Party, West Scotland)

The principal aim of providing support for families is to give children the best start in life and the greatest chance to succeed as they grow and develop into adulthood. It is essential to maintain the highest quality of provision in order to support child wellbeing and development, alongside providing significant support to families and sustainable employment opportunities. That is why I back the amendment in the name of the cabinet secretary.

The Deputy Presiding Officer

We are tight for time. Members have up to six minutes.

Hugh Henry (Labour, Renfrewshire South)

Murdo Fraser took some delight in trying to point out differences of opinion within other parties on a range of issues. On this particular topic—tax credits and the impact that they will have on working families—it appears that there is quite a significant difference within Murdo Fraser’s party. I do not know whether Ruth Davidson represents the caring weekend face of conservatism when she says that she is concerned about the impact that tax credits will have, whereas Murdo Fraser perhaps represents the real face of the Conservative Party as cheerleader for tax credit cuts and the impact that they will have on families right across the country.

There are a number of different issues at stake. The first issue is the tax credit cuts and what they will do. There can be no doubt that there are hundreds of thousands of families throughout the United Kingdom, including in Scotland, who are profoundly worried about what is going to happen to them.

I recently had the pleasure of meeting Mark Payne from Port Glasgow, who is a member of the Union of Shop, Distributive and Allied Workers. USDAW is a trade union that is at the forefront of campaigning about the impact of tax credits on its members and on ordinary families. Mark and his partner, Agnes, live in Port Glasgow and have three children. They are a family who believe in the ethos of hard work, and both Mark and Agnes work. They are also a family who stand to lose £2,100 per year because of the changes to tax credit. Mark works full time as a supermarket delivery driver, and Agnes works part time in the retail trade, too. Mark told me that he and Agnes work two jobs for more than 60 hours per week. They have no time with the kids, and they have no food in the fridge by the end of the week. He and Agnes have to skip meals to ensure that the kids eat.

When I raised Mark’s case with Priti Patel, who came here to meet members of the Welfare Reform Committee, she agreed to meet Mark. I hope that she will listen and reflect on what Mark has to say. I accept that there are members of the Conservative Party at Westminster who have begun to realise the inhumane impact that the tax credit cuts will have.

Unfortunately and tragically, Mark is not alone. There are hundreds of thousands of people like Mark, and it is not just hard-working families who are affected. Amanda Batten, the chief executive of the charity Contact a Family, said:

“These cuts will affect a staggering 150,000 hardworking families with disabled children whose finances are already at breaking point.”

That is the reality of what we are confronting.

I will take help and support from anybody who will help to stop the cuts taking place. That is why I welcomed the decision in the House of Lords, which is a body that has to be reformed—Labour is on record as saying that we will reform it from top to bottom. What struck me was not just the decision in the House of Lords but the quality of the debate there, which would put this chamber and the House of Commons to shame. We heard some fantastic contributions from people who were reflecting on what is happening in ordinary families across the country. To their credit, they forced the Westminster Government to stop and think again, which I hope it will do.

I agree with Alex Neil that the solution is for Westminster to come to its senses and accept that what is being proposed is, frankly, unacceptable and also cruel in the extreme. I also think that we have a responsibility to say that, if we cannot win the argument there, we will look at our power and our budgets in order to do something.

Before this afternoon, it was all about whether the Labour motion would have been competent and could have been put into effect. Alex Neil now tells us that an amendment has been tabled today in the House of Commons; I do not know whether he is talking about the SNP amendment or the Government amendment, but he seems to indicate that it is that. Well, Presiding Officer, we have a problem. If that amendment was tabled before the debate today, we will be asked to vote on an amendment here this afternoon that is outdated, no longer competent and, frankly, misleading.

Joe FitzPatrick (Scottish National Party, Dundee City West)

Will the member take an intervention?

Hugh Henry (Labour, Renfrewshire South)

In a minute. We have been asked to vote on something that says that we have no power, when in fact the minister has indicated that we will have the power.

Alex Neil (Scottish National Party, Airdrie and Shotts)

On a point of order, Presiding Officer.

The Deputy Presiding Officer

You are in your last 20 seconds, Mr Henry, although there appears to be a point of order from Mr Neil.

Alex Neil (Scottish National Party, Airdrie and Shotts)

What has been lodged in the House of Commons today is a proposed amendment. As things stand, the bill does not give us the powers that would be required to carry out the Labour proposal. If the amendment tabled today is carried, it will do. Therefore, we are not out of order.

The Deputy Presiding Officer

Many thanks for that. I will treat it as a point of information. Mr Henry, would you please close in the next 20 seconds.

Hugh Henry (Labour, Renfrewshire South)

The SNP amendment says that

“there is currently no proposed power in the Scotland Bill”,

but there clearly is.

I think that we should work together. I think that the cabinet secretary should reflect on where the SNP is. To be honest, this should not be about point scoring—about who is right and who is wrong. If that power is there, I think that we should grab it with both hands. We should reflect. We will look absurd, Presiding Officer, if we vote on something that is now outdated. What we need is something that will protect hard-working families.

Joan McAlpine (Scottish National Party, South Scotland)

I welcome the cabinet secretary’s assurances that we will, when the time comes, take measures to help the families who are affected by these cruel tax credit cuts. I have great confidence that the cabinet secretary will do that, because I judge the Scottish Government on its record.

The Scottish Government has already spent £300 million to mitigate the damaging effects of UK Government welfare reforms. We do not have to go by the Scottish Government’s figures on that. In March this year, evidence was presented to the Parliament’s Welfare Reform Committee from research that it had commissioned from Sheffield Hallam University on the cumulative impact of welfare reforms to that date. The evidence did not cover the budget shock announcement about tax credits, but it did cover the £350 million of previous tax credit cuts that were brought in by the Tories and their coalition partners.

The Sheffield Hallam research showed that the cumulative effect on Scotland of all the welfare changes announced to March was £1.5 billion. It broke that down into an average of £440 per head for every adult of working age in Scotland, whether or not they claimed benefits. That is an important point. Professor Steve Fothergill who conducted the research pointed out that the per capita cost to Scotland of those welfare cuts was just below the GB average of £450, but was much less than in other areas, including even London, which loses £490 per head, the north-west of England, which loses £530, and Wales, which loses £520.

The explanation of that in the research is worth quoting. It said:

“It should not escape note, however, that the impact in Scotland would have been around £35 a year per head higher for every adult of working age if the Scottish Government had not struck a deal with local authorities to avoid passing on the cut in Council Tax Benefit or put in place arrangements to defray the impact of the ‘Bedroom Tax’.”

It continues:

“The financial burden of these welfare reforms is being borne by public sector budgets in Scotland rather than by benefit claimants.”

That is a very clear acknowledgement from an independent source that the Scottish Government’s measures to mitigate cuts are working. However, it is also an acknowledgement that those measures come at a cost to other public sector budgets in Scotland—budgets for health and education, and general local authority budgets. Every week, Labour members come to the chamber demanding that more be spent on those budgets, even though revenue budgets have been cut by 10 per cent by the Tory Government and capital budgets have been cut by 25 per cent.

Although I have confidence that the Scottish Government will continue to do the right thing by the poorest in society, as it has done in the past, we must recognise that that comes at a cost to existing public sector budgets—and it will continue to do so. The cabinet secretary has pointed out Labour’s black hole. The tax powers will not kick in until one and two years after tax credits have been cut, and not a single Labour speaker who has been challenged has been able to answer that question about the black hole.

The Scotland Bill gives us limited powers over tax and welfare. Seventy per cent of tax and 85 per cent of welfare will remain with Westminster, so the vast part of Scotland’s budget will continue to be determined by a UK Government that we did not vote for and which has very different priorities from the Scottish Government. We have a UK Government that is cutting welfare by £12 billion while cheerily committing to an additional £167 billion for weapons of mass destruction—a policy that was backed cheerfully by Labour front bencher, Jackie Baillie, only yesterday.

Let us never forget that the cuts are coming from that Tory Government. It is vital that we do not let the Tory Government off the hook. It is vital that we speak with one voice on tax credits, as we spoke with one voice yesterday on Trident renewal. George Osborne has been on the ropes over tax credits, so I urge members not to let him bounce back, whether by blaming tax credit cuts on the SNP or by saying that the policy is okay and not a big deal, because Scotland can somehow find the money to sort it all out. Tax credit cuts are a very big deal for the families who are affected and we must not let George Osborne off the hook. We need to call time on his cruel tax credit cuts, and that needs to happen in London.

I began by talking about the Scottish Government’s track record in clearing up Westminster’s mess. Measures in that regard require not just resources but expertise at devising solutions that work in our increasingly complex devolved settlement. Mitigation of benefit cuts is difficult, as we have seen, and requires us to have a careful look at what we can do with the powers that are devolved to us.

The issue will become increasingly complicated, given the piecemeal devolution of some benefits and not others. If I had more time, I would quote some of the expert evidence to the Welfare Reform Committee on the difficulties that piecemeal devolution will bring and the hardship that it will cause, particularly in the context of the failure to devolve universal credit. Devolution of universal credit would make it much easier to mitigate the tax credit cuts. I cannot understand why anyone on the Opposition benches who has heard some of the evidence on welfare reform would vote against devolution of universal credit in its entirety.

That is why I take with a pinch of salt some of the pronouncements from the other benches. I say to members that it is not too late. Amendments to the Scotland Bill will be tabled and we can still devolve universal credit and power over sanctions, which is another issue that is harming the poorest people in our society.

Cara Hilton (Labour, Dunfermline)

The Tories’ austerity agenda is penalising the poor and vulnerable, and it is having a devastating effect in communities throughout Scotland. Over the past five years, we have seen benefits and tax credits changed and cut, which has hit working families and the poor hard, while, at the same time, we have seen taxes cut for the rich and a blind eye turned to tax evasion by both individuals and companies.

Now, despite promising during the general election to protect tax credits, the Tories are at it again. In their election manifesto, the Tories promised to improve the lives of

“the millions who work hard, raise their families, care for those who need help, who do the right thing”.

The changes that the Tories want to make to our tax credits system fly in the face of those aspirations. I guess that the lesson to learn is never to trust a Tory.

The Tories’ plans to cut tax credits will leave around 4,600 families in my constituency an average of £1,300 a year—more than £100 a month—worse off. Across Scotland, more than 250,000 working families will be affected, and the figure reaches 3 million across the UK. That is 3 million working families, the vast majority with children, who are already struggling to get by from week to week and who will have less money in their pockets than they have now. The Child Poverty Action Group has cited some examples of those who will be affected: the nursery nurse who will lose £1,788 a year; the hospital porter who will lose £2,011 a year; and the care worker who will be £1,906 a year worse off.

While those low-paid families are being made to pay the price of austerity, the Tory Government has made its priorities clear, pledging £2.6 billion to help the rich by cutting inheritance tax, handing £7.25 billion to big business by cutting corporation tax, and increasing the take-home earnings of those who are already comfortable by raising the threshold of the top tax rate, which will benefit the rich most. Last week at Westminster, the Labour lords won a vote to stop the Tory plans going ahead unless protections are introduced for the most vulnerable. However, although the UK Government suffered a setback, the Tories are still refusing to say that they will change their plans.

We have heard many statistics, but I will talk about the actual impacts on families. The Union of Shop, Distributive and Allied Workers has been contacting its members to find out how they will be affected by the tax credit cuts. Many on household incomes of between £7,000 and £27,000 a year are already worse off because of previous cuts to tax credits. Those families are struggling with rising housing costs, heating bills and food prices. In the retail sector, where evening and weekend work is the norm, mums and dads who are already struggling to spend enough quality time with their children and are now facing further cuts are asking whether it is worth their staying in work at all.

Imagine the outrage that there would be if the Government proposed a 97p tax rate for millionaires, yet the increase in the clawback that is proposed by the Tories means that families who are in receipt of housing benefit will lose 97p of every £1 that they earn, making it impossible for them to make up for the cuts or work their way out of poverty as some Tories suggest. Only a Tory would think that the solution is to work more hours. For many families, working more hours means more childcare costs, not more income. For USDAW members who work in retail, the reality is that there is little opportunity for them to increase their hours; in fact, many feel that there is a real risk of employers’ cutting their hours to make up for the increase in the minimum wage, and many worry about being replaced by younger workers who will cost their employers less.

What impact will the cut in tax credits have? Hugh Henry cited one example and I will cite others. An USDAW member called David could lose £2,000 a year. David says that the changes to tax credits will “massively affect” his family, who are already worrying about how to pay their bills and keep their car running. He says:

“The government is disgusting for taking these tax credits away from people like myself who work hard and have never been unemployed since they left school. We are the people who keep the economy going”.

Yvonne from Airdrie will lose £1,870 a year. She says:

“We struggle financially most months, even without these cuts being introduced. Food shopping is obviously a big part of our monthly budget. Anything over and above is non existent. This will just make things worse”.

Tax credits are an absolute lifeline for those families—they are the difference between families keeping their heads above water or going under.

Those are just two examples that highlight how the Tory tax cuts could hit hard almost a quarter of a million hard-working families right across Scotland unless we act.

Bob Doris (Scottish National Party, Glasgow)

Will the member give way?