Scottish Parliament, 11 May 2006

420 contributions from 76 members. The official report.

Official Report 11 May 2006

Council Tax and Pensioner Poverty

George Reid (None, Ochil)

Good morning. The first item of business today is a debate on motion S2M-4363, in the name of John Swinney, on council tax and pensioner poverty.

John Swinburne (SSCUP, Central Scotland)

On a point of order, Presiding Officer. I find it appalling that, despite lodging an amendment to this very good motion, my party and I have not had it selected for debate. Other parties have had their amendments selected. We have 100 per cent attendance in the chamber today, whereas only three Labour members, two Lib Dems and two Conservatives are present.

Mike Rumbles (Liberal Democrat, West Aberdeenshire and Kincardine)

There are three Liberal Democrats.

John Swinburne (SSCUP, Central Scotland)

My party represents solely senior citizens, but it is continually ignored when it lodges amendments. Presiding Officer, will you look into the problem and rectify it in future?

George Reid (None, Ochil)

Mr Swinburne, you are one of 129 members. If you look at the score, you will find that you do rather better than your proportional entitlement. You will be called if you are good.

John Swinney (Scottish National Party, North Tayside)

Mr Swinburne referred to the fact that only a few Labour members are here. I see that the Government front bench has now been taken over completely by the Liberal Democrat party, which is one of the most frightening sights I have seen in my life.

Christine Grahame (Scottish National Party, South of Scotland)

Here is another one.

John Swinney (Scottish National Party, North Tayside)

Oh my goodness—it has taken a turn for the worse. I thought that things could only get worse, and they have. I say to Mr Lyon that it is only a matter of time before I am over on the Government front bench, which I look forward to with enthusiasm. Who else will be there is a different matter.

Christine Grahame (Scottish National Party, South of Scotland)

He agrees with you.

John Swinney (Scottish National Party, North Tayside)

I am sure that he does.

This debate provides Parliament with the opportunity to examine how local taxation is raised and to establish the extent to which the method is fair. Our motion contends that the council tax is unfair because it is based neither on income nor on ability to pay, and it sets out our belief that local taxation will be made fair only when Parliament introduces a local income tax.

The fairness or otherwise of the council tax has been hotly contested since its introduction. Those who support it say that it is appropriate to tax on the basis of property value because so much other taxation is driven by income. They put the equally important argument that adequate measures have been put in place through the council tax benefit arrangements to temper any unfairness in the system.

On 12 February 2004, the First Minister told me:

"Those who are lowest paid or who have the lowest incomes receive council tax benefits that contribute towards meeting their costs."—[Official Report, 12 February 2004; c 5839.]

On 26 February 2004, the First Minister told me:

"Such a benefit system exists to help those who have problems with making their payments."—[Official Report, 26 February 2004; c 6078-79.]

However, statistics provided in parliamentary answers from Mr Lyon to my colleague Christine Grahame and information from the Department for Work and Pensions expose the First Minister's assurances as hollow rhetoric. In Scotland, 496,429 pensioners are eligible to claim council tax benefit, but information from the Department for Work and Pensions shows that only 56 per cent of them make a claim. More than 200,000 pensioners in Scotland who are entitled to claim council tax benefit do not claim it and therefore pay more council tax than they should. That means that more than one in five Scottish pensioners pay an extra £540 every year—Scottish pensioners pay a staggering £118 million more than they should in council tax.

Fergus Ewing (Scottish National Party, Inverness East, Nairn and Lochaber)

So much for the Labour Party.

John Swinney (Scottish National Party, North Tayside)

I am coming to the Labour Party. Mr Ewing should be patient and should not think that we will leave the Labour Party out of this.

Among pensioners, the take-up of council tax benefit has decreased by about 10 per cent since 1997-98. A Labour Government that is supposedly dedicated to helping the most vulnerable in our society has presided over a situation in which a smaller proportion of pensioners claim the support to which they are entitled. It is no wonder that not one Labour minister has come to the front bench of the Parliament today to face those statistics. It is an absolute scandal. All the advertising campaigns that have been undertaken to encourage take-up have delivered a very poor performance.

The take-up of council tax benefit by owner-occupiers is even lower than the average figures suggest; only 35 to 40 per cent of owner-occupiers take up the benefit. The statistics demonstrate that efforts to tackle the manifest unfairness of the council tax through a benefit system have failed to deliver on ministers' rhetoric. If we needed any further evidence to show that the current council tax system is unfair, the figures that I cited have delivered all that is required. Evidence that the benefits system is too complex to ensure that individuals receive the support to which they are entitled has dealt a body blow to claims that the system is fair. The council tax is manifestly unfair and must be abolished.

We believe that the council tax should be replaced by a system of local income tax based on the ability to pay. A local income tax would have a number of clear attractions as a new system for collecting local taxation. It would have the advantage of being local. Local communities would be in control of how much they wished to contribute to pay for local services. A local income tax would be based on the ability to pay. The income tax system already identifies those who are liable to pay income tax, and a local income tax would be a bolt-on to that system. A local income tax would be clear and simple and would not involve the bureaucracy of council tax and the council tax benefit system.

Bristow Muldoon (Labour, Livingston)

In the interests of a full and informed debate on the proposed local income tax, will the Scottish National Party publish its estimates of what local income tax would be for each of Scotland's 32 local authorities?

John Swinney (Scottish National Party, North Tayside)

Obviously, Mr Muldoon is not paying attention. We published the estimates some time ago, when we launched the local income tax policy. We will, of course, publish our proposals in advance of the election campaign. We will also share with the public the consequences of retaining the council tax, which will be a revaluation of properties and a massive increase in council tax under the Labour Party. In the months to come, we will share that information with every household in Scotland.

A local income tax would be more reliable to collect. The income tax collection rate is 96.17 per cent, whereas council tax collection rates are much nearer to 92 per cent. A local income tax would be cheaper to collect. Council tax collection costs £78 million, £30 million of which is spent on the failing council tax benefit system. Those compelling reasons make a local income tax attractive and desirable, but there are others.

The Government amendment, for which the sparse Liberal Democrats on the front bench will argue, I presume, refers to the independent inquiry into local government finance. Goodness knows who will speak to the Labour Party's position. The amendment states that both the Labour Party and the Liberal Democrats have

"submitted clear and detailed proposals"

to explain their positions. The word "different" is missing, to paper over the cracks in the coalition, but they exist. As I indicated diplomatically to Mr Muldoon a moment ago, an essential element of the Labour Party's commitment to retain the council tax is that there will be an expansion of the bands for properties and a revaluation to take account of changes in values. Even if today the Labour Party is not keen to spell out clearly from the front bench the impact of its proposals, we will do our level best to ensure that the public clearly understand the consequences of the Labour position.

A brief look at the Welsh revaluation gives us a flavour of the cost of keeping the council tax. Across Wales, the council tax burden on nearly 40 per cent of properties increased as a result of revaluation. In the city of Cardiff, which has experienced the same housing pressures that many of our cities have experienced, 50 per cent of properties went up one band, 13 per cent went up two bands and 8 per cent went up three bands or more. Labour should make clear to the electorate that retaining the council tax will mean an escalating bill for many people, to add to the 60 per cent increase that has taken place since the Labour Government came to power.

Those are some of the reasons why Parliament should move to new ground in local taxation. The council tax system has been shown to be unfair and the benefits system has been shown to have failed to protect the most vulnerable. A local income tax would be the fairest and most efficient system. I invite Parliament to support the motion in my name.

I move,

That the Parliament recognises that the council tax is an unfair tax which is based neither on income nor on the ability to pay; further notes that the council tax, which has increased by over 60% since 1997, discriminates against those on a fixed income, particularly the elderly; notes that means-tested council tax benefit has failed to help many of the elderly, in particular older owner-occupiers, and calls for the abolition of the unfair council tax and its replacement by a local income tax based on the ability to pay.

George Lyon (Liberal Democrat, Argyll and Bute)

I am pleased to take part in this debate and to restate the Executive's position on the future of local taxation in Scotland. Following the last election, this devolved Government agreed to set up an independent review of local government finance. We all, I am sure, agree on the need for local taxation and on the importance of having the right systems to provide the funds that local authorities need to deliver the many vital services for which they have responsibility.

Of course I recognise that there are genuine differences of view across the chamber about what system is right. It is no secret that there is a difference of opinion between the Liberal Democrats and the Labour Party on this matter. Even the far-reaching and highly regarded Layfield committee report of 30 years ago recognised the difficulty of choosing between a property-based tax and a local income tax.

More recently, in 2002, the Parliament's Local Government Committee also examined the issues and highlighted the need to strike a balance between council tax funding of local services and the funding that the Executive provides. That is why we gave the independent review committee, under the chairmanship of Sir Peter Burt, a wide-ranging remit. Two months ago, Tom McCabe—the Minister for Finance and Public Service Reform—and I met the committee to review progress and receive an update. It is clear to me that the committee has approached its remit thoroughly and comprehensively. It has considered options for property-based local taxation, including the council tax, domestic rates and land value tax, and it has considered options for non-property-based local taxation, including a local income tax and a poll tax—although I have not seen any political support for that last one.

John Swinney (Scottish National Party, North Tayside)

What about the Tories?

George Lyon (Liberal Democrat, Argyll and Bute)

I had a look to see whether the Conservatives had supported the idea, but it seemed to be missing from their contribution to the review committee's consultation.

The committee consulted widely and has published a summary of responses on its website. I have a paper copy here with me today. From the summary, it is clear that the position of pensioners and their ability to pay are key issues that arose during the consultation.

Alasdair Morgan (Scottish National Party, South of Scotland)

When does the minister expect the committee to give Parliament its final report? Will both Executive parties endorse its conclusions?

George Lyon (Liberal Democrat, Argyll and Bute)

The committee has indicated that it is likely to report in the autumn. Once we receive the report we will examine it closely and discuss how to respond to it and how to proceed.

The committee has taken evidence from a range of experts as well as from individuals and organisations with an interest. The work has taken time, but the committee has been able to indicate to us—as I have just said to Mr Morgan—that it is on track to publish its report in the autumn.

John Swinney (Scottish National Party, North Tayside)

Will the minister take an intervention?

George Lyon (Liberal Democrat, Argyll and Bute)

If Mr Swinney does not mind, I would like to make some progress.

In the meantime, we have not simply sat back to await the committee's report; we have acted to tackle pensioner poverty in Scotland. As a result, since 1999, 80,000 Scottish pensioners have been lifted out of relative poverty, which represents a reduction in relative pensioner poverty of more than a third. We have also introduced a number of specific measures, such as our central heating programme, the warm deal scheme, unlimited Scotland-wide free bus travel for older and disabled people, and free personal and nursing care.

John Swinney (Scottish National Party, North Tayside)

I am interested in that list of measures, including those on bus travel and central heating, but none of them pays the council tax. Will Mr Lyon explain what measures the Government has taken to increase pensioners' uptake of council tax benefit, which the First Minister and others have cited as the mechanism for protecting pensioners from council tax poverty?

George Lyon (Liberal Democrat, Argyll and Bute)

As Mr Swinney will know, we are doing a lot of important work in conjunction with the Department for Work and Pensions and local authorities to try to increase the uptake of council tax benefit in Scotland. Of course, for pensioners and for all council tax payers across Scotland, we have just had the lowest average council tax increase since devolution.

The independent review committee received around 350 responses to its public consultation, of which almost a third were from pensioners. It also received 450 postcards from pensioners, as part of a campaign co-ordinated by Help the Aged. I have no doubt, therefore, that issues relating to low-income pensioner households are being fully considered by the review committee. I am also sure that the team will closely examine those responses and all the others that it received, including those from political parties. The committee will examine all the ideas that have been presented.

For the future, of course we want a system of local taxation that is fair, reliable, predictable and stable. I am sure that members across the party divides agree with that basic concept. That is why we should await the review committee's report. I do not intend to speculate today on what the committee might or might not conclude. What I can say is that we will examine its recommendations very carefully, and we will act on them.

I move amendment S2M-4363.4, to leave out from first "council tax" to end and insert:

"Scottish Executive has established the independent inquiry into local government finance consistent with the Partnership Agreement of May 2003; notes that the Labour Party has submitted clear and detailed proposals to support changes to the council tax, and further notes that the Liberal Democrats have submitted clear and detailed proposals to support a local income tax and that the inquiry is due to report in the future."

Derek Brownlee (Conservative, South of Scotland)

It is fair to say that no one doubts the importance of tackling pensioner poverty. When high council tax levels make that poverty worse, we have to consider carefully any measures that can be taken to ease the burden. There should be no doubt that for some pensioners, as for many groups in society, council tax is a real burden.

At the heart of today's short debate is a fundamental divide over whether the council tax is simply a flawed tax that cannot be improved or whether it is the level of the tax that causes the problems. In short, the question is whether the council tax should be abolished or reformed. As others have suggested, disagreements exist not only within the Parliament but within the Executive.

We could have a long debate—or a relatively long debate within our time limits this morning—on the merits of the council tax versus those of a local income tax. No doubt when the review committee publishes its report we will have a rather longer debate on the subject.

I want to touch on some of Mr Swinney's figures. He talked about the benefits of a local income tax in terms of collection rates. Most people accept that the collection rate for income tax is generally quite high, but the collection rate for income tax for Scotland that Mr Swinney mentioned is actually lower than the collection rate for council tax in England and Wales. That is a signal that, in Scotland, council tax collection could be better.

John Swinburne (SSCUP, Central Scotland)

Will the member give way?

Derek Brownlee (Conservative, South of Scotland)

No, I would like to make some progress.

If we improved collection rates—as the amendment in my name suggests we should—we could shave some money off the average level of council tax. The amount would not be huge, but it would make a difference.

Even if the review committee recommended a change, and even if—we might have to suspend our disbelief for a moment—the Executive agreed, any change to the local government finance system would take time. If we want to tackle pensioner poverty now, we should be considering more immediate measures. We should be considering what we can do with the council tax now.

The fundamental problem with the council tax is that it has increased by 60 per cent since 1997. That increase is well above the rate of inflation and well above the increases in income of most people who pay the tax. If we want fundamentally to reform the level of council tax rather than simply make an incremental change—that is, if we want to do something significant about the level of council tax rather than simply tinker at the edges—we will have to take a fundamental look at what councils do and at what we expect them to raise through the local government finance system, whatever that system might be.

Every time the Executive suggests new or enhanced services, we have to ensure that the councils that will be expected to provide them will be funded in full. I suspect that a significant portion of the increase in council tax since 1997 results from additional services being asked of councils but not financed.

Bruce Crawford (Scottish National Party, Mid Scotland and Fife)

Mr Brownlee said that we have to take a fundamental look at what councils do. What powers would the Tories either take away from councils or give to them?

Derek Brownlee (Conservative, South of Scotland)

The point is more about what councils can do with what they are asked to raise. For example, if education services were taken away from local authorities, shifts could be made in council tax. That should be considered. Education could be devolved to a lower level.

Andrew Arbuckle (Liberal Democrat, Mid Scotland and Fife)

Will the member give way?

Derek Brownlee (Conservative, South of Scotland)

No, I want to make some progress.

We could consider many issues in relation to the role of councils and what we expect them to raise.

As John Swinney pointed out, the uptake of council tax benefit is nowhere near as high as it should be. I suspect that many pensioners do not know that they are eligible for it, while others find it difficult to complete the application form or have a problem with the intrusive nature of many of the questions that they are asked in order to qualify for it.

Pensioners' difficulties have been compounded by the Chancellor of the Exchequer's scrapping of the temporary £200 council tax rebate that he introduced before last year's election. The day after he introduced it in his budget, he told the "Today" programme that his

"spending plans ... including what we can do for pensioners"

were "costed and affordable". In an online chat at the Labour Party conference, his friend the Prime Minister went further and said:

"Labour is helping the most vulnerable to meet the costs of council tax".

Of course, as soon as Labour got back into power, it scrapped the rebate.

I should point out that between 33 per cent and 42 per cent of pensioners who are eligible for pension credit do not receive it, so it is a bit naive to think that the Scottish Parliament alone can deal with pensioner poverty. Instead, we need a joined-up approach with the Westminster Administration.

Moreover, we should not discount the impact that improving council tax collection could make. Some councils—particularly those in cities, but I could mention some others—are simply not collecting the appropriate amount of council tax.

Mike Rumbles (Liberal Democrat, West Aberdeenshire and Kincardine)

What practical measures to improve their council tax collection rates should councils take that they are not already taking?

Derek Brownlee (Conservative, South of Scotland)

They should look at best practice. However, I strongly urge all councils not to look at what Inverclyde Council is doing. Its tax collection rates seem to be going down.

Mike Rumbles (Liberal Democrat, West Aberdeenshire and Kincardine)

But what should councils do?

Derek Brownlee (Conservative, South of Scotland)

Inverclyde Council provides a very good example of what a flagship Liberal Democrat authority is not doing.

If we are serious about tackling pensioner poverty instead of scoring political points, we must work with the United Kingdom Government, no matter its colour. I realise that that might be difficult for some SNP members who take a different view of life.

Defenders of a local income tax system claim that it will benefit pensioners, because they will not have to work, but the Liberal Democrats recently suggested that pensioners should work and that we should take the tough decision to raise the state pension age. As a result, under the Liberal Democrats, pensioners would be no better off, because they would have to work and pay local income tax.

We should not expect to resolve local government finance issues in a 75-minute debate. However, we need to address some pretty fundamental issues of council tax reform rather than debate certain parties' ideological obsession with the local income tax, which would be difficult to implement and expensive to collect.

Christine Grahame (Scottish National Party, South of Scotland)

The phrase "ideological obsession" will come back to haunt the member.

Derek Brownlee (Conservative, South of Scotland)

I was referring not to Christine Grahame but to political parties.

I have pleasure in moving amendment S2M-4363.1, to leave out from "recognises" to end and insert:

"notes that the council tax has increased by 60% since 1997 and that it is this large rise which has made the cost of local council services a punishing burden for so many Scottish households, especially pensioners; calls on the Scottish Executive to fund fully the centrally-driven policies which it imposes on local councils; further calls on the Executive to ensure that those who are entitled to council tax benefits are in receipt of them, and notes that in 2004-05 councils collected only 92.7% of council tax and that, if the Scottish councils improved their average collection rate to that of England, 96.5%, an extra £41.50 could be shaved off the average band D council tax in 2005-06."

Tommy Sheridan (SSP, Glasgow)

My amendment falls into two separate parts. First, it recognises that, as some members have already pointed out, the council tax is unsustainable as a system of raising revenue to pay for local government jobs and services. For a start, it is fundamentally flawed and unfair. It charges the very wealthiest people in society very little while charging the lowest paid workers, and particularly pensioners, a lot. Because it hammers the poor and pensioners and pampers the wealthy and well-off, it is clearly a Tory tax.

Unfortunately, since 1997—and particularly over the past seven years since 1999—this Tory tax has survived on a life support system operated by the Labour Party and, in Scotland, by Labour and the Liberal Democrats. Because they have helped to keep the council tax in place over the past seven years, the Liberal Democrats, in particular, should be ashamed of themselves.

Mike Rumbles (Liberal Democrat, West Aberdeenshire and Kincardine)

Does Tommy Sheridan accept that, given that the Labour Party and the Conservatives are opposed to changing the council tax system, there is no majority in this Parliament for such a change?

Tommy Sheridan (SSP, Glasgow)

I hope that during the 2007 election campaign Mr Rumbles and his colleagues will stand up at every hustings and say, "Listen, there's no much chance of us getting our policies through because we're no going to have a majority, but gaunae vote for us anyway?" The Liberal Democrats are involved in deliberate political deceit. As in the recent Dunfermline by-election, they are telling the electorate, "Vote for the Lib Dems to scrap the council tax in Scotland." However, in this Parliament they are saying, "Oh, wait a wee minute, we've no got a majority, so we cannae vote to scrap the council tax. Let's just

keep it now we've got the electorate's votes under false pretences."

Members should be in absolutely no doubt that the council tax is unfair. Even according to the Scottish Executive, 110,000 pensioners in Scotland are officially in council tax poverty because they are paying more than 10 per cent of their disposable income on the council tax. Indeed, Help the Aged suggests that that figure might be as high as 30 per cent. Of course, we are talking not just about pensioner households but ordinary working-class households. Seventy-eight per cent of Scotland's workers earn less than the average annual wage of £20,603. They are being hammered by this unfair tax. The first and foremost principle that we must establish this morning is that the council tax is rotten to the core and it must go.

In the second part of my amendment, I point out that the SNP has been politically duplicitous and has displayed rank political hypocrisy. In February, the nationalists had the opportunity to abolish the council tax when the Parliament voted on the general principles of the Council Tax Abolition and Service Tax Introduction (Scotland) Bill, but they refused to seize that opportunity, even though the convener of the Local Government and Transport Committee made it clear that the principle behind the bill was to abolish the council tax and replace it with an income-based alternative. We proposed that the form of any such alternative could be decided at stage 2, but the SNP refused to vote to allow the bill to proceed to that stage. That was political duplicity.

Stewart Stevenson (Scottish National Party, Banff and Buchan)

I remind the member that at the time he used the phrase "featherbedding". Under his bill, I, my wife and MSPs would have paid less tax. Only 21 words in the bill would have survived stage 2 amendments to make it into a piece of legislation to replace council tax with a fair local income tax. Mr Sheridan's proposal was simply not possible, and he should acknowledge that now.

Tommy Sheridan (SSP, Glasgow)

I will acknowledge that, under our alternative, Mr Stevenson, with his salary of £52,000, would have paid an average £2,500 more than he is currently paying in council tax. The same would have applied to everyone in the chamber, which is probably why the bill was voted down.

Stewart Stevenson said that, after stage 2, only 21 words would have remained of my bill—well, it would have been 21 words more than the SNP has introduced to deal with this matter in seven years. The SNP tells us that it is sincerely committed to replacing the council tax, but it has not introduced a single bill to do so. That political duplicity should be exposed today.

By all means let us scrap the council tax, but we must also expose the political double-dealing and duplicity of the SNP and the Liberal Democrats, who might well be partners in future.

I move amendment S2M-4363.3, to leave out from "and calls for" to end and insert:

"regrets the failure of the SNP and Liberal Democrat parties to vote for the replacement of the unfair council tax with an income-based alternative, when presented with such an opportunity during the February 2006 debate on the Council Tax Abolition and Service Tax Introduction (Scotland) Bill; notes the failure of either the SNP or Liberal Democrat parties to propose any concrete legislative alternative to the council tax over the last seven years, and believes that the overwhelming majority of Scottish citizens support the replacement of the council tax with a system based on income and designed to tax the wealthy more and ordinary workers and pensioners less."

Karen Whitefield (Labour, Airdrie and Shotts)

I welcome the opportunity to speak in the debate, not least because it provides us with an opportunity to highlight what Labour has done for pensioners both here and throughout the United Kingdom since coming to power. It also offers us an opportunity to examine the very real effects that the SNP's proposals for a local income tax would have. At best, the nationalists' attacks on council tax and their proposals for a local income tax are disingenuous. The very phrase "axe the tax", which the nationalists are so keen to punt, belies the fact that they are not planning to axe the tax at all, but merely proposing a different tax. We all know that no tax system will please everyone and that no tax system is ever perfect. The SNP must face up to the question whether its proposed tax system is fairer. In particular, does it deliver for our poorest people?

Alasdair Morgan (Scottish National Party, South of Scotland)

Will the member make it clear whether criticisms of the SNP also apply to her colleagues in Government?

Karen Whitefield (Labour, Airdrie and Shotts)

I shall mention that—I am sure that Mr Morgan will not be disappointed.

Is the SNP's proposed tax system practical and cost effective to collect? On all those points, the local income tax fails. I will touch on that later.

Let me be clear: improving the lives of older people—in particular, the poorest and most vulnerable—always has been and continues to be a priority for the Labour Party. Over the past few years, we have introduced a range of measures that I know from conversations with my constituents have made a real difference to older people in Scotland. Initiatives such as free national bus travel, the central heating initiative and warm deal, free health and dental checks and free personal care have complemented the improvements made by Labour colleagues at Westminster, which include the winter fuel allowance, free television licences and the pension credit. All those initiatives have helped to lift more than 170,000 Scottish pensioners out of poverty. That is not to say that more should not be done. In relation to today's motion, I recognise the need to improve and reform the current council tax system. In particular, it is important that the concerns raised by organisations such as Help the Aged are dealt with and that we improve the uptake of council tax benefit among the elderly. That is why I look forward to the findings of the independent local government finance review committee, which are due to be published soon.

Christine Grahame (Scottish National Party, South of Scotland)

rose—

Karen Whitefield (Labour, Airdrie and Shotts)

Christine Grahame should sit down. I have a lot to say and she is just going to have to listen for once.

Christine Grahame (Scottish National Party, South of Scotland)

What a spiteful madam.

Karen Whitefield (Labour, Airdrie and Shotts)

Christine Grahame taught me all I know about that.

John Swinney was wrong to suggest that the local government finance review is considering revaluation—we have ruled that out. The nationalists' proposals and, it has to be said, those of the Liberal Democrats, are not the solution. Many of the difficulties with those proposals have been fairly and clearly set out in the Local Government and Transport Committee's stage 1 report on the Council Tax Abolition and Service Tax Introduction (Scotland) Bill. Like Mr Sheridan's bill, the nationalist proposal would require primary legislation at Westminster and would take about nine years to implement. There would be no quick way to modify the pay-as-you-earn system for the collection of the tax, which in any case would be set at different levels in the 32 Scottish local authorities. Bristow Muldoon challenged John Swinney to set out what that would mean in all 32 local authorities. I have John Swinney's paper here. It gives us examples of seven local authorities in Scotland; it does not list all 32. It is about time John Swinney came clean and gave us the details on all 32 local authorities and all bands, not just band D and up, given that 70 per cent of Scots live in bands A to C.

It does not take much imagination to predict the kind of difficulties that would be faced in setting up a collection system. That is one of the questions that the nationalists and others in favour of a local income tax must face up to. How much will it cost to set up and run the bureaucratic system necessary to assess and collect a local income tax? What impact will local income tax differentials have on public services if people choose to move to areas of low taxation? What burden will be placed on the poorest citizens, who are in most need of those services? How will councils meet the shortfall in income resulting from the withdrawal of council tax benefit from the Treasury? The nationalist proposals are ill considered and would result in a bureaucratic nightmare that would leave Scotland's local authorities short of much-needed money and our public services struggling. That is why I cannot possibly support the SNP's motion.

John Swinburne (SSCUP, Central Scotland)

Today's debate is aptly named "Council Tax and Pensioner Poverty". The council tax is not the cause of pensioner poverty; the blame for that lies firmly at the door of 11 Downing Street. The golden boy, Gordon Brown, and all his predecessors at 11 Downing Street have combined for about 60 years—since the end of second world war—to treat with indifference and disdain the financial problems of long-suffering pensioners. The result has been that pensioners feel that politicians pay only lip service to their problems. They are 100 per cent right. Gordon Brown, in his latest lengthy budget, allocated a mere few seconds to pensions, saying that he would be examining in detail the findings of the Turner report, before continuing on to more pressing issues. That sums up his brief reaction to the fact that 1.8 million pensioners in the United Kingdom—by the Labour Government's reckoning, not mine—are living below the poverty line. In Scotland, that equates to 194,000 pensioners below the Government's poverty line. For one of the richest countries in the world, that is an abomination. No politician can look a pensioner in the eye and say, "We're being fair to you." Politicians should think, "Black, burning shame on us for what we are doing for pensioners—it is not nearly enough." I could go on and on all day, but there is an issue that we can do something about. In a written question to the Scottish Executive, I asked whether it would consider exempting pensioners who are in full receipt of council tax benefit from paying the cost of water and sewerage rates. It sounds logical: if a pensioner who has been means-tested qualifies for council tax benefit, having jumped through all the hoops, that can bring their income up to about £114 a week. However, then they are sent a bill for their water rates. For an average band D home, that amounts to £354.60. Where in the name of goodness is a pensioner who is on the breadline and who lives alone going to get £354.60 to pay their water rates? We can settle that question in the Parliament by instructing councils to stop sending out water rates demands to pensioners. That would avoid a lot of problems.

The answer I received from the Executive was:

"On 1 April 2006 the Scottish Executive introduced a water services charges reduction scheme for vulnerable households."

That means pensioners, by the way. The answer continues:

"The scheme provides a reduction in charges of up to 25% a year for households with more than two adults, who are in receipt of Council Tax Benefit (CTB), and no other discount. The purpose of the scheme is to introduce a permanent means of assisting low-income households largely occupying lower Council Tax bands, in receipt of CTB, which had previously received little or no assistance with their water services charges. The Executive has no plans to extend the scope of the scheme."—[Official Report, Written Answers, 9 May 2006; S2W-25504.]

The Executive lifts pensioners marginally out of poverty, then puts its foot on them and pushes them back down into poverty with water rates. For a single pensioner in a band D house, £354 is one hang of a lot of money. How the Executive can sit there and allow that to go through unchallenged is beyond my comprehension. No wonder ministers are hanging their heads.

By the way, I say to John Swinney that taxation raised through PAYE is not necessarily the answer. Lord Levy, who is alleged to have helped Tony Blair to sell peerages, is a multimillionaire and, allegedly, paid only £5,000 in income tax last year. A nurse pays more than that, so the Treasury will have to tighten up. I wish that Gordon Brown would tighten up on the Lord Levys of this world, as opposed to tightening up on the pensioners, who cannot afford to pay council tax and deal with all the other financial impediments that are put in their way.

I am proud of what the Parliament has done to introduce free personal care, free travel and free central heating for the elderly. The free central heating scheme is magnificent but, sadly, as time goes on, increasing numbers of pensioners find it impossible to turn on their excellent free central heating systems because the cost of fuel is going up at such a rate.

Politicians simply do not seem to be able to grasp the reality of what is happening to pensioners in this country. Pensioners make up about 22 per cent of the population and when it comes to putting an X on the ballot paper, they will not listen to the weasel words that are flung at them but will look at the council tax and water rate demands and will vote for people who are out to try to better their situation. Then members will think, "I wish I'd done a wee bit when I had the chance."

Alasdair Morgan (Scottish National Party, South of Scotland)

As an aside, I must pick up one illogical piece of nonsense from the Labour Party. In her speech, Karen Whitefield ruled out any revaluation and then went on to criticise the bureaucracy of the local income tax. However, she fails to realise that ruling out revaluation in her preferred system will, for the next 20 years, cause assessors to go around valuing any new property that is built—some are still being built despite the mismanagement of Scottish Water—at the price that it would have been worth had it existed in 1991. What kind of bureaucratic nonsense is that?

I refer members to the report of the Scottish Valuation and Rating Committee, also known as the Sorn committee, which I first mentioned in a debate in June 2002—there are some new members who did not hear me speak on that occasion. The Sorn committee considered different methods of raising tax. On the proposal of a local income tax, it said:

"This suggestion has been put to us from one quarter only, namely, the Scottish Council of the Labour Party."

That was in 1954. It is a pity that the ancestors of current Labour Party members did not manage to pass down some of their wisdom.

One of the reasons why the Sorn committee rejected local income tax was that, although it acknowledged that the rates, as they were then, did not reflect ability to pay, it thought that the totality of local government funding—at that point, 51 per cent came from the Treasury and 49 per cent came from rates—reflected ability to pay, because the 51 per cent from the Treasury was collected from income tax. If that was the case then, it would true in spades now, because the Treasury contribution has gone up from 51 per cent to something like 80 per cent. Although it is true for the totality of local government finance, it is decidedly not true for individuals on fixed incomes, who are the subject of the motion. Their contribution is not based on ability to pay; it is based on a fixed council tax that they have to pay out of a fixed income.

Another reason why the Sorn committee rejected local income tax was to do with practical difficulties. It is interesting that the committee did not investigate the difficulties itself but simply quoted a previous committee, which sat in 1922—I remind members that the Sorn committee reported in 1954. I hope that, as a result of his conversations with the Layfield committee, the minister will be able to assure us in his closing speech that the committee will not say whether or not something is practical simply by quoting the evidence from the 1922 committee—if he needs it, I can give him the reference for the document.

Any tax system relies on relief to make it equitable and acceptable, but if the types of relief become complex and costly to administer, if a substantial number of the proposed beneficiaries of them do not take them up and if the proportion that is not taking them up is increasing, we clearly have a major problem. The predecessor to the council tax—the poll tax—collapsed under the weight of its complexity, its contradictions and its huge unpopularity. It also brought its proponents to political near extinction in Scotland. We are fast approaching the point at which the council tax will go the same way, and, for the good of Scotland, I hope that when it goes—as surely it will—it also brings down the Labour-Liberal Democrat coalition that has been supporting it for the past seven years.

Sylvia Jackson (Labour, Stirling)

John Swinney's opening speech dealt with local income tax as an alternative to the council tax, rather than considering other aspects of pensioner poverty and how they have been tackled by the measures that the Labour Party is delivering in the coalition, but I suppose that that was to be expected.

I begin by considering the matter that John Swinney concentrated on most—the replacement of the council tax with a local income tax. There is no doubt that a local income tax would hit working families the hardest. Double-income families would be among the biggest losers. That has obvious implications for younger people who are just starting work, given the difficulties that they face with finding affordable housing, which we all know about. Single people who live alone would lose their current discount, which means that every person who lives alone would pay more. A local income tax would be less stable than a property-based tax, as the yield from income tax is less predictable.

Tommy Sheridan (SSP, Glasgow)

Will Sylvia Jackson give way?

Sylvia Jackson (Labour, Stirling)

I am sorry, but I have a lot to get through.

A local income tax would be more complex and expensive to collect than the council tax. Although the proposal might look attractive to pensioners, the local income tax form could be as complicated to fill in as self-assessment tax returns. Those issues have not been addressed at all.

The Labour Party believes that the council tax can be redesigned to be fairer and more representative of today's property market. The 2003 Scottish Labour Party manifesto and the partnership agreement committed us to an independent review of local government finance. The manifesto commitment stated:

"We will design a fairer council tax banding system which is more representative of house valuations in Scotland",

particularly by extending the range of the upper council tax bands. That is another point that John Swinney and other SNP members conveniently did not mention.

The real issue is what the SNP's proposals are for a local income tax and whether they can stand up to scrutiny. Although the SNP is always willing to highlight what its proposals would mean to those with no income, it is less enthusiastic about spelling out their effects on working families. Its proposals, which were launched in March 2004, seek to replace the current council tax with a locally set income tax and, according to the SNP's figures, would increase income tax by 4.3p in the pound. There is no doubt that such proposals would hit ordinary working families the hardest.

It must also be pointed out that the SNP's proposals consider only seven local authorities, not all 32. There is no reference in the SNP's material to what its proposals would mean to any of my constituents. Moreover, the SNP does not consider council tax bands A, B or C; all that it considers in its material is band D. Is it not suspicious that the SNP considers only one band?

I reiterate what Karen Whitefield said about the many things that the Labour Party has done to alleviate pensioner poverty. The winter fuel allowance, the warm deal, the central heating programme, free television licences and free national bus travel—the list goes on. For the reasons that I have outlined, we cannot support the SNP motion.

Mark Ballard (Green, Lothians)

I am grateful to the SNP for spending part of its debating time this morning on the unfairness of the council tax and the growing problem of pensioner poverty, not least because it gives me the opportunity to expand on not one, but two, key Green economic policies: land value taxation and the citizen's income. As the Greens argued in their submission to the independent review of local government finance, land value taxation is a more equitable, efficient and economic solution to the needs of local government finance. We hope that, whenever that report comes out, it will recognise the benefits that LVT—to which I will return later—can bring.

The first question that we must address is that of why pensioners are facing such hard times. What are the causes of pensioner poverty? Council tax poverty is only one kind of pensioner poverty. Pensioners face fuel poverty, and they even face food poverty. As John Swinburne rightly pointed out, inadequate pension provision lies at the heart of the matter. Less than half of pensioners earn enough to pay any income tax at all. A recent report showed that a worker earning an average wage is likely to retire on less than the minimum wage. We are an affluent society but, at the moment, we are not providing a decent income for all pensioners.

The single most helpful action that we could take for the pensioners of both today and tomorrow would be to restore the link between pensions and earnings. We can change the local government finance system as much as we like, with income taxes, council taxes, poll taxes or LVT, but unless we tackle the central problem that is faced by pensioners, which is that they are not getting enough money in, we will not do anything to tackle the causes of pensioner poverty.

The latest long-term projections by the Treasury and the Department for Work and Pensions show that the amount that they plan to spend on the state pension is falling as a percentage of gross domestic product, from 6.2 per cent today to 5.8 per cent by 2050. The number of pensioners is going up, but the Treasury predicts that it will spend less of GDP on the state pension. That is largely due to the windfall of at least £5.5 billion a year from the retirement age for women going up to 65. It is also a consequence of the Government's failed approach, with a morass of means-tested benefits topped off by the minimum income guarantee.

That is a major disincentive for anyone to save. With means-tested benefits, if people have saved, they will not get the minimum income guarantee. That is why Green policy is to award all pensioners a citizen's pension, as a supplement to the citizen's income scheme, which would mean a guaranteed payment to all by right. That would be the solution for bringing pensioners the money that they need.

That arrangement would have to be linked to the taxation system—a fairer, more equitable system of local government taxation. The problem with the council tax is not, as Derek Brownlee argued, that it is too high. It is a flawed tax, which was drawn up by the Tories on the back of a fag packet to deal with the disaster of the poll tax. It is not based on real ability to pay, and—

Murray Tosh (Conservative, West of Scotland)

The sound system has been switched off because the fire alarm is sounding. The fault—if it is a fault—has not been traced. The building is being evacuated in phases, and it is now necessary to evacuate the chamber.

When we resume the meeting, we will probably have to adjust the remainder of the day's business. I do not think that I will be calling you for the remaining 30 seconds of your speech, Mr Ballard—although it was very well received by members.

Murray Tosh (Conservative, West of Scotland)

Order. I think that the official reporters can carry on straight from the sound. The sound goes upstairs. What we do not have are the people to send the messages in the chamber, but I think we can pick up the debate with the closing speeches.

Because of the interruption in the course of the debate, I communicate my apologies to Andrew Arbuckle and Stewart Stevenson, whom I am not now going to call. We are going now to the closing speeches. I call Tommy Sheridan to close for the Scottish Socialist Party.

Tommy Sheridan (SSP, Glasgow)

The interruption gives a whole new meaning to the idea of continuing the debate outside. It appears that that has a different connotation in the west of Scotland from the one that it has in the east of Scotland.

We have had a partial debate. Unfortunately, none of the SNP or Liberal Democrat speakers was able to defend themselves from the accusation of duplicity. Obviously, whoever sums up for those parties will try, in vain, to defend themselves from that accusation. I look forward to highlighting over the next 12 months the fact that, when this Parliament was given the only opportunity to—

Stewart Stevenson (Scottish National Party, Banff and Buchan)

Will the member give way?

Tommy Sheridan (SSP, Glasgow)

I will give way because the member never got a chance to speak and I am a fair type of guy.

Stewart Stevenson (Scottish National Party, Banff and Buchan)

Will the member accept that, under the proposals that he brought to Parliament, which I voted against, I would have paid no tax, although I have one of the highest incomes of anyone in this Parliament?

Tommy Sheridan (SSP, Glasgow)

Not for the first time, Stewart Stevenson is talking nonsense. Under the service tax proposal, he would have been taxed on his income as an MSP at a rate of £3,900 a year. There is not a council tax bill in the whole of Scotland that currently reaches £3,900 a year. Stewart Stevenson would have paid more under the Scottish service tax than he pays under the council tax. That would have been quite appropriate, because he can afford to pay that amount of money.

In relation to the abolition of council tax, we are talking about introducing a fairer form of taxation that redistributes wealth away from those with plenty and toward those with little. That is what redistribution of wealth is all about and is what the proposal that was before Parliament in February would have delivered. After we had voted for the principle of abolishing council tax and replacing it with a form of income-based taxation, we could have had an argument at stage 2 about the form of taxation that we wanted to put in place and debated the pros and cons of a tax that is set nationally in comparison with a tax that is set locally.

My argument is that the form of tax that was proposed in the Council Tax Abolition and Service Tax Introduction (Scotland) Bill would have been more cost effective, more efficient and more redistributive than a local income tax could be. A local income tax would require 32 different sets of taxation. If that local income tax system also involved different rates within each local authority, each of the 32 local authorities would set different rates. There would be 32 different collection mechanisms and 32 different sets of explanations of the level of income at which people would have to pay their tax. However, under the proposals in the bill that the SNP and the Liberal Democrats voted against, the rates that would have been set nationally would have ensured that an individual on £20,000 a year in Paisley would have paid the same in local taxes as an individual on £20,000 a year in Perth.

Some members on the Labour benches have asked the SNP how much people would pay under the SNP's local income tax scheme. We can tell members in detail how much people would have to pay under our system. We can tell members that, based on the latest figures from HM Revenue and Customs, the proposal that the SNP voted against would not only have taxed people more fairly but would have raised £300 million more for local government jobs and services. We would have had a win-win situation.

The problem is that the SNP and the Liberal Democrats have spent seven years desperately telling everyone in Scotland who was willing to listen that they were going to scrap the council tax but, when they had the only opportunity in seven years to do so, they were feart of taxing the wealthy too much. That is disappointing, not only for the people who voted for those parties, but for ordinary Scottish citizens.

I urge members to support the amendment in my name.

Murray Tosh (Conservative, West of Scotland)

As Sylvia Jackson has already spoken on behalf of the Labour Party, I call Dave Petrie to close for the Conservatives.

Dave Petrie (Conservative, Highlands and Islands)

I thank you for your warm welcome to the chamber, Presiding Officer—nothing to do with the fire, of course.

It is patently obvious that there is no palatable way in which to fund essential local services. However, the most important provision that we want from our local authorities is a service that represents value for the money collected. The concern of all parties must be that, at the moment, money is not being used to the best effect and, more important, is being driven into ever-increasing bureaucracy while the provision of front-line services continues to disintegrate.

I am particularly concerned about the double handling of public funding of major functions such as transport, education and social work at Holyrood and councils. That feeds bureaucracy and undermines those vital services. It is worth pointing out again that, since Labour came to power in 1997, council tax has risen by 60 per cent. I agree with the widely held view that people are dissatisfied with the high levels of council tax that they must pay today and endorse the view that they are paying too much, particularly given that, on average, councils collect only 92.7 per cent of owed council tax.

We have had an excellent debate and have heard some interesting speeches. As my colleague Derek Brownlee said, council tax can be only one part of the overall equation. The Scottish Conservatives' argument is for a broadly based and rational funding system rather than one that is based solely on income. Because of that, I cannot agree with the SNP motion.

Under the local income tax proposals, it seems that the greatest burden would fall on those who have families and on parents who have mortgages, income tax, national insurance and household bills to pay. Hard-working families are often cited as the very people whom political parties would seek to help. We should not be weighing them down with additional taxation. The SNP's proposals would make housing more unaffordable for young couples and first-time buyers, whose income would be targeted. As an MSP for the Highlands and Islands, I am particularly aware of the lack of affordable housing to buy or rent and the difficulty that people have in making the first step on the housing ladder.

There are already great disparities between the levels of comparable council service in rural and urban areas. In Argyll and Bute Council's area, in which I live, residents pay similar levels of council tax to those that are paid by people in Glasgow and Edinburgh but do not receive anything approaching comparable levels of public services such as libraries, museums and recreational facilities. In addition, there is a moratorium in Argyll and Bute on free personal care for the elderly. I have great sympathy for those pensioners who are suffering and living in poverty. While council tax bills have increased at twice the rate of pensions, real poverty has left them at risk of cold-related illnesses.

Tax rises, such as those of the past decade, are most hard on those with low, fixed incomes, such as pensioners. As Help the Aged has pointed out, council tax benefit can be highly effective in alleviating the worst effects of council tax and should be a mechanism to ensure that the poorest in our society do not suffer. However, the system is so complicated that the benefit often no longer reaches the people who are entitled to it.

On-going difficulties in finding out about entitled benefits and consequent limited take-up of such initiatives is a serious problem. To simplify the matter and make the system more inclusive, we propose to restore the link between pensions and average earnings as a better way to help pensioners. Pensioners who are suffering due to the current weaknesses in the system deserve a revision of that reality and should be given a more appropriate liability to pay.

I urge members to support the amendment in the name of my good friend, Derek Brownlee.

George Lyon (Liberal Democrat, Argyll and Bute)

The debate has reflected previous debates on this matter, with the various parties setting out their positions with regard to the future of the council tax.

Mr Swinney set out the SNP's position quite clearly and recognised the difference of opinion that exists between the Liberal Democrat and Labour members of the coalition.

Mr Brownlee talked about improvements in the collection of council tax. Everyone in the chamber would like collection rates to be improved and agrees that such an improvement would have an impact on the provision of services and on council tax levels. With regard to his claim that council tax has increased by 60 per cent since 1997, I point out that since 1999—when the Liberal Democrat and Labour coalition came to power—the increase in council tax has been 11 per cent.

Tommy Sheridan (SSP, Glasgow)

I take it from the minister's comments on the difference between 1997 and 1999 that Labour is to blame for the rises in council tax.

George Lyon (Liberal Democrat, Argyll and Bute)

I am just quoting the facts. I leave it to Mr Sheridan to draw conclusions.

I was interested in Mr Brownlee's comment that the Conservatives were going to take responsibility for education away from councils. I am not sure whether that was a new policy announcement or whether Mr Brownlee was just thinking out loud.

Derek Brownlee (Conservative, South of Scotland)

Will the minister take an intervention?

George Lyon (Liberal Democrat, Argyll and Bute)

No. I will make some progress. We are short of time.

We heard Mr Sheridan's usual strong rant from the back about the Scottish service tax. As we all know, that would be a national and not a local tax. It would centralise decision making and be punitive in nature. It would drive out entrepreneurs and those who create the wealth in Scotland, but Mr Sheridan has made it clear in previous debates that he does not give a damn about that.

Mr Morgan mentioned the Scottish Valuation and Rating Committee report of 1954. Unless I misheard, he mentioned my conversations with the Layfield committee and said that I should do various things. I think that he meant the Burt committee. I certainly was not around when the Layfield committee reported.

As I said in my opening speech, in 2004 the Executive commissioned an independent local government finance review to undertake a comprehensive study and make recommendations on the way forward. I reiterate the commitment of Scotland's devolved Government to the independent review, which is the correct way forward on the vital issue of local taxation. The matter is serious and complex and the Burt committee needs to complete its work before the Parliament makes decisions on that important issue.

As I have said to the Parliament before, we need a careful and independent consideration of the different models of local taxation. That is what the review team is doing. The committee is considering all the various models of taxation that have been proposed by the political parties: the local income tax model from the Liberal Democrats and the SNP; the improved council tax model from the Labour Party and the Conservatives; and the land valuation tax model and the Scottish service tax model from the Greens and the SSP. Even the poll tax is being considered, although I do not think that there is any political support for its return.

I am heartened by the interest and debate that the independent review has generated and continues to generate throughout Scotland. I am sure that I am not alone in receiving many letters on the issue, particularly from pensioners. They are glad to have the opportunity to feed their views into the review and the committee's work. Many pensioners and pensioners groups took the opportunity to respond to the Burt committee's consultation and I am sure that they are well aware of the many issues that have been raised today.

I have some sympathy with many of the points that have been made, especially on pensioner poverty, which is an important issue. None of us wants a system that impacts disproportionately on some of the most vulnerable people in society. The issues are complex and challenging and the debate will continue. Local taxation is a fundamental issue and we look forward to the review's conclusions and findings.

Murray Tosh (Conservative, West of Scotland)

I call Christine Grahame to wind up for the SNP. You have seven minutes.

Christine Grahame (Scottish National Party, South of Scotland)

Thank you, Presiding Officer. I will speak slowly; I thought I was going to get only five minutes.

Murray Tosh (Conservative, West of Scotland)

If you can do it in five minutes, that would be helpful.

Christine Grahame (Scottish National Party, South of Scotland)

I will try. I wish I had not said that, now.

It is a great shame that the fire alarm—which will, no doubt, be the butt of many jokes in columns and perhaps newspaper headlines tomorrow—will overtake what has been a serious debate about pensioner poverty and the complete failure of the Liberal-Labour coalition, over seven years, to do something that we have the power to do in Scotland, which is to get rid of the council tax and put in its place a fair local income tax.

The basic rule of tax is that it should be fair and collectable. None of us likes paying tax, but we accept that basing taxes on income is the fairest way to tax people. I will move on to the collectability of tax shortly.

The background to the debate is the shame of pensioner poverty in Scotland. Some 190,000 pensioners in Scotland live in relative poverty even though Scotland is an oil, gas and energy-rich nation. There is a failure in the targeting of benefits. I find it astonishing, after my many years here, that Labour is still defending the targeting of benefits. As Labour members know, there has been a 10 per cent decrease in claims for council tax benefit in the past five years. We also know that one third of pensioners who are eligible for the pension credit do not claim it. In a debate many months ago, I produced the pension credit application form—all 60-odd pages of it—and another booklet about how to fill it in. There are many reasons why people do not claim pension credit, including the complexity of making a claim, the fact that they do not know that they are entitled to it, and the shame of asking for it. During the same period, the Labour Government at Westminster has had the shameful record of keeping the basic state pension at the same level—currently, it is only £82 for a single pensioner. Many single pensioners do not even get that, particularly women who do not have enough credits to their name. Again, many of them do not claim pension credit.

Against that background, what could the Scottish Parliament have done for the 1 million Scottish pensioners? What does it have the power to do? It has the power to introduce a fair tax, but the Labour and Liberal coalition has singularly failed to do that. No matter what members from the Labour benches say, if one speaks to individual pensioners in the supermarket or to pensioners organisations, the two things that they say they want are a decent pension and a local income tax. Of course, with independence we could also deliver, as my party would, a decent citizens wage. That would take all the means testing out of the system.

Despite pensioner poverty in Scotland, pensioners pay their council tax bills, their rent and whatever else they have to pay. Where are the cuts made? They are made on eating and heating. If we go to the supermarket and look in pensioners' trolleys, we see they do not contain a Sainsbury's crate of six bottles of wine, or instant meals. Pensioners buy small amounts and individual bits of food that they can use up and they look for things that are reduced. Many of Scotland's pensioners buy their clothes in charity shops.

The central heating programme is welcome, but what is its point if people cannot afford to switch on the heating? In 2004-05, there were 2,760 excess winter deaths in Scotland.

Tommy Sheridan (SSP, Glasgow)

I waited three and a half minutes before trying to intervene. Christine Grahame is right to highlight the fact that the Lib Dems and Labour have failed to change the tax for seven years. However, does she accept that, during that time, the SNP should have brought forward legislative proposals to change the council tax? In the absence of such proposals, does she accept that the SNP should have voted for the socialist Council Tax Abolition and Service Tax Introduction (Scotland) Bill?

Christine Grahame (Scottish National Party, South of Scotland)

I will come to Tommy Sheridan's bill shortly.

I wanted to set out the background because we should remember the canvas against which we work.

I turn to the points that were raised by other members. Tommy Sheridan's bill was fundamentally flawed. Ten of the 11 sections in the bill would have punished people and would have done nothing to alleviate pensioner poverty. Not only that, the bill would have taken away local accountability. Frankly, the Parliament has taken too much away from local government. I want local government to be responsible for raising some of the money that provides the services. We would still provide some of the money from here. People want that to happen. We cannot expect people in the Borders to pay the same local income tax as people in Glasgow because they have different needs and requirements.

Karen Whitefield's claim that she was my star pupil astounded me. I have to say that my pupil has not been paying attention and that she must speak to teacher after class. She has lessons to learn.

Free personal care was lauded, but the coalition had to be dragged kicking and screaming to deliver the initiative, which was driven by the Scottish National Party. The SNP took the lead on the issue—I was the first person in the Parliament to lodge a member's bill on free personal care. The SNP drove forward the proposal, against the wishes of the then Minister for Health and Community Care, Susan Deacon.

The point about the cost of collecting local income tax was a red herring. Consider the money that is wasted at present: £30 million-worth of council tax benefit is not collected and £78 million is spent on collection. The system would be simple to administer. We all have national insurance numbers, income tax codes and postcodes, so it would not be beyond our wit to administer the system. Sylvia Jackson talked about working families, but Labour's record on the shambles of the working families tax credit system is shameful. My in-tray is full of letters about that.

Pensioners will not be reading tomorrow's paper to read about a fire. Pensioners will want to know what members have said in the chamber. I will use extracts from Labour members' speeches in my election campaign next year. Votes are running away from the Labour Party. The 1 million pensioners in Scotland are listening to the fact that the SNP would deliver a local income tax and a decent pension. The Liberals have had seven years to deliver that and they have not done so, but they swan around as if they have achievements. Were we in their position, we would now have a local income tax. The voters are waking up fast to the Liberals, who have no proposals. I am also delighted that it has been put on the record that a revaluation will not take place.

Scottish Enterprise

Murray Tosh (Conservative, West of Scotland)

We come to the next item of business still some distance behind the clock. I have taken the opportunity of inviting one member to stand down from the debate. It may be necessary to reduce speaking times in the open debate, but I will try to protect time so that all members who wish to speak are called.

The debate is on motion S2M-4367, in the name of Jim Mather, on Scottish Enterprise. Mr Mather is entitled to seven minutes for his speech, but any economies will be greatly appreciated.

Jim Mather (Scottish National Party, Highlands and Islands)

Today's issue is not Scottish Enterprise's management trying to do an impossible job. Scottish Enterprise is a subset of the tools that Scotland needs—that view has been endorsed recently in reports that have slipped out from Scottish Enterprise under cover of darkness, such as those on the knowledge economy and on headquarters. As we have seen in recent weeks, Scottish Enterprise's management labours under considerable structural and procedural complexity. Meanwhile, other nations enjoy the lean and focused efficiency of financial autonomy and of getting on with growing their economies.

The debate is more about the Executive's promotion—amazingly—of the idea that that inadequate tool is enough, which is a big lie that goes back to 1974. We know that because we have an internal Government memo from 1974 that says:

"an SDA would be attractive just because it might make it possible to buy off some of the pressures from Scotland without a substantial addition to expenditure there."

That was said in the McCrone era.

The memo also says:

"There would be an element of window dressing about it in that the SDA would take over money now spent through the Department of Industry's Regional Office."

That window-dressing continues. We have had 30 years of Scottish Development Agency and Scottish Enterprise activity, which have resulted in the lowest growth rate in western Europe in that period.

Our objective is to knock more scales from more eyes. As Peter McMahon said in Scottish Business Insider this week,

"We need a more mature attitude to this area of public policy".

We must find a better way—that is the mature approach—and make the Executive's top priority much more than rhetoric. Recent events have further endorsed our position and our aspirations for Scotland.

John Swinburne (SSCUP, Central Scotland)

Will the member give way?

Christine May (Labour, Central Fife)

Will the member take an intervention?

Jim Mather (Scottish National Party, Highlands and Islands)

I am delighted to take an intervention.

Christine May (Labour, Central Fife)

If our strategy is such a basket-case, how does Mr Mather explain the view of the Financial Times that Scotland is the United Kingdom region of the future and the best region in Europe for human resources, skills and education, and that it has the best strategy for inward investment?

Jim Mather (Scottish National Party, Highlands and Islands)

I will meet Scottish Enterprise representatives tomorrow. We should take that medal and use it where we can, but I hope that our opponents do not subject it to audit, because it is the thinnest thing that I have ever seen.

The fact is that senior managers of Scottish Enterprise and ministers support something that cannot work. The growth rate over the years shows that Scottish Enterprise is certainly not enough on its own. We have evidence that managers and ministers are trying too hard to make an engine that cannot work move into action, hence the deficit and the cuts to, and threats and uncertainty about, services. There are asset disposals that look like a fire sale, redundancies and last-minute cash and resource transfers. The net effect is that Scottish Enterprise—our only tool—has been damaged by the people who are supposed to be its custodians.

Can Scottish Enterprise—our only tool—lift our living standards to the average level elsewhere? We face a choice: will we continue to hear the claim that the current strategy will work—that strategy would increase the damage and earn the condemnation of posterity—or will we admit that it cannot work on its own without economic powers? If we admit that, we can start the recovery process and gain the plaudits of posterity. Members will note that on 25 April, neither Jack Perry nor John Ward felt able to answer the question whether the strategy will work.

Jamie Stone (Liberal Democrat, Caithness, Sutherland and Easter Ross)

Will the member give way?

Jim Mather (Scottish National Party, Highlands and Islands)

No. I will crack on and put some content on the record.

The question whether we can converge must be answered. An honest answer from the minister that would stand the audit of posterity would start a new era and would be good news. It would acknowledge that Scottish Enterprise and the minister are responsible to the people of Scotland and that the powers have limitations and would recognise poor continuity and poor expectation setting. It would force the Scottish Executive and Scottish Enterprise's management at least to start the process of taking a new mature attitude to public policy.

Jamie Stone (Liberal Democrat, Caithness, Sutherland and Easter Ross)

Will the member give way?

Jim Mather (Scottish National Party, Highlands and Islands)

Mr Stone is persistent, so I will give way.

Jamie Stone (Liberal Democrat, Caithness, Sutherland and Easter Ross)

Jim Mather's colleague Alex Neil first gave Scottish Enterprise's management three months to sort out the situation and then said 10 days later that the management should be fired. I notice that the motion does not mention that. What is the Scottish National Party's policy?

Jim Mather (Scottish National Party, Highlands and Islands)

The SNP's policy is to make the best of what we have, and Scottish Enterprise is all that we have. The roots of its failure and difficulty are in the window-dressing of 1974 that Governments have kept going for 30 years. For my entire working life, Governments have kept that farce going—I expect Kafka to appear to analyse and audit Scottish Enterprise.

Karen Gillon (Labour, Clydesdale)

Will the member take an intervention?

Jim Mather (Scottish National Party, Highlands and Islands)

Sit down—I will not take an intervention.

Governments have created a system that is complex and confusing. The Executive is either a player, the coach of Scottish Enterprise or at arm's length away from Scottish Enterprise when it says, "That is an operational matter for Scottish Enterprise—we won't touch that." The Executive will never recognise its joint and several liability for making that one engine of economic growth its responsibility.

Karen Gillon (Labour, Clydesdale)

Will the member take an intervention?

Jim Mather (Scottish National Party, Highlands and Islands)

Karen Gillon can sit down.

In the past week or two, Ronald MacDonald has moved from fiscal federalism to financial independence or full independence, on the basis of the implicit moral hazard of a safety net. That moral hazard prevents wise spending and the achievement of economic growth. I advise the minister to read Ronald MacDonald's paper with great interest.

The mature approach for which McMahon calls is the Ronald MacDonald approach—the full-powers, standing-on-your-own-two-feet approach. That is why I will write to members today to seek support to create a cross-party group on Scotland's financial future that will debate all the options, inform the debate, properly assess the problems, challenges and opportunities, examine all the alternatives, create a climate for honest examination of the options and honestly assess others' experience. The question is who will join that cross-party group. Who is callous enough not to join the debate? Scottish Enterprise and Highlands and Islands Enterprise will never be enough. I have pleasure in moving the motion in my name.

I move,

That the Parliament views the current financial position of Scottish Enterprise with mounting concern, given that the overspend is now estimated to be in excess of £60 million; is doubly concerned that this overspend will jeopardise jobs, skills and training, including those jobs of Scottish Enterprise employees; is disturbed to discover that Scottish Executive ministers were unaware of the true extent of the overspend for four months after it was first identified; criticises the failure to address this mismanagement at an earlier stage, and calls for urgent action to be taken to address the current problems facing Scottish Enterprise, for future guarantees that organisations must live within their established budgets and a recognition that the activity of enterprise agencies will never adequately compensate the people of Scotland for the lack of economic powers and the full means to manage the Scottish economy competitively and effectively in the interest of everyone in Scotland.

Nicol Stephen (Liberal Democrat, Aberdeen South)

Jim Mather called for a mature debate—he certainly quoted Peter McMahon's call for a mature debate. Jim Mather started the SNP's contribution by saying, "It's just a lie," and he quickly distanced himself from Alex Neil's call for the chairman and the chief executive of Scottish Enterprise to have three months to prove themselves, which was followed by his call days later for them to be sacked.

Over the years, Jim Mather has made interesting contributions on the Scottish economy. I recall that when he spoke to The Courier newspaper back in June 2004, he called the Scottish economy "a crazy, deviant economy" and "A busted flush." I ask members to judge whether that was part of a mature debate. Is that likely to develop Scotland's economy, to attract international investors or to create the cross-party consensus on the economy that is important to Scotland's future economic success?

Jim Mather (Scottish National Party, Highlands and Islands)

People are entitled to make such comments when the economy is unlike anything else in the world and when the results justify them.

Will the minister tell us what Jack Perry and John Ward could not tell us? Will the current strategy make the living standards of Scottish taxpayers converge with those in London, the south-east and elsewhere? Yes or no?

Nicol Stephen (Liberal Democrat, Aberdeen South)

Given the language that Jim Mather has used in the past and has continued to use in today's debate, perhaps he should consider whether Peter McMahon's call for a mature debate is not directed at him and the Scottish National Party.

I will take the opportunity to update members on developments since my previous statement to the Parliament on 30 March. As members know, KPMG was commissioned to investigate the reasons for the overspend, to check the accuracy of the overspend estimate and to make any recommendations on financial practice and reporting. The KPMG report points to some serious failures, which I have instructed Scottish Enterprise to address. I have written formally to Sir John Ward to require implementation of the recommendations of the KPMG report. In addition, Scottish Enterprise intends to implement the detailed recommendations of its own internal audit process. The Enterprise, Transport and Lifelong Learning Department will liaise with Scottish Enterprise on the implementation of the KPMG recommendations, but I also intend to ensure that there is an external check on progress.

John Swinney (Scottish National Party, North Tayside)

Will the minister give way?

Nicol Stephen (Liberal Democrat, Aberdeen South)

I give way to John Swinney.

John Swinney (Scottish National Party, North Tayside)

rose—

Murray Tosh (Conservative, West of Scotland)

Can we have sound for Mr Swinney please? I suggest that Mr Swinney should speak from the microphone next to him.

John Swinney (Scottish National Party, North Tayside)

I am grateful to the minister for giving way.

Murray Tosh (Conservative, West of Scotland)

Mr Swinney, your own microphone has now been switched on.

John Swinney (Scottish National Party, North Tayside)

Is the minister aware that, as a consequence of Scottish Enterprise's budget crisis, several local projects that the agency had committed to deliver in partnership with local authorities and other private sector providers have now been cut back?

Murray Tosh (Conservative, West of Scotland)

You must be quick.

John Swinney (Scottish National Party, North Tayside)

Those projects include initiatives in my constituency that were due to receive rural initiative funding and a crucial enterprise programme in Dundee's life science industry centre. What action can the minister take to ensure that the economy is not damaged by Scottish Enterprise's withdrawal from those programmes?

Nicol Stephen (Liberal Democrat, Aberdeen South)

I should perhaps signal that I am happy to take interventions—

Murray Tosh (Conservative, West of Scotland)

Minister, we are very short of time.

Nicol Stephen (Liberal Democrat, Aberdeen South)

—and I would be willing to release time from my summing-up speech if that would be helpful.

It is important that we make available to Scottish Enterprise additional resources, which will also assist those partner projects that are under threat. However, I realise that Scottish Enterprise will continue to experience difficulties—I will focus on that point later in my remarks—but I ask MSPs to continue to keep both Scottish Enterprise and me informed of any particular concerns that they might have. Along with the staff of my department and of Scottish Enterprise, I will work hard on those issues over the coming weeks.

Scottish Enterprise has accepted that it should have taken stronger action in November and December once the scale of its estimated overspend became known and that the lack of such action is the key cause of the overspend. Scottish Enterprise's non-cash budget, although it was not the central issue, has been an important factor.

Regarding the financial situation over the coming 12 months—the period 2006-07—I promised last week, when I gave evidence to the Enterprise and Culture Committee, to announce funding to allow the Scottish Enterprise board to fix its budget at its meeting on 12 May, which is tomorrow. Today, I have written to that effect to Sir John Ward and I have met Jack Perry, who is the chief executive of Scottish Enterprise. I have also answered a parliamentary question on the issue and I have written to Alex Neil, who is the convener of the Enterprise and Culture Committee.

Karen Gillon (Labour, Clydesdale)

Will the minister explain where in his resources the £25 million that has been given to Scottish Enterprise will come from? What would that money have been used for if it had not been given to Scottish Enterprise?

Nicol Stephen (Liberal Democrat, Aberdeen South)

Clearly, within the enterprise and lifelong learning budget, we have had to reprofile spend and use the limited flexibility that existed within budgets that were already fixed so that we could deal with the issues.

I want now to clarify what additional funding has been made available. The Executive will provide an additional £45 million of resource cover so that Scottish Enterprise can meet its non-cash requirements in 2006-07 and access its reserves. Scottish Enterprise will also be able to retain receipts of up to £5 million above the previously agreed target. Those steps will cover repayment of the non-cash element of the budget overspend in 2005-06. Scottish Enterprise will therefore be able to deploy an additional £50 million of resources, which will allow the board to agree Scottish Enterprise's budget for 2006-07 in a way that reflects the Executive's priorities.

Alex Neil (Scottish National Party, Central Scotland)

Will the minister take an intervention?

Nicol Stephen (Liberal Democrat, Aberdeen South)

I would be happy to do so, but I am already significantly over my time and, unfortunately, I still have some more remarks to make. Perhaps I can come back to the member in my summing-up speech.

On that basis, I now expect that Scottish Enterprise's allocated budget, taking into account all income and from which it must allow for all resource-spend items, will be £550 million. As I said in response to John Swinney, Scottish Enterprise will still face significant pressures due to the scale of projects in the pipeline. I have asked Scottish Enterprise to keep closely in touch with me on those matters. Clearly, MSPs will wish to continue to keep me informed of local issues.

For Scotland's economy, it is important that Scottish Enterprise gets back on track in terms of support. I signal my strong support for Scottish Enterprise in its challenge over the coming year. Scottish Enterprise is doing good work that is vital for Scotland's economic future through investment in the intermediary technology institutes and in skills and training. Scottish Enterprise is winning international recognition and success, with new projects such as those involving Wyeth, Invitrogen and Morgan Stanley.

Scottish Enterprise must support the local initiatives and projects of its local enterprise companies and their boards. I pay tribute again to the hard work of the Scottish Enterprise board and the local enterprise company board members. That is the mix that is supported by ministers and which the Executive's amendment backs.

I move amendment S2M-4367.2, to leave out from "views" to end and insert:

"recognises the important role of Scottish Enterprise in supporting the growth of the Scottish economy; endorses the strategic direction set by ministers for Scottish Enterprise in terms of business growth, regeneration and local development initiatives, training, skills and maximising international opportunities; welcomes the steps taken by the Scottish Executive to secure effective financial management by Scottish Enterprise in the future, in particular the commissioning of the robust report by KPMG and the commitment to the implementation of its recommendations; welcomes the additional non-cash resources to be made available to Scottish Enterprise, and confirms the important role that Scottish Enterprise will play in contributing to the growth of the Scottish economy."

Murdo Fraser (Conservative, Mid Scotland and Fife)

The motion in Jim Mather's name highlights mounting concern about the shortfall in Scottish Enterprise's budget. I am sure that, like me, all members have been contacted by local groups and businesses in their constituencies that have expressed concern at projects being put on hold due to Scottish Enterprise's uncertain budgetary position. I know that a great deal of distress has been caused, particularly amongst those who had anticipated funding in the current year for projects that have now been put in doubt.

The fact is that the handling of Scottish Enterprise's finances has been a credit neither to that organisation nor to the minister and his department. Two key concerns exist about how Scottish Enterprise responded to the impending overspend. First, as the KPMG report makes clear, Scottish Enterprise

"were slow to act when it became clear that the new budget and resource allocation system had stimulated expenditure well ahead of budgeted income. In November 2005 SEn became aware of a significant overspend but action taken at that time was not sufficiently robust. This was not helped by poor and slow financial reporting and unclear budget accountability."

Clearly, a serious error was made. When I challenged Jack Perry and his colleagues on that point at the Enterprise and Culture Committee meeting on 25 April, Jack Perry accepted that a mistake had been made. We should be grateful to him for at least admitting that.

The second problem is that, apparently, Scottish Enterprise was told by the Executive as from May 2005 that there was no scope for additional funding in the current year but, notwithstanding, Scottish Enterprise still believed that additional resources might be made available. When I asked Jack Perry whether he had believed that the door was still open, he said:

"We felt that it was still ajar."—[Official Report, Enterprise and Culture Committee, 25 April 2006; c 2946.]

However, the minister told the committee:

"I certainly never suggested that the door was open for additional spend."—[Official Report, Enterprise and Culture Committee, 2 May 2006; c 3009.]

At best, a serious breakdown in communication took place between the minister's department and Scotland's largest public agency.

The overspend issue has been poorly handled by Scottish Enterprise, but I do not believe that it should be a resignation matter for the organisation's senior officials. In that respect, I disagree with Alex Neil's stance. For me, the more interesting question concerns the position of the Minister for Enterprise and Lifelong Learning in all this. Why did he allow the situation to develop within a department that comes within his brief? By his own admission, the minister was made aware of the seriousness of the emerging problems at Scottish Enterprise by "press reports". Thereafter, a meeting was requested between the Executive and Scottish Enterprise officials so that the situation could be fully understood. Only subsequently was the minister advised of a likely overspend. It is simply extraordinary that the minister had to rely on information from the press to tell him what was happening in a public agency under his own brief. Perhaps we should not be too surprised, because the minister's stock is not high in the business community. Peter Hughes, chief executive of Scottish Engineering, was quoted in The Scotsman on 28 April as saying:

"The SE board has lacked political support all along ... My impression is that they are an unhappy bunch because the minister has lacked the balls to support them. As they were appointed by politicians, I firmly believe that politicians should get behind them. The fence-sitting and failure to support has been appalling."

That may not be parliamentary language, but nothing can disguise the seriousness of that attack on the Minister for Enterprise and Lifelong Learning by a senior business figure. I cannot recall any previous minister with responsibility for enterprise being attacked in such a way by a business leader. What a mess the minister has allowed his department to get into. Calling him a hands-off minister is putting it mildly. It is impossible to imagine Wendy Alexander getting into such a situation.

What is to be done? Scottish Enterprise must sort out its finances. We need more clarity from the minister as to where that £50 million is coming from. What budget will be cut? Will it be the green jobs strategy, the skills and training budget or transport? The minister needs to get a grip on his department and tell us what programmes are being cut.

I move amendment S2M-4367.1, to leave out from "calls" to end and insert:

"believes that the time has come for Scottish Enterprise to be restructured, refocused and slimmed down, with the savings made being invested in transport infrastructure improvements and reductions in the business rate which would deliver real benefits to all businesses across Scotland."

Christine May (Labour, Central Fife)

Let me start with some stats. Employment in Scotland: up. Gross domestic product in Scotland: up. Growth in the private sector: up. That is all due to the strategic direction given by Scottish ministers to Scottish Enterprise national under "A Smart, Successful Scotland", and to the stable United Kingdom economic climate generated by my Westminster colleague, Gordon Brown.

I am pleased to support the amendment in Nicol Stephen's name. It confirms that, although we rightly recognise the concern about the recent budget issues at Scottish Enterprise national, this Parliament and the Labour-led Executive are about more than just micromanagement, which is what the SNP motion and the Tory amendment call for. It is a question of setting a vision for the nation, and I suppose that we should not be surprised by such motions from two parties whose only economic policy was to halve or cut completely the budget of Scotland's economic development agency.

Murdo Fraser (Conservative, Mid Scotland and Fife)

How can Christine May, having read our amendment, consider that we are calling for micromanagement?

Christine May (Labour, Central Fife)

It is not just the Tories' amendment, but also the tone of what they say, how they say it and the history of what they have said. However, I want to move away from personalities and concentrate on strategy.

As a former board member of Scottish Enterprise, having served in a non-voting capacity on what was then known as Fife Enterprise, and as a former council leader, I know about the difficulties of balancing priorities within limited budgets. I entirely support the contention that Scottish Enterprise should be administered efficiently and I share the concerns that have been expressed throughout Scotland about recent events. However, the important question for us is what the right economic policy is for Scotland. For me, it is about setting strategic priorities in the energy and biotechnology industries, about maximising international opportunities and about the development of human capital, which must be at the heart of our approach. If Scotland's people are to be able to take advantage of the economic opportunities that are now flowing from that successful strategy, human capital, skills development and lifelong learning in our local areas will be as important as the riskier support for developing and emerging sectors.

Jim Mather (Scottish National Party, Highlands and Islands)

How can that be a successful strategy? In the 50 years from 1970 to 2020, Ireland will double its population while our population flatlines.

Christine May (Labour, Central Fife)

I regret that I do not have time to deal with the population issue, although I have statistics on that.

I want to concentrate, in the final minute of my speech, on taking risks, because that is what the private sector does well. Those who argue that politicians should or could second-guess the private sector on those judgments of risk are living in cloud-cuckoo-land. My judgment of risks and priorities has frequently been the subject of comment and I can tell members that, if we were to move, as has been suggested, to a situation in which ministers took micromanagement responsibility for those decisions, the comments that we have seen hitherto would be as nothing compared with the huge media storm that would be unleashed.

That does not mean that I do not share people's concerns, and I remind the minister that my concerns have not gone away, either as a result of his statement or because of Scottish Enterprise's agreement to implement the recommendations of the KPMG report. I am from a constituency on the periphery of two metropolitan regions. I want to see the metropolitan region strategy develop to recognise the peripheries. I want the operating plan from Scottish Enterprise to strike that balance between skills and training, local discretionary spend and the impact of any reductions in spend on work in progress. I hope to hear from the minister how he will ensure that the operating plan can do that, and how he will manage the implementation of that plan in policy terms.

Brian Adam (Scottish National Party, Aberdeen North)

Scottish Enterprise is clearly in financial trouble, and it seems from his amendment that the minister wants to run away from the situation. His motion is the usual self-congratulatory set of words that do not accept any kind of responsibility, but that is typical of the Executive and of the role that the Liberal Democrats play in the Executive. The appointees the minister has put in place to run Scottish Enterprise are under fire, and quite rightly, from the convener of the Parliament's Enterprise and Culture Committee, but the minister himself must accept some responsibility for the situation. The fact that his appointees did not know how bad the situation was is a measure of the incompetence in the organisation and in the ministerial approach to dealing with the matter.

I would like to refer, as the minister invited us all to do, to some local matters that illustrate the impact that the problems will have. Scottish Enterprise Grampian has told me that, in the past financial year, it spent around £4 million on four programmes relating to the national delivery of training—modern apprenticeships, modern apprenticeships for the over-25s, skillseekers and the get ready for work programme. I understand that there has been a national direction that there will be no money for the over-25 modern apprenticeships, and that that direction is being applied. That is extremely short-sighted in circumstances where we are trying to diversify our economy and accept that people will have not just one, but several careers. The MA 25 programme gave people the opportunity to retrain.

In the area that I represent, we have an oil and gas industry that is crying out for people. In the past day or two the United Kingdom Offshore Operators Association's report has said that there will be thousands more jobs and we need to retrain people to go into those jobs. There have been big cuts in training programmes across the board. There is to be a 40 per cent cut in the skillseekers programme in my area and there has been a major cut in the get ready for work programme.

Nicol Stephen (Liberal Democrat, Aberdeen South)

Will Brian Adam give way?

Brian Adam (Scottish National Party, Aberdeen North)

I am in the final minute of my speech. I am quite happy to provide the minister with details of the cuts that I mentioned, but I am looking for some guarantee that the announcement that he is making today will mean that there will be a restoration of funding to those programmes where there have been cuts, so that the major programmes that will deliver the skills that are required across the board will not suffer as a result of the incompetence of the people at the top of Scottish Enterprise or, indeed, of his own department.

Shiona Baird (Green, North East Scotland)

It is an unfortunate but recognisable human trait that one of the best ways to learn is by making mistakes. Scottish Enterprise has made some serious errors of judgment, but the blame cannot be put entirely on its shoulders. It may represent the business world, but it is being asked to work within constraints in which no ordinary businesses would work. The indication from the Scottish Executive that a review will take place on moving from annual to triennial funding is welcome. Such recognition of the need for flexibility would address some of the problems that have arisen.

How Scottish Enterprise chooses to resolve its funding problems will, in my view, be the defining factor in establishing its future credibility. If it cuts the funding of vital services such as skillseekers and modern apprenticeships, it will lose considerable support from the companies that need those skills. There are concerns in business gateways that budgets may be cut and that some services that were previously offered will be delivered in other ways. There must be absolute clarity that those vital grassroots services—although they are often perceived as lower profile—will not suffer.

I want to move on—as, I am sure, does Scottish Enterprise. Few people are fully aware of the changes that we face to our economy. The impact of climate change must be seen also as an economic issue, not only an environmental one. Rising oil prices and declining raw materials worldwide will all contribute to a very different economy. Scottish Enterprise and the Executive both include sustainable development in their policy documents, perhaps without fully understanding its implications.

Work must start now to move towards a more locally-based economy. A good starting point is to recognise and support the start of social enterprises. They have a valuable role to play in providing supported employment opportunities and they encourage and foster entrepreneurship. Scottish Enterprise must support indigenous businesses of all sizes, but the support does not have to be monetary. Proactive acknowledgment of the contribution that a business makes and being available to offer advice is often sufficient.

Scottish Enterprise will need to work hard to stem the rising tide of criticism, but fundamentally it must recognise that Scotland is more than the central belt, it is more than the city regions and it is much more than the high-profile large employers.

Karen Gillon (Labour, Clydesdale)

I welcome the opportunity to contribute to the debate. Some of the comments made by my colleague Christine May are important and pertinent.

The Scottish economy is going in the right direction. It is typical of the SNP to take away from some fair points in its amendment by seeking to make the issue a constitutional crisis and by excusing from responsibility those within Scottish Enterprise—who have failed to do what they were supposed to do—by saying that it is the tool and not the implementation that is to blame.

It is interesting that Jim Mather failed to pass judgment on either Jack Perry or John Ward, as his colleague Alex Neil has done.

Brian Adam (Scottish National Party, Aberdeen North)

Will the member give way?

Karen Gillon (Labour, Clydesdale)

I have only three minutes, so I must make progress.

The situation has been a shambles. Scottish Enterprise said that it knew and understood the accounting rules under which it was working, so by implication it chose to ignore those rules in the hope that somebody, somewhere within the Scottish Executive, would find it the money. The truth is that that is what had happened in the previous two years. We were told by Jack Perry and Iain Carmichael that slack had been found in the previous two years and money had been vired from within the enterprise budget. Scottish Enterprise knew the rules, but it chose not to implement them.

The reality now is that not-for-profit training agencies in my constituency were told in January that from then onwards there would be a £300 per week cut in the amount of money that they would get to deliver training, which has seriously affected their ability to deliver. This week they have been told that they will be able to offer fewer places and that less money will be available per place. Those cuts are impacting on the people at the coalface who are working to regenerate some of our most vulnerable communities. I asked the minister—I still await an answer—where the £50 million will come from and what is being cut to provide that money?

I am not saying that Scottish Enterprise should not get the money, provided that it gets to the front-line services that I am talking about, but what guarantees does the minister have that the rules that are in place now will be followed this year? We do not want to be in the same situation again next year with Scottish Enterprise saying that it is sorry but that it did not really understand the rules and it did not have enough money anyway, so it has again overspent. What guarantees has the minister been given? How does the minister's announcement today impact on local economic regeneration in constituencies such as mine? How does the approach that he has announced ensure that more money will go to the people who deliver essential skills and training in constituencies such as mine and that it will not be sucked up by the big, sexy projects of which the leadership of Scottish Enterprise is very proud, although they do not want to get their hands dirty delivering hard stuff on the ground?

Richard Baker (Labour, North East Scotland)

Today's debate has been hampered by time constraints, not only because of the fire alarm but because the SNP allowed us only half a session to discuss such a huge issue. Some cynical people might think that the SNP were more interested in their press release than in genuine debate. I will not join Jim Mather's cross-party group on fiscal autonomy; as Karen Gillon rightly said, the debate should not continually be reduced to constitutional matters.

Although there is undoubtedly genuine concern about the budget situation at Scottish Enterprise, some of the Opposition comments ring hollow; they come from the very people who went into the previous election demanding cuts in Scottish Enterprise's budget. Opposition members have described as indispensable key areas of the agency's work that they have rightly identified as crucial local projects. Those projects were, however, clearly dispensable to the Opposition parties at previous elections. Labour members regarded the projects as indispensable then and we regard them as indispensable now.

Murdo Fraser (Conservative, Mid Scotland and Fife)

Will the member take an intervention?

Richard Baker (Labour, North East Scotland)

I am sorry, but I do not have time to take an intervention.

We are now entering a period when we can see how great an impact the Executive's economic strategy is having. Of course we want economic growth in Scotland to be stronger, but already our rate of growth has caught up with the rest of the UK and there is significant new business investment in Scotland. The huge new investment by Wyeth is exciting and I am pleased that the University of Dundee and the University of Aberdeen will play vital roles in that project. A number of indicators show that our economic strategy is working.

Questions have been asked this morning about how Scottish Enterprise arrived at this situation. It is right that those questions are asked, but people in Scotland are not as interested in a fruitless hunt for a smoking gun as they are in knowing that Scottish Enterprise will continue to do its job and support key local projects in their area. I am sure that the minister is aware that reassurance must be provided. It is good that the business gateway is being protected, but along with other members I have received letters from individuals and organisations that are concerned about funding for vital skills programmes. I have received letters from companies in the oil and gas sector in Grampian that state that funding for their skillseekers and modern apprenticeship programmes

"is being severely restricted with immediate effect".

That follows similar contact about get ready for work programmes in the area. As Christine May and other members have said, it is crucial that urgent action is taken to ensure that the projects are protected and that they continue. They are a key priority for this Executive.

Members have also referred to the restructuring of Scottish Enterprise. Much of the new strategic approach is welcome. I, for one, also welcome the fact that there is still a role for local enterprise companies. However, although the Deputy First Minister took action on the local enterprise companies, I question why there was a need for Scottish Enterprise to draw the work on all the key strategic areas to its headquarters. The energy team being moved from Grampian to HQ is a prime example; that team is being moved away from the majority of companies that it services. In a world of information and communication technology, it strikes me as bizarre to physically centralise operations in that way.

The key issue is not only to agree a new budget for Scottish Enterprise but to ensure that, in the longer term, the new strategy evolves and works for Scotland's economy. The true story is that the Executive's overall economic strategy is working. Labour, at Westminster and at Holyrood, is delivering for Scotland's economy. We will continue to ensure that Scotland's economic growth is even stronger in the years ahead.

Derek Brownlee (Conservative, South of Scotland)

It does not really matter whether Scotland's economic record is the responsibility of Scottish Enterprise, the Scottish Executive or even the Labour Government. I think that we all accept that Scotland is not performing to its potential. Economic growth in Scotland is not at the level at which it should be. Before Labour members get too excited about lauding their chancellor, let us not forget that this week the independent ITEM club, which uses the Treasury's own model of the economy—the independent Treasury economic model—has said that the tax burden, which is rising all the time, is rising towards the highest level on record.

Karen Gillon (Labour, Clydesdale)

Is the truth not that if people are in work they can pay their taxes? Under the Conservative Government more people in Scotland were out of work, languished on the dole and contributed nothing to the Scottish economy.

Derek Brownlee (Conservative, South of Scotland)

The point is that everyone, whoever they work for, pays more tax under this Government. As was mentioned in the previous debate, some people who do not work still pay a significant amount of tax.

Wherever we think the responsibility lies, we need to consider what contribution—it is perhaps a limited contribution—Scottish Enterprise can make. We could adopt different models. We could go down the route advocated by Brian Wilson, which is to bring the organisation in-house. I presume that that would require the Minister for Enterprise and Lifelong Learning to take a more hands-on approach than he has to date. The arms-length model adopted for Scottish Enterprise, which is designed to bring in business expertise, seems to be fundamentally the right model if the agency is to be allowed to get on with the job. However, Scottish Enterprise seems to have the worst of both worlds as it has neither leadership and direction from the Executive nor the ability to get on with what it is asked to do. It would be interesting to know how much direction has come from the Enterprise, Transport and Lifelong Learning Department since the discovery of Scottish Enterprise's financial difficulties and how prescriptive the Minister for Enterprise and Lifelong Learning has been about what Scottish Enterprise can and cannot do.

We are all concerned about the fundamental budget issues. I hope that the minister will answer Karen Gillon's fundamental question about where the additional money is coming from. It must come from somewhere in the Executive's budget and it should not be beyond the wit of man for the minister to stand up and tell the Parliament from where it will come and what impact that will have on projects that might otherwise have taken place. Indeed, the "Scottish Public Finance Manual" suggests in its basic points of financial management that staff in charge of budgets should have clear guidance on the size of the budget, what it can be used for and how it can be varied. Scottish Enterprise certainly has not had such guidance and it will be interesting to know what the minister thinks of that.

On the local impact that other members have talked about, it is the uncertainty as much as anything that is causing problems. We are part way through the financial year, but only now are local enterprise companies about to get assurance on the level of their budgets and on what they can do. A number of other members and I received a letter from Scottish Enterprise Dumfries and Galloway from which I will quote because it is illustrative. The letter states:

"We will not know our final 2006/7 budget until the Scottish Executive's commissioned external advisers at KPMG have confirmed Scottish Enterprise's projected resource figures for 2005/6 and the Scottish Executive has discussed the findings. This is expected to take until the end of May 2006."

The letter continues:

"Until that time, I am unable to confirm what our annual operating budget will be for Dumfries and Galloway and what the restructuring implications will be on our services and planned projects."

That will be the case not only for Dumfries and Galloway, but for every local enterprise company up and down Scotland and, of course, for Scottish Enterprise itself. It is clarity on budgets and on what can be done with them that is so vital and we have now wasted two months of the financial year. It is time that the Executive and the minister got a grip on Scottish Enterprise.

Murray Tosh (Conservative, West of Scotland)

I call Nicol Stephen. Minister, you have about two and a half minutes.

Nicol Stephen (Liberal Democrat, Aberdeen South)

We must remember that the SNP wants to cut Scottish Enterprise—we should keep that firmly in our minds. In addition, Alex Neil wants to sack the chairman and the chief executive. Would doing that strengthen Scotland's economy? Is that a mature contribution to the debate?

Alex Neil (Scottish National Party, Central Scotland)

Will the minister give way?

Nicol Stephen (Liberal Democrat, Aberdeen South)

I will, but I have very little time.

Alex Neil (Scottish National Party, Central Scotland)

Okay, I have two short, sharp questions. First, can the minister answer Karen Gillon's question about where the £50 million will come from? Secondly, after Scottish Enterprise's legal commitments are met, how much of the £550 million will be left to spend?

Nicol Stephen (Liberal Democrat, Aberdeen South)

On the £550 million, I have set the overall budget for Scottish Enterprise and it is now for its board to meet tomorrow and agree its operating plan. Further information on that will be given next week.

Murdo Fraser talked about the need to get behind Scottish Enterprise and its board. Well, that is exactly what I have been doing, but I do not think that that is what he has been doing. Contrast that with Conservative plans to axe Scottish Enterprise spending, which would mean axing projects and plans that would be good for the Scottish economy and axing Scotland's future economic success.

Christine May made fair points about the new approach that is being taken in Scottish Enterprise. There are new industrial sector groups and I think that it is important for them to get established and for us to get behind that. There is new metro-region planning, which is also important; so, too, is the involvement of local business people in local enterprise companies, involving board members in real decision making about local budgets.

On Karen Gillon's point, I will ensure that, through today's announcement and the decisions that the Scottish Enterprise board will make tomorrow, £50 million of additional funding that would otherwise not have been available for Scottish Enterprise this year will be allocated to the sort of projects, plans and priorities that the Parliament wishes to see.

I am certain that there will still be difficult issues ahead, but I am particularly concerned to ensure that local discretion in the local enterprise companies will remain and that partnership projects will still be an important part of Scottish Enterprise's strategy and budget. It was vital today to end the uncertainty and start the process of getting Scottish Enterprise back on track with strong ministerial support. All the Parliament should work together on Scotland's future economic success. However, wider than that, politicians, public agencies and the private sector should all be in partnership—that is the best way to secure Scotland's economic success in the future.

Alex Neil (Scottish National Party, Central Scotland)

I emphasise that the minister has not answered two basic questions. The first, fair question was from Karen Gillon and it has now been asked of the minister three times and three times he has dodged it; either he does not want to answer it or he does not know the answer. If he increases the spend of Scottish Enterprise this year by £50 million, unless there is an overall increase in public expenditure of £50 million—there is not—that £50 million has to come from existing allocations.

Yesterday, we read in The Herald, which is better informed than the Parliament, that the money was coming from the green jobs strategy, non-Scottish Enterprise spend on skills and training and the transport budget. Can the minister tell us, therefore—I will take an intervention if he has the answer—where are the £50 million-worth of cuts in existing allocations?

Nicol Stephen (Liberal Democrat, Aberdeen South)

I have made it clear that there are two sources for the additional funds: reprofiling the spend in the Enterprise, Transport and Lifelong Learning Department and using the limited flexibility in our budgets. More information on that will be issued in due course, but I have given a clear explanation of the difficult decisions that have had to be taken to find the £50 million of cover. Of that sum, £45 million is of course non-cash cover. However, the £50 million total of additional resource will now be available to Scottish Enterprise.

Alex Neil (Scottish National Party, Central Scotland)

It does not matter whether it is cash or non-cash. If the total level of spend is £50 million, it must come from somewhere. The minister says that that spend is being reprofiled, but the question is: reprofiled from which original profile? Can he give us a photograph? Can he give us a profile? Does he know the answer to the question?

Surely, before he allocated that £50 million and before he reprofiled it, he would have known where the money was coming from. If it is coming from elsewhere in his department, does that mean a reduction in money for colleges, universities, student awards or non-Scottish Enterprise skills and training spend? Is the money coming from the transport budget? If some or all of it is coming from that budget, which part of the budget is it coming from? It is absurd that the minister has come here this morning and been unable to answer such a fundamental and, if I may say so, simple reprofiling question.

He has also failed to answer the second question, though he told us at last week's meeting of the Enterprise and Culture Committee that he would have the answer this week. To be fair, the week is not yet over, so he may have the answer later on today or tomorrow—no doubt we will read it in The Herald tomorrow. The second question is: after Scottish Enterprise's legal commitments have been met, how much of the new budget of £550 million is left?

Christine May (Labour, Central Fife)

Will the member give way?

Alex Neil (Scottish National Party, Central Scotland)

I will do so in a minute. I know that Christine May likes to get in on the act.

How much of the £550 million is left? Perhaps Christine May knows the answer—let us find out.

George Reid (None, Ochil)

You have a minute and a quarter, Mr Neil.

Christine May (Labour, Central Fife)

While I agree that these are important questions, perhaps Alex Neil can say whether he and his SNP colleagues welcome the money being made available to Scottish Enterprise.

George Reid (None, Ochil)

You have a minute, Mr Neil.

Alex Neil (Scottish National Party, Central Scotland)

If there had not been this shambles in the first place, we would not need to be allocating the money. We should consider the money that has been wasted. For example, over the past six years, Scottish Enterprise has allocated £194,000 to the lobbying organisation CBI Scotland—of which John Ward and Jack Perry are former chairmen—while many a small company was told that there was no money left for them.

The Presiding Officer is trying to reprofile my timescale, so I will be brief. Two issues are at stake: first, the shambles at Scottish Enterprise; and secondly, the shambolic way in which the minister has failed to deal with the crisis.

Question Time — Scottish Executive — General Questions

David Davidson (Conservative, North East Scotland)

To ask the Scottish Executive what plans it has to assist students of the University of Aberdeen to graduate with the awards to which they are entitled. (S2O-9764)

Nicol Stephen (Liberal Democrat, Aberdeen South)

Clearly, ministers are very concerned about the potential effects of the current pay dispute on students in all our universities. I know that the University of Aberdeen has in place contingency plans to minimise the effects of the dispute on student examinations and has published advice and guidance for students. However, ministers are not in a position to intervene in the internal management of any university. The resolution of the current dispute is clearly a matter between the institutions and their staff.

David Davidson (Conservative, North East Scotland)

I, too, have seen the documentation that the university is using to inform its students of the difficulties that they may face. Is there not a role for the Executive in the dispute? Could it not act as an arbiter? It would not take sides but would try to facilitate the coming together of two groups of people in a dispute in which the innocent victims—indeed, hostages—are the students?

Nicol Stephen (Liberal Democrat, Aberdeen South)

It is important to emphasise that the negotiations that have been taking place on the issue are at the United Kingdom level. Representatives of the universities and unions in Scotland are involved.

I encourage a negotiated settlement on the issue. If I thought it appropriate for ministers to become involved in these matters, I would consider becoming involved very carefully. However, it is clear to me that the best way to get a resolution on the issue is to encourage the representatives of the employers and the employees—the universities and the trade unions—to get together and reach a settlement as soon as possible. That is what will minimise the impact on students. I am concerned about the potential impact on student exams and on the future opportunities for students if the issue is not resolved quickly.

John Home Robertson (Labour, East Lothian)

To ask the Scottish Executive what the annual emissions of carbon dioxide are from electricity generating stations in Scotland. (S2O-9790)

Rhona Brankin (Labour, Midlothian)

Sectoral carbon dioxide emissions are reported in "Greenhouse Gas Inventories for England, Scotland, Wales and Northern Ireland 1990-2003", a copy of which has been placed in the Scottish Parliament information centre. Emissions from electricity production are recorded in the public electricity and heat production category which, in 2003, accounted for 18,031 gigagrams—equivalent to around 18 million tonnes—of carbon dioxide in Scotland.

John Home Robertson (Labour, East Lothian)

That is a lot of carbon dioxide from a little country. I find it disappointing that the Liberal Cabinet minister is not answering questions for which he is responsible.

Will the minister acknowledge that the base-load stations at Torness and Hunterston are not emitting CO2 and that we will have to replace the fossil fuel stations that are causing the problem? Forty per cent from renewables is great, but where will the remaining 60 per cent come from to allow us to avoid power cuts in future? Now that the Committee on Radioactive Waste Management has resolved the nuclear waste issue and recommended safe geological storage, can we get on with the job of planning new nuclear power stations to stop the dangerous emissions of CO2, in accordance with Labour Party policy.

Rhona Brankin (Labour, Midlothian)

I am not going to get into an argument about which minister answers questions.

Carbon dioxide emissions from nuclear power generation are negligible, but we must not lose sight of the fact that emissions are associated with the construction of power stations and with the mining and processing of the fuel. Decommissioning and dealing with nuclear waste also lead to emissions. It is important to take a balanced view of the contribution that nuclear makes to meeting our climate change commitments in a sustainable way, including consideration of the wider environmental impacts.

For our part, as John Home Robertson well knows, the partnership agreement clearly states that we will not support further development of nuclear power stations while waste management issues remain unresolved. Of course, the UK energy review is looking at the future options—including nuclear and other technologies—that will allow the UK to meet its energy needs in a way that is affordable to consumers and meets its emissions target.

John Home Robertson mentioned CORWM. Its remit states clearly that it considers the management options for the way in which we deal with the waste; its remit is not to solve the waste management problem per se.

Shiona Baird (Green, North East Scotland)

Does the minister agree that CO 2 emissions at the point of generation are not the only emissions that should be taken into account when assessing nuclear electricity generation? Does she accept that whole-life-cycle emissions make nuclear power about as climate friendly as efficient gas-fired electricity generation? Will the minister give the chamber an assurance that full-life-cycle CO 2 emissions will be taken into account in any decisions on nuclear power generation?

Rhona Brankin (Labour, Midlothian)

I thought that I had made that clear in my earlier answer. I reiterate the importance of taking a balanced view of the contribution that nuclear makes to meeting our climate change commitments in a sustainable way, including consideration of the wider environmental impacts.

Alasdair Morgan (Scottish National Party, South of Scotland)

Given that renewables are the major alternative to conventional generation, is the progress towards forms of renewable energy other than onshore wind not far too slow?

Rhona Brankin (Labour, Midlothian)

As the member knows, we are committed to developing a range of renewable energy technologies. We are reviewing the situation. It is important to get the balance right and to ensure that the maximum number of opportunities is taken up in Scotland.

Phil Gallie (Conservative, South of Scotland)

The minister referred to lifetime carbon emissions, as did Shiona Baird in her question. Does the minister acknowledge that wind-generated energy has a greater lifetime CO 2 emissions factor than nuclear generation has? That is the case particularly when we look at the installed capacity and output of wind generation.

Rhona Brankin (Labour, Midlothian)

I am sorry to disappoint Mr Gallie, but I will not get into a broader debate on the issue. It is important for us to have a range of renewable energy sources in Scotland, of which wind is an important one.

Tricia Marwick (Scottish National Party, Mid Scotland and Fife)

To ask the Scottish Executive whether it can give a further update on when the examination of the economic, social and environmental impact and cost of retaining or removing tolls from the Tay and Forth bridges is likely to be concluded. (S2O-9759)

Tavish Scott (Liberal Democrat, Shetland Islands)

We are preparing detailed proposals for the examination and we intend to inform Parliament about the matter next week.

Tricia Marwick (Scottish National Party, Mid Scotland and Fife)

It is certainly a comfort to know that, after seven weeks, the minister can tell MSPs more about when the review is taking place than that it is taking place "as soon as possible". Can he now tell the chamber when he expects the review to conclude and when ministers will take a decision? Will he also announce today that, until the review is concluded, work on relocating tollbooths will be halted?

Tavish Scott (Liberal Democrat, Shetland Islands)

I assume that, in her final question, Tricia Marwick was referring to the Forth road bridge. I cannot give her that assurance, nor will I. We have to ask some fundamental questions about congestion on and around the Forth bridge and I hope that Tricia Marwick and her colleagues will do so too. One of the questions that we need to ask is how it is good for the Scottish economy if the tolls are removed and congestion increases. I am sure that that is one of the issues on which she and many others will want to comment.

David Davidson (Conservative, North East Scotland)

In light of the comments that were made by the Secretary of State for Transport about road pricing, does the minister favour road pricing as opposed to tolls for any of the bridges in Scotland?

Tavish Scott (Liberal Democrat, Shetland Islands)

Yes, I do. I was very encouraged by the speech that the new Secretary of State for Transport made in London this week. It made an important contribution to this central debate on how we value and charge for space across the trunk road network in the UK. I believe that the matter should be taken forward on a UK-wide basis. However, I must add two important caveats. First, there must be clear and demonstrable improvements in public transport services and people must be able to use those services. Secondly, if we take forward such a policy, the user of the road—whether that is the freight industry or Mr Davidson or me using our motor cars—must see a consequential reduction in other forms of taxation. Those are issues that the Department for Transport is considering at the moment.

John Swinney (Scottish National Party, North Tayside)

To ask the Scottish Executive whether it has any concerns in respect of the provision of out-of-hours health care services in the highland Perthshire area. (S2O-9765)

Andy Kerr (Labour, East Kilbride)

My concern will always be that patients have ready access to the services that they need. The new contract for general practitioners enables them to withdraw from out-of-hours services. Where they do so, responsibility transfers to national health service boards. In remote and rural areas, NHS boards have adopted a range of models to ensure out-of-hours cover is provided.

John Swinney (Scottish National Party, North Tayside)

I appreciate the minister's interest in the provision of care in remote and rural areas. Does he share my further concern that, in a recent GP call-out for a suspected meningitis case, ambulance cover took more than 40 minutes to arrive, which highlights the weakness of the current arrangements and the potential danger to patient safety? Does he agree that it is important that NHS Tayside should reconsider the arrangements that it has put in place to ensure that adequate out-of-hours health care cover is in place in the Rannoch and Tummel area?

Andy Kerr (Labour, East Kilbride)

Of course, I am concerned that patients should receive the best possible service from our national health service. A meeting will take place in Kinloch Rannoch on 15 May, at which NHS Tayside, NHS 24 and the Scottish Ambulance Service will discuss the service with the community. The out-of-hours service was opted out of on 1 May, but GP cover and a rapid response unit are available in Aberfeldy. I understand that Aberfeldy is 30 to 40 minutes' travel away. The situation is new and arose on 1 May, but plans have been put in place and are working. I am sure that the board will be happy to hear from the community about the efficacy and safety of those services. I look forward to hearing again from John Swinney on the issue.

Sylvia Jackson (Labour, Stirling)

As the minister knows, I have similar problems in the rural part of my constituency around Killin, which adjoins John Swinney's area. The particular problem is how the accident and emergency ambulance service, which has been working for some time, is dealing—or not dealing—with some emergencies. Will the minister please consider improvements or alternatives to the present system, so that constituents' faith in out-of-hours health provision can be restored?

Andy Kerr (Labour, East Kilbride)

We have restored massively the confidence in our ambulance service, which now has more trained paramedics and receives more investment than ever before. Although NHS 24 still has challenges that patients quite correctly put before it, the turnaround times in the service have nonetheless also been transformed. Our overall investment in the health service is delivering a huge return for patients. The member raises specific matters about a local community, which is my concern, too. She has written to and met me and we are to meet again on the issues that she raises. I am always happy to pass on challenges to boards and to ensure that they are met robustly. Let me reassure patients about the quality of services. Our investments are delivering a first-class health service in Scotland.

Helen Eadie (Labour, Dunfermline East)

To ask the Scottish Executive when it last had discussions with the European Union about osteoporosis. (S2O-9786)

Lewis Macdonald (Labour, Aberdeen Central)

We have not had such discussions, as European Union institutions have no remit for the planning of health care for specific chronic conditions.

Helen Eadie (Labour, Dunfermline East)

Does the minister share my concern that the annual EU-wide cost that arises from fractures that result from osteoporosis is estimated to be more than €30 billion and that the figure is expected to double in the next 10 years? As many of us are aware, osteoporosis is known as the silent killer, as the disease is often far advanced before people know that they have it. What steps have the minister's officials taken to create a co-ordinated data collection system to monitor osteoporotic fractures? Is the Executive co-operating with the new World Health Organisation approach, which is believed to represent a more accurate way of identifying those who are at risk of osteoporotic fractures?

Christine Grahame (Scottish National Party, South of Scotland)

This is a speech.

Helen Eadie (Labour, Dunfermline East)

Are the minister's officials aware of, or were they party to, the most recent meeting of the International Osteoporosis Foundation consultation panel, which was held in Bavaria, at which one of the key speakers, Professor Johnell, said that in Europe osteoporotic fractures cause more lost years of healthy life than do many other major diseases, including breast cancer and colorectal cancer?

Lewis Macdonald (Labour, Aberdeen Central)

Helen Eadie raises important issues, so I am happy to reply to her supplementary points. We share the priorities in the World Health Organisation approach and recognise the importance of a risk assessment as the best way in which to act. The Scottish intercollegiate guidelines network guideline on osteoporosis acknowledges that the development of a validated tool for risk assessment would be a useful addition to the assessment of the condition. We are keen to learn from the continuing work of the WHO on the matter.

Fergus Ewing (Scottish National Party, Inverness East, Nairn and Lochaber)

I have given the minister notice of my question. As he knows, one fracture leads to another. The SIGN guidelines state that patients who have already suffered a fragility fracture should be a priority target. However, a Scotland-wide audit that was published in 2005 showed that, although in the Western infirmary in Glasgow, nearly everybody in that category received treatment, only one fifth—21 per cent—of such people in Aberdeen, Inverness, Livingston and East Kilbride received it. Does the minister agree that that is unacceptable and that the disparity in standards of treatment throughout Scotland desperately needs to be reduced?

Lewis Macdonald (Labour, Aberdeen Central)

I agree that those matters are important. I am glad that Mr Ewing's question was heard courteously by members throughout the chamber—that is a good model for dealing with such serious issues.

We accept that the audit that NHS Quality Improvement Scotland carried out last year showed clearly the benefits of the type of dual energy X-ray absorptiometry scanning that is carried out in Glasgow. We look to health boards throughout Scotland to adopt a similar approach to address the issues that Mr Ewing raises. A further audit of fractures, which will involve several hospitals throughout Scotland, started last month.

Jamie McGrigor (Conservative, Highlands and Islands)

To ask the Scottish Executive what discussions it has had with Scottish Water in respect of the connection of properties in the Highlands and Islands. (S2O-9743)

Rhona Brankin (Labour, Midlothian)

The Executive has on-going discussions with Scottish Water on a variety of topics that relate to the delivery of its investment programmes.

Jamie McGrigor (Conservative, Highlands and Islands)

Is the Executive putting pressure on Scottish Water to take on more connections, so as not to hold up urgent projects in the Highlands and Islands? Will the Executive and the Scottish Environment Protection Agency insist that Scottish Water take on connections from private properties when installing new sewage works in areas such as Connel and Taynuilt in Argyll, where the continued discharge of raw sewage into the sea loch Loch Etive is a threat to the Food Standards Agency's classification of the water quality? A downgrading of that classification would prevent the harvesting of mussels in a designated shellfish-growing area that at present produces 40 per cent of all the mussels that are grown off mainland Scotland.

Rhona Brankin (Labour, Midlothian)

Scottish Water is required to meet the strategic capacity requirements of all estimated new development. On the Loch Etive issue, the member will be aware that Scottish Water's duty to connect properties to the public network is limited by a caveat on reasonable costs. Scottish Water's duties extend only to provision that can be done at reasonable cost. To fulfil its duties, Scottish Water's current policy is to make a reasonable cost contribution or to undertake work up to a predetermined figure. It is our understanding that Scottish Water has connected all properties that fall within that reasonable-cost guideline. I am happy to discuss the issue further with the member, if he requires that.

Jim Mather (Scottish National Party, Highlands and Islands)

What plans does the Executive have to ensure the robustness of Scottish Water's systems in the Highlands and Islands, given last week's water supply failure in Acharacle and Kilchrenan, which led local schools to send children home and forced local businesses to close?

Rhona Brankin (Labour, Midlothian)

It is up to Scottish Water to work closely with Highland Council. There have been several meetings with the council and I expect Scottish Water to work to resolve the issues. Again, I am happy to provide an update if the member requires one.

Cathy Peattie (Labour, Falkirk East)

To ask the Scottish Executive what consideration it has given to the extension of the national entitlement card to local and national concessionary rail travel and what discussions it has had with current providers of concessionary rail travel schemes regarding the maintenance of existing provision. (S2O-9810)

Tavish Scott (Liberal Democrat, Shetland Islands)

Where existing local concessionary schemes offer additional transport modes such as rail, those remain the responsibility of the local authority. The Executive has agreed with the Convention of Scottish Local Authorities a fair split of resources, to ensure that those local authorities continue to be resourced for concessionary travel on modes other than bus. There are currently no plans to introduce national concessionary rail travel.

Cathy Peattie (Labour, Falkirk East)

In Falkirk East, over-60s and disabled people no longer have access to concessionary rail travel because of a council cut. I urge the minister to think again about a national scheme.

Tavish Scott (Liberal Democrat, Shetland Islands)

As I said, the national scheme that we have introduced relates to bus and is seen as a tremendous improvement throughout Scotland. I appreciate that specific issues may arise for the council in Cathy Peattie's constituency, but I am sure that she is pursuing those with considerable vigour in that part of the world.

Adam Ingram (Scottish National Party, South of Scotland)

To ask the Scottish Executive whether it agrees with the conclusions and recommendations of Scottish Water's draft national sludge strategy. (S2O-9741)

Rhona Brankin (Labour, Midlothian)

The draft strategy is Scottish Water's. Scottish Water has undertaken a public consultation on the strategic environmental assessment of its draft sludge strategy but has not yet published its conclusions or recommendations following that consultation.

Adam Ingram (Scottish National Party, South of Scotland)

As the minister will be aware, £63 million of investment will be required to bring sewage treatment plants and other infrastructure up to an appropriate level to implement the draft strategy, which, as she said, is out to consultation. Does the Scottish Executive intend to contribute to the cost or to otherwise ensure that the cost will not be passed in its entirely to already hard-pressed charge payers?

Rhona Brankin (Labour, Midlothian)

Once the Scottish Executive is in receipt of Scottish Water's recommendations, we will consider what action is required.

First Minister's Question Time

Nicola Sturgeon (Scottish National Party, Glasgow)

It is good to be back in the chamber.

To ask the First Minister what issues will be discussed at the next meeting of the Scottish Executive's Cabinet. (S2F-2280)

Jack McConnell (Labour, Motherwell and Wishaw)

The next Cabinet meeting will discuss among other matters a report on the current position in Fife for the families affected or potentially affected by E coli. The matter is serious and I am sure that every member will want to wish the children well, express concern for the families and ensure that we support the local agencies that have to get to the bottom of the situation as quickly as possible.

Nicola Sturgeon (Scottish National Party, Glasgow)

All our thoughts are with the children and their families in Fife.

I am sure that we all agree that teachers deserved a substantial pay rise when the McCrone agreement was struck back in 2001. Does the First Minister agree that the ultimate objective of any increase in education spending should be to improve the quality of education for children? If so, can he explain why, according to the report that Audit Scotland published this morning, as Minister for Education, Europe and External Affairs at the time, he failed to include clear outcome measures defining what the agreement was intended to achieve, which, in Audit Scotland's opinion, made it impossible to assess the overall value for money of the £2 billion spent?

Jack McConnell (Labour, Motherwell and Wishaw)

I start by congratulating Ms Sturgeon. There have been 63 First Minister's question times since I became First Minister in November 2001. On none of those 63 occasions has Ms Sturgeon asked me a question about schools and schoolchildren. I am delighted that she has changed that habit and has suddenly discovered her interest in the subject.

I could list many changes and improvements that have been made to Scottish education, in particular in the past five years. Given that Ms Sturgeon has raised the matter, let us go back to the debates on the McCrone agreement that took place at the time. At no time in 2001, 2002 or 2003 did the Scottish National Party say that we were spending too much money on Scottish teachers, as Ms Hyslop implied yesterday. At no time did SNP members say that there needed to be more monitoring and more bureaucracy; in fact, they said exactly the opposite. After a statement on the agreement, Mike Russell said:

"Would it not be better to reduce bureaucracy ... on schools and young people of assessment, targeting and the publication of league tables?"—[Official Report, 14 February 2001; Vol 10, c 1201.]

The SNP was consistent in its opposition even to the measures that were contained in the agreement and our policies on measuring outputs and on improvements in Scottish education.

Back then, the agreement was about Scotland's children—as it is today. It does not take an accountant to work out that children will benefit from lower pupil teacher ratios and from teachers spending more time in the classroom teaching them. It does not take a genius to work out that those experiences in schools will be enhanced if teachers are happy and well rewarded. I am absolutely determined now—as I was back then—that we will not go back to the days when industrial relations in Scotland's classrooms were a shambles, when Government was not directly involved and when schoolchildren's education was being affected. As a teacher in the 1980s, I knew the cost of that then, and I know today the value of the improvements that we have brought in, with which we will continue.

Nicola Sturgeon (Scottish National Party, Glasgow)

There is no doubt that the McCrone agreement has resulted—quite rightly—in better-paid teachers, so it is hardly surprising that it has delivered better industrial relations. According not to me but to the Audit Scotland report that was published this morning, clear evidence that it has also resulted in better-educated children is lacking. I draw the First Minister's attention to the key conclusions of the Audit Scotland report. It states that the agreement contains no clear outcome measures relating to educational attainment and that it is not possible to form any judgment on its overall impact or the value for money achieved. I remind the First Minister that he was the education minister who struck the deal. Does he accept that, when he was agreeing to spend £2 billion of taxpayers' money, he should have paid much more attention to what taxpayers and their children would get in return?

Jack McConnell (Labour, Motherwell and Wishaw)

As I said, it did not take a genius to work out that removing the administrative burden on teachers would improve what happened in the classroom and that increasing the number of teachers and improving their promotion structures, professionalism and skills would improve the teaching of children and their results. It did not take a genius to work out that the industrial relations improvements in the classroom and in schools would result in improvements in Scottish education.

The improvements have been dramatic. The percentage of primary school pupils achieving expected attainment levels has increased by 9 percentage points in the years since devolution.

Attainment among younger pupils in that age group is particularly encouraging. Almost 90 per cent of pupils in primary 3 now achieve the levels that we expect of them in that year. In the years since devolution, the percentage of secondary 2 pupils achieving expected levels has increased from 41 per cent to 59 per cent. Scotland is recognised not by Audit Scotland but by Her Majesty's Inspectorate of Education—the experts on education who independently assess our education system—as being in the top three performing countries in the world in every important category.

We know the improvements that we have made. Ms Sturgeon and the SNP may have moved back to the days when another party was in Government and may know the cost of everything and the value of nothing, but we understand the value of good education and are determined to continue with the improvements to which I have referred and to support Scotland's teachers who are in the front line of bringing them about.

Nicola Sturgeon (Scottish National Party, Glasgow)

In all his ranting and raving, the First Minister has failed to answer one question: why does Audit Scotland say that there is no evidence of better education or value for money? Is it not the case that the report is not a one-off, but just further evidence of the sloppiness at the heart of the Government? Today we hear that £2 billion was spent on education with no evidence of value for money. Two months ago, Audit Scotland reported a fourfold overspend on the consultants contract, with no evidence of the benefits to patients. Is it not the case that the First Minister and the Government are very good at making promises and spending money, but very, very bad at making real improvements in the delivery of public services?

Jack McConnell (Labour, Motherwell and Wishaw)

I accept Ms Sturgeon's definition of the Government as very good. I will not quote back to her the statistics that I have just outlined, because there are so many more that I can use. The number of youngsters in Scotland who are achieving the desired level at standard grade is going up. The number of youngsters who are achieving higher level grades in Scotland is going up. The number of teachers in our schools is going up. Class sizes in our schools are coming down. The number of new schools and the number of refurbished schools in Scotland are both going up. As a result of the McCrone agreement, the amount of bureaucracy in which teachers are involved is coming down, allowing them to teach in the classroom as they wanted to do when they chose teaching as a career.

The SNP should read the report, not the newspapers. The report says:

"Good early progress has been made in implementing the Agreement".

It also states that

"The early evidence suggests that good progress is being made,"

and that

"All but one of the milestones set for completion by August 2004 were met".

It was a good agreement that has delivered for Scottish education.

The SNP should accept that, as it did at the time. A parliamentary motion in the name of Brian Adam began:

"That the Parliament notes with concern the shortage of social workers throughout Scotland and considers that the Scottish Executive should initiate a McCrone-type review".

In its manifesto for the 2003 elections, the SNP said:

"An SNP administration will honour the McCrone agreement on teachers' pay and conditions in full"

because that is the way to guarantee

"the period of stability and co-operation that the agreement was meant to achieve."

The SNP should be consistent. It should support Scottish teachers and Scottish education and—most important of all—it should support Scottish schoolchildren and give them the best chance in life.