Wellbeing Economy, Net Zero and Energy
Good afternoon. The first item of business is portfolio question time, and the first portfolio is wellbeing economy, net zero and energy. I remind members who wish to ask a supplementary question to press their request-to-speak button during the relevant question or to enter “RTS” in the chat function if they are joining us online.
Carbon Emissions Targets
To ask the Scottish Government whether it will provide further details of its reasons for removing its annual and interim targets for carbon emissions. (S6O-03356)
As the member is aware, the Scottish Government proposed a 70 per cent reduction in carbon emissions by 2030 in the Climate Change (Scotland) Bill, and a Scottish Labour amendment proposed a 75 per cent reduction, which the Climate Change Committee advised was likely to be unachievable. Although the cross-party ambition of Parliament was clear, there is no doubt that Parliament understood the scale of the challenge.
The Climate Change Committee has now firmly assessed that the target for 2030 is not feasible, which we accept in the challenging context of United Kingdom Government cuts and backtracking. Our current rigid linear annual target approach is not fit for purpose, it poorly reflects realities such as harsher winters and it does not allow precision when estimating the impact of developing technologies.
In 2020, the Climate Change Committee wrote to the Scottish Government, saying that the interim targets were difficult but not impossible to achieve, and it outlined what needed to be done in order to achieve them. Does the minister not accept that the necessary action was not taken? Does he accept that we must now set out a plan to achieve the maximum reductions and set out targets, given the climate emergency and its impact on humanity?
It is really important that we all work together to look at the impact on humanity and, I hope, ensure that this Parliament unites around the measures that are required to reduce emissions and achieve our overall net zero targets in Scotland. I think that we can all agree on that.
All members are obviously aware that, when some proposals are made, political bandwagons are often suddenly created and parties jump on them, and that there is political opposition to some of the measures that we must take in order to reduce emissions in Scotland, whether those be low-emission zones or deposit return schemes. In my time in Parliament, the Government has made proposals on a whole host of issues that Opposition parties have opposed. It is very difficult to make progress under those circumstances. We have to unite where possible and move forward with the long-term targets and with our carbon budgets—which, of course, the rest of the UK follows—working together to achieve those ambitions.
Long-term Labour Market Strategy
To ask the Scottish Government what its position is on whether its long-term labour market strategy is helping to make Scotland a fairer country. (S6O-03357)
Although employment law remains reserved to the United Kingdom Government, we are promoting fairer work practices across the labour market in Scotland. Despite challenging conditions, the latest labour market statistics demonstrate positive progress on labour market inequalities, including the gender pay gap and the disability employment gap.
Our approach to employability aims to tackle inequalities in Scotland’s labour market by creating a system that meets the needs of employers and helps people of all ages who experience barriers to participating in Scotland’s labour market to achieve their potential. Our skills system will support those ambitions as we take the lead on national skills planning while strengthening regional approaches.
The Conservative Party has accused people of overmedicalising the everyday challenges and worries of life. That comes from an extremely financially privileged individual who has never had to experience the worry and adversity that his party has forced on people up and down Scotland. How does the Scottish National Party Scottish Government intend to continue to protect people from the worst abuses of Tory mismanagement?
I know exactly what Marie McNair is referring to. I was appalled by the language that the Prime Minister used. He talked about a “sick-note culture” alongside an anti-workers’ rights and anti-trade union agenda, which does nothing to support people accessing the labour market and does nothing for employers or for recruitment and retention.
By contrast, we, in Scotland, treat people with fairness, dignity and respect by developing a wellbeing economy and tackling structural inequalities. As I said, that means promoting fairer work practices across the labour market in Scotland through our approach to employability meeting the needs of employers and helping people of all ages who experience barriers and by working together to take down those barriers.
A fundamental part of the Scottish Government’s labour market strategy and fair work policy is the promotion of the real living wage. I know that the Scottish Government wants all those who are engaging in procurement with the Scottish Government to pay the real living wage.
Last week, when members of this Parliament’s Economy and Fair Work Committee visited Glasgow Prestwick Airport Ltd—an institution that is wholly owned by Scottish ministers—we were horrified to find out that that institution does not pay the real living wage. When the minister talks about fairness, dignity and respect for workers, should she not begin at home?
I was not on that visit to Prestwick airport. Murdo Fraser raises an issue that I will feed back to the cabinet secretary and officials. Obviously, I will have to investigate that, as we need to investigate ourselves.
Small Vessel Replacement Programme (Direct Award)
To ask the Scottish Government, regarding its work to secure a sustainable future for Ferguson Marine, what discussions the net zero secretary has had with ministerial colleagues regarding potential plans for a direct award of the small vessel replacement programme contract to Ferguson Marine. (S6O-03358)
As ministers have advised Parliament previously, a direct award of public contracts is possible only in strictly limited circumstances under public procurement rules. Ministers are currently evaluating the business case for the small vessel replacement programme, and all ministers with a portfolio interest in the programme are connected to that in the normal way.
Before he was cruelly dumped, the former chief executive officer, David Tydeman, produced a series of investment asks of the Government, which could secure the yard’s future. That business plan went to the cabinet secretary—who is unfortunately not here today—on 5 April. How much is the minister prepared to invest to upgrade the yard, and does he foresee it getting any Government contracts soon?
As, I am sure, Graham Simpson is aware, ministers have also informed Parliament that they are currently considering the business case for further investment. That is an on-going process within Government. Ministers are committed to updating Parliament as soon as there is any progress with that or any news to give to MSPs in Parliament. We are, of course, taking that seriously. We want to do everything that we can to support the jobs, but clearly we have to consider the business case that has been put forward, and Parliament will be updated in due course.
The minister said that a direct award is, under procurement rules, possible only in strictly limited circumstances. Can he say what those circumstances are?
Has the Scottish Government spoken to United Kingdom counterparts to ascertain whether the UK Government would support a direct order or whether the Subsidy Control Act 2022 would come into play?
When will we have a final decision on the award of that contract?
The procurement law requirements under which a contract can be directly awarded are set out in the Public Contracts (Scotland) Regulations 2015. The question of subsidy control compliance also has to be considered separately.
Our consideration of a direct award has, to date, not necessitated engagement with the UK Government. Of course, that may arise—I cannot predict what the case will be. As I said to Graham Simpson, ministers are currently considering the issues and will update Parliament accordingly.
The minister referred to the subsidy control regime restricting potential state aid for investment at Ferguson Marine. One of the key asks in the investment plan is a new panel line. There are already two existing panel lines in Scotland—in Govan and Rosyth—as well as a third that is being installed in Belfast. Has he considered that a way around that restriction is to take a sector-wide approach and pool the resources that are available in shipbuilding steel work across Scotland, to draw on for Ferguson Marine’s future programmes?
I will certainly draw Paul Sweeney’s point to the attention of the cabinet secretary, and I am sure that it will be taken into account. All the issues are being considered at the moment. As I said before, a number of specific issues have to be considered in relation to the business case, and Parliament will be updated in due course.
Wind Farms (Support for Opposition)
To ask the Scottish Government what discussions the Minister for Energy, Just Transition and Fair Work has had with ministerial colleagues regarding any support that it provides to communities opposing onshore wind farm developments at public inquiries. (S6O-03359)
The onshore wind sector deal in Scotland sets out that onshore wind developers will continue to collaborate with local communities in order to build good practices to enhance the existing good-neighbour approach through engagement at all stages of a project’s life cycle, offering impactful community benefits and practical routes to shared ownership.
I can confirm that I have no discussions with ministerial colleagues regarding live applications. Scottish ministers have been fully co-operating with the Citizen Participation and Public Petitions Committee regarding a live petition that seeks to increase communities’ ability to influence planning decisions for onshore wind farms.
The current process is far from fair or equitable, with local communities and residents facing aggressive and humiliating questioning from legal representatives who are desperate to deliver consent for their clients. Worse still, useful video evidence from past inquiries that shows such behaviour has been removed, which prevents scrutiny and denies new objectors the chance to familiarise themselves with the likely process.
Does the minister agree that local communities deserve legal representation when the process is clearly combative? Will she ask the DPEA—the planning and environmental appeals division—to look again at the decision to remove videos from its website?
Oliver Mundell has raised that matter in the chamber a couple of times, and I am aware of some of the issues that he has said that people have faced. The petition that I mentioned calls on the Scottish Parliament to appoint
“an independent advocate to ensure that local participants are not bullied and intimidated”
at local public inquiries. However, reporters are instructed to ensure that unrepresented partners are able to give their evidence in a safe environment. When unrepresented parties appear at an inquiry, reporters confirm at the outset of the inquiry that it is important that witnesses are treated courteously at all times, especially when being cross-examined. If any witness feels bullied or intimidated by the tone of cross-examination, they are advised to inform the reporter immediately.
In the same vein, I have met many constituents near Newton Stewart in Dumfries and Galloway who have concerns about proposed wind farm developments in Glenvernoch and Blair Hill, which would lead to the tallest onshore turbines in Scotland, despite the region already having one of the highest levels of wind farm developments anywhere in Scotland.
I know that the minister cannot comment on live planning applications, but will she outline what action constituents can take to ensure that proposers adequately hear concerns and engage diligently with persons who oppose developments?
I confirm that applications for both proposals that Emma Harper mentioned have not yet been submitted to Scottish ministers. However, she is right that, even before that point, I cannot comment on the merit or otherwise of such proposals.
If a proposed development proceeds to the application stage, there are clear notification requirements to ensure that local communities and the general public are informed of the submission to Scottish ministers. Members of the public may make representations and comments to Scottish ministers on an application. When an application is ready to be determined, Scottish ministers consider all relevant material that is available to them before making a decision. However, I implore developers to have meaningful engagement with the constituents of Oliver Mundell and Emma Harper on all their proposals well ahead of that process.
Petroineos (Discussions)
To ask the Scottish Government whether it will provide an update on what discussions it has had with Petroineos and trades unions about refining capacity at Grangemouth. (S6O-03360)
The Scottish Government continues to engage extensively with Petroineos. I most recently met the chief executive officers of Petroineos on 27 March, when I made clear the Scottish Government’s commitment to continue to engage constructively with the business. Petroineos and trade unions are also members of the Grangemouth future industry board just transition leadership forum, which I convened on 28 March.
Ministers met Unite the union and the Scottish Trades Union Congress on the morning of the import terminal announcement. Outwith the Grangemouth future industry board, I met unions in Falkirk on 15 March at a Just Transition Commission round-table meeting, which included representation from the wider Grangemouth community, Petroineos, unions and the local authority. I will next meet Unite in June to further discuss this very important matter.
I thank the minister for that detailed answer.
Here is what we know: the most recent accounts from Petroineos show that the site is profitable, and it has now secured investment in the hydrocracker, which was previously seen to be critical, but the plan to stop refining in 2025 is still in place.
What is the minister’s understanding of what factors motivate the commitment to disinvestment? Has she discussed those matters directly with PetroChina, given that the Government has met it and it is bankrolling much of this, or, indeed, any other potential investors? Most critically, is the Government’s objective to secure refining at Grangemouth beyond 2025 or simply to mitigate the effects of decisions that are being made elsewhere?
Mr Johnson has raised really important points. I have to point to the fact that Petroineos is making commercial decisions, and it has actually outlined them. It would not be fair to air in public what those commercial decisions have been based on because that is confidential.
One of the key aims of the Scottish Government, working in partnership with the United Kingdom Government and, indeed, the wider Grangemouth community, is to see how we can secure the refinery for the future. We are keen to look at whether it could become a biorefinery, and we are looking at ways in which we can influence the UK Government to bring down the hydroprocessed esters and fatty acids—HEFA—cap so that it could be one of the first movers in sustainable aviation fuel. That is one of the areas in which there are real opportunities for the refinery. Our colleagues at Petroineos agree with that, and we are working towards it.
Can the minister provide further information on how plans to develop a specific just transition plan for the Grangemouth industrial cluster will help to secure a long-term, sustainable future for the area?
Our just transition plan for the Grangemouth industrial cluster will outline a first-of-its-kind vision for the site and will include the long-term net zero operations that we would hope to see take place by 2045, some of which I spoke about in my answer to Daniel Johnson’s question. Beyond that, our plan will chart a series of actions that seek to secure that by focusing on securing long-term investment and developing technical and commercially viable solutions for manufacturing.
The necessary policy development as well as the skills and place-based activity that will be required to support a prosperous net zero future for the area are being developed with those who work in Grangemouth, communities, local employers, local authorities, unions and many other stakeholders.
Energy Efficiency Improvements (Due Diligence on Suppliers)
To ask the Scottish Government what due diligence is conducted by Home Energy Scotland when selecting recommended suppliers to install energy efficiency improvements that are supported by Scottish Government funding. (S6O-03361)
Home Energy Scotland is not responsible for selecting or recommending installers of energy efficiency improvements. Applicants to the HES grant and loan scheme are required to use a microgeneration certification scheme-accredited installer for heat pumps and other renewables and a TrustMark-registered installer for complex energy efficiency measures, including external wall insulation.
HES recommends for all measures that householders contact at least three installers, ensure that the chosen installer is fully qualified, and seek a guarantee or warranty for the work carried out.
Across Scotland, many colleges are saying that they are unable to recruit enough apprentices to meet the forthcoming demand to deliver on the Government’s insulation plans and its net zero objectives. Will the minister therefore speak to the Minister for Higher and Further Education; and Minister for Veterans about reversing the funding cuts to Scotland’s colleges, which will mean more cowboy operators operating in Government-funded schemes in Scotland?
I will tell Mr Hoy exactly what we are doing. We are working in partnership with the sector to ensure that appropriate support and training provision are aligned at the local level with business needs and local demands. We have funded the green heat installer engagement programme to provide assistance and support for installers in their clean heat transition to become accredited for the installation of heat pumps. That included the MCS certification fund, which last year supported 24 businesses to become MCS certified.
The issue is of great importance. I have frequent conversations with Graeme Dey, who oversees what the colleges do. They are alive to the fact that a number of skill streams will have to raise their game and produce a prospectus that will meet the demand for future skills.
Energy Saving Trust administers the grant and loan scheme for Home Energy Scotland. I have heard from suppliers about delays in processing applications, and the knock-on effect is that delayed payments to the businesses negatively impact their cash flow. While ensuring due diligence, what can the Scottish Government do to improve the process so that local suppliers, which are often small businesses, can continue to support the on-going and necessary energy efficiency installations?
Our target is to always process Home Energy Scotland claims within 10 working days, once the required documentation has been received. We are aware that the majority of such applications are dealt with on time, but, as we roll out the scheme, a lot more can be done to ensure that any delays are investigated and that processes are developed that bring about improvement.
Net Zero Targets (Green Economy)
To ask the Scottish Government what impact it anticipates its recent announcement on changes to its net zero targets will have on the development of a green economy. (S6O-03362)
The need to amend the statutory trajectory towards our ambitious net zero target is driven by legal necessity. It follows all parties setting a target that was considered beyond what could reasonably be achieved.
Our recent announcements in no way detract from the scale of our ambitions for tackling climate change, including via our energy transition, which presents enormous economic opportunities for Scotland, as well as risks that have to be managed. We remain committed to realising those opportunities for businesses and workers in Scotland, and to supporting a just transition.
The Nuclear Industry Association has warned that Scotland’s green economy risks losing billions in investment thanks to the Scottish National Party’s short-sighted opposition to new nuclear development.
Now that the Greens are no longer in government, will the minister use the opportunity to consider nuclear power as a means of bolstering Scotland’s green economy and strengthening energy security?
Only a Tory could intervene by calling for there to be more attention and focus on nuclear when Scotland is in the middle of a green energy revolution in terms of jobs from offshore wind. [Interruption.]
Members!
I draw members’ attention to an edition of The Press and Journal from around a week ago, in which Ian Wood said that the decision on the offshore floating wind farm that has been given consent
“will unlock around £3bn of investment, generate hundreds of jobs and ... effectively result in Europe’s first commercial scale floating wind development.”
Phenomenal developments are happening across Scotland at the moment, so let us not waste time and resources on decades of lost opportunity by focusing on nuclear when we have an opportunity on our doorstep that is right before our eyes. Let us create the jobs in green energy and power ourselves towards net zero.
To deliver a just transition, we need to make sure that Scotland’s workforce has the skills that are needed by industry. Approximately 80 per cent of the skills of workers in the oil and gas sector could be used in renewables, but demonstrating those skills is a challenge. That is why we support the development of an energy skills passport, but that has repeatedly been delayed. The former Minister for Green Skills, Circular Economy and Biodiversity said that a passport would be delivered this April, but April has gone and there has been no announcement.
Will the minister intervene urgently and work with trade unions, industry and skills accreditation companies to get a passport in place as soon as possible to open up opportunities for those workers in Scotland?
The energy skills passport is a key building block in getting towards a just transition, and ministers have devoted a lot of resource and time to it. However, it is an industry-led initiative and, as Sarah Boyack is aware, it has been quite a complex process. The good news is that we are expecting an announcement soon, so we will hear about the progress that is being made. It is an industry-led initiative, to which we have devoted resources because of its importance.
Does the minister agree that it is somewhat hypocritical of the Conservatives to demand more investment in net zero when the Conservative Government has cut our capital budget?
John Mason makes a perfectly valid and powerful point. It is hypocritical of the Conservatives to cut Scotland’s capital budgets at a time when we want to address the climate emergency and invest in the green energy revolution—[Interruption.]
Members—please!
—and to then come here and complain about the lack of progress towards those targets. That is utter hypocrisy.
Common User Charge
To ask the Scottish Government what assessment it has made of the potential impact on hospitality and other businesses in Scotland of new post-Brexit import fees on food products, known as the common user charge. (S6O-03363)
The United Kingdom Government recently published its common user charge fees for Government-run border control posts in England. Currently, there are no Government-run BCPs in Scotland, but it is anticipated that that charge sets a market price signal, and Scottish traders who use English ports will clearly be affected.
We will of course monitor any impacts on businesses and consumers, including those in our important hospitality sector.
Household budgets have been decimated by the cost of living crisis, Liz Truss’s mini-budget and Brexit. Now, people are facing fees of up to £145 on items such as fish, cheese and yoghurt. What steps is the Scottish Government taking, with the powers that it has, to mitigate the harms that are being inflicted on the people of Scotland?
I heard Conservative members sigh when Collette Stevenson mentioned the impact of UK Government policies on hospitality businesses in Scotland. I remind them that the business insights and conditions survey stated that the top factors affecting businesses are inflation and energy costs, both of which are at the door of the UK Government at the moment—[Interruption.]
Please resume your seat for a wee second, cabinet secretary. I will not have all this shouting across the chamber. The minister has been asked a question and he is responding. Please have the courtesy to listen to his response.
Colette Stevenson is quite right. Recent press reports have highlighted concerns that an increase in costs will lead to a further price increase for consumers who are already struggling with the cost of living crisis. It is entirely because of Brexit that the latest raft of import controls has been introduced. Scotland did not vote for Brexit, but we are paying a huge price. Although no one can point to the benefits of Brexit, this issue demonstrates yet more unnecessary damage being caused to the Scottish economy because of it.
That concludes questions on the portfolio of wellbeing economy, net zero and energy. There will be a short pause before we move to the next portfolio to allow front-bench teams to change positions, should they so wish.
Finance, Deputy First Minister Responsibilities and Parliamentary Business
The next portfolio is finance, Deputy First Minister responsibilities and parliamentary business. Should a member wish to seek to ask a supplementary question, they should press their request-to-speak button or, if online, enter the letters RTS in the chat function, during the relevant question.
Capital Spending Review
To ask the Scottish Government whether it will provide an update on when its review of capital spending will be complete. (S6O-03364)
The capital outlook is currently very challenging, with a 9 per cent real-terms cut in our capital funding from the United Kingdom Government. Work is under way to update the infrastructure pipeline to ensure that it is affordable and deliverable and provides the best value for money.
In the Highlands, a number of health projects have been paused, including the maternity services upgrade, the new Belford hospital for Fort William and the Caithness health redesign. During the pause and delay, construction costs are increasing, which is not only adding greater costs to the investment but creating greater costs for NHS Highland, because it must manage the failing infrastructure. When will the review be complete? What will be the value of the projects that get the go-ahead, and what will be the value of the projects that are scrapped?
I very much understand the issues that Rhoda Grant has raised. However, given not just the cut to our capital budget but the significant levels of construction inflation, there has been a reduction in our spending power on top of the capital cut, so we have had no other choice than to revisit the pipeline of projects.
As I have said to Rhoda Grant in the chamber previously, and as I said in my initial answer, work is under way to review the programmes that relate to the 2021 infrastructure investment plan, to ensure that it is affordable and deliverable and provides value for money. The refreshed infrastructure pipeline is intended to be published alongside the medium-term financial strategy, as it is right that future investment plans are embedded in wider thinking on fiscal sustainability. That will include reference to the health projects that Rhoda Grant has mentioned.
The bus partnership fund has been paused, despite local transport authorities spending a lot of time and money working up bids worth hundreds of millions of pounds that are clearly linked to the Government’s strategy for hitting net zero and getting people out of cars and on to public transport. How will the Government prioritise that? Will the Deputy First Minister give an indication of when the bus partnership fund will resume?
The bus partnership fund sits in the Cabinet Secretary for Transport’s portfolio, but it is clear that support for the expansion of public transport is a key lever in our ambitions towards net zero.
Alex Rowley referred to prioritisation. In the light of the construction costs and inflation that I mentioned, the cut to our capital budget and the further cut to financial transaction availability, we have had to make very difficult decisions in the capital priorities work that is going on—work not just on the infrastructure investment pipeline but across the whole Government. That work is under way, and, when a new First Minister comes into post, I am sure that they, too, will have a view on those priorities.
Two weeks ago, I asked the Cabinet Secretary for NHS Recovery, Health and Social Care when we might know more about the timetable to replace Shetland’s Gilbert Bain hospital. He acknowledged that certain parts of the 1950s-designed building are in a bad state. In the light of the capital spending review, and as the Gilbert Bain hospital is one of the oldest hospital buildings in the Highlands and Islands, will the Deputy First Minister do all that she can to ensure that progress towards a replacement hospital is forthcoming?
I will ask the health secretary to write to Beatrice Wishart. What I said to Rhoda Grant about the infrastructure investment pipeline and the reasons why we are revisiting it, which are multifaceted and include the rise in construction costs and the cuts to the capital budget, applies to all those projects.
I understand Beatrice Wishart’s, and Rhoda Grant’s, point that giving certainty as early as possible is very important, which is why the refreshed pipeline will be published alongside the medium-term financial strategy.
Public Sector Pay Disputes
To ask the Scottish Government whether it will provide an update on work undertaken to resolve any public sector equal pay disputes. (S6O-03365)
The Scottish Government has a long-standing commitment to the principles of fair work, and the fair work action plan outlines the direct action that we are taking to address labour market inequalities. All public bodies and local authorities need to ensure that they comply with their legal obligations; they are encouraged to work jointly with their trade unions in undertaking equal pay reviews and equality proofing their pay systems.
Pay discrimination appears to be endemic in local government. The GMB union has active equal pay cases in six local authorities, including Dundee City Council. Job evaluation is an on-going issue in Glasgow, and a local authority contracting company used by Dundee, Angus and Perth and Kinross councils uses discriminatory practices. Today is May day, international workers day. Will the Deputy First Minister agree to meet the GMB union to discuss the issues that its members face and agree to support the development of a strategy to deal with pay discrimination in local government?
I thank Maggie Chapman for raising these important issues. She will be aware that, as councils are independently accountable bodies and employers, it is their duty to ensure compliance with the Equality Act 2010. We recognise the need to move forward on these issues. Our negotiation and on-going dialogue with the trade unions is important to us, but we have to ensure that, where there are contractual and employment-related issues, they remain between the trade unions and the respective employer—in this case, local authorities.
We recognise the importance of local government funding in that context and of local authorities being able to take the steps that they need to resolve the equal pay claims. With that in mind, the 2024-25 Scottish budget provides record funding for local government of more than £14 billion, which represents a real-terms increase of 2.5 per cent.
I would be happy to discuss these issues further with Maggie Chapman if she would like to do so.
What would the Deputy First Minister say to the leader of Dundee City Council, who continually refuses to meet the GMB or, frankly, to answer correspondence from parliamentarians on the pay dispute? I draw the chamber’s attention to my declaration of interest as a member of the GMB.
First, I know that the leader of Dundee City Council takes such matters very seriously and values very much the relationship with the trade unions. I remind Michael Marra that, in relation to one of the biggest equal pay claims, in Glasgow, it took a change of administration—from Labour to the Scottish National Party—to begin to resolve such matters. There is no lack of willingness and desire to resolve equal pay claims on the part of the SNP, whether that is in local government or anywhere else.
I make a plea for succinct questions and answers, because we still have quite a number of questions to get through.
Local Government Debt
To ask the Scottish Government what its response is to reports that local government debt has now risen to 160 per cent of its annual funding settlement. (S6O-03366)
Although there are no limits on the amount that a Scottish local authority can borrow, local authorities are under a statutory duty to determine and keep under review the maximum amount that they can afford to allocate to capital expenditure, including associated borrowing levels. Local authorities must have regard to the Chartered Institute of Public Finance and Accountancy prudential code, which requires borrowing to be “affordable, prudent and sustainable”. Regulations also require local authorities to set an authorised limit for external debt.
Given the shocking rise of local government debt and the risk of it spiralling further, can the minister confirm what contingency plans the Scottish Government has made in the event of a local authority going bankrupt?
It is not possible for there to be no impact on capital borrowing from the cuts that have been made to our capital budget by the United Kingdom Government, if we want to continue running some of the services that are provided.
As we are talking about councils going bankrupt, I note that no council in Scotland has gone bankrupt, and the latest report suggested that none is likely to. That is in huge contrast to Conservative-controlled England, where there have been 12 section 114 notices, in eight councils. Those are not just Labour councils. There was Northamptonshire County Council, twice; Croydon Council; Slough Borough Council; Nottingham City Council, again; Croydon Council, again; Northumberland Council; Croydon Council, again; Thurrock Council; Woking Borough Council; Birmingham Council; and, most recently, Nottingham City Council, again. The Scottish Government will keep doing what it can to support and work with our local authorities, and the UK Government should start doing the same with its local authorities.
Will the minister say anything about the private finance initiatives and public-private partnerships that put local authorities under huge pressure and impacted on their debt?
John Mason makes a very strong point. The private finance initiative was an expensive Labour and Tory mistake that simply did not deliver best value for the people of Scotland. PFI and PPP unitary payments place significant pressure on local authorities. There are 38 local authority PFI contracts, and £7.25 billion has been paid on those up to this year, with a further £8.15 billion of payments to be made over the coming years. That is £15.4 billion of payments for local authority contracts that have a capital value of only £3.27 billion.
I recently attended an event hosted by the Convention of Scottish Local Authorities and discussed the priorities that were set out in its five-year plan in 2022. They include securing sustainable funding, delivering a just transition and supporting the most vulnerable in our communities. Given the financial pressure that is being faced by our councils, can the minister advise what measures the Scottish Government is taking to ensure that those goals are met?
That is an area that the Scottish Government is working on constructively with COSLA. No one is coming to the chamber to suggest that there are not pressures on local government’s finances, just as there are right across the public service. That is why this Government took decisions to increase the amount of spending power that it had. I hope that progressive colleagues across the Parliament will continue to support such policies to ensure that we can prioritise public services over the kind of tax cuts that the Conservative Government makes.
Ferries Task Force (Update)
To ask the Scottish Government whether it will provide an update on the work of the ferries task force with Orkney Islands Council, including when it expects new ferries to be procured. (S6O-03367)
The Deputy First Minister and the Cabinet Secretary for Transport met the new deputy leader of Orkney Islands Council on 18 April. They reiterated the Scottish Government’s commitment to support the council in its work to develop a robust business case for the ferry replacement, which can then inform the council’s decisions on its next steps. It was also confirmed in that meeting that the Scottish Government has maintained almost £16 million-worth of support for the operation of Orkney’s ferries in 2024-25, in a very challenging financial context. We are also continuing to provide additional island cost crisis emergency funding to the council this year.
When the previous First Minister stood down last year, the work of the ferries task force came to an abrupt halt for around six months. Given the urgent need to move ahead with the procurement of new vessels to operate the lifeline routes in Orkney, can the minister guarantee that the latest departure from Bute house will not result in the ferries task force being stuck in dry dock again for the remainder of the year?
I can absolutely confirm to the member that the work is progressing at pace. If he wants to come and have a briefing with me or with the transport secretary, I will be more than happy to oblige.
The national shipbuilding strategy refresh in 2022 outlined a 30-year pipeline of all public sector vessel procurements and committed to having a minimum 10 per cent weighting on social value for all new vessel competitions. Can the minister confirm that, in the case of this programme, the Government will adhere to the 10 per cent minimum threshold on social value and perhaps even go further and be more ambitious, as Maritime UK has called for?
The transport secretary will write to the member with an answer to that question.
Economic Recovery (Tax Revenue)
To ask the Scottish Government what the implications are for future tax revenue of reports that the economic recovery outlook for Scotland continues to lag behind the United Kingdom average. (S6O-03368)
Despite being tied to the failing UK economic model, the Scottish economy, far from lagging behind the UK, is one of the best-performing parts of the UK. Scotland, unlike the UK, avoided entering recession in 2023. Earnings in Scotland grew by 8 per cent in 2023, which is faster than in any other part of the UK, including London and the south-east, and income tax revenues are growing faster in Scotland than in the rest of the UK.
The latest Scottish Government report shows that growth in Scotland’s economy for 2025 is expected to be 1.1 per cent; in the rest of the UK, growth is expected to be nearly double that. Does the cabinet secretary agree with me that that failure by the Scottish Government will mean an even bigger black hole for our budget in future years? What actions is the devolved Government taking to have growth levels that are comparable with those in the rest of the UK?
I know that the Conservatives find it difficult to welcome any good news about the Scottish economy. In my initial remarks, I laid out some of the areas in which the Scottish economy is outperforming the UK, in terms of strong earnings growth and record income tax receipts.
We are absolutely aware of the need for our economy to grow. Scotland’s gross domestic product per capita has grown faster than that of the UK since 2007, and productivity has grown at an annual average rate of 1 per cent a year in Scotland since 2007, compared with that of the UK at 0.4 per cent a year. Inward investment projects in Scotland have grown by 3.3 per cent, compared with a 6.4 per cent fall across the UK.
We absolutely want to make sure that we have a growing economy and we have strength in many areas, not least in net zero. It is just a pity that the Conservatives continue to talk down the Scottish economy.
Income Tax Divergence (Impact on Private Sector Recruitment)
To ask the Scottish Government what analysis it has undertaken of how income tax divergence has impacted or may impact private sector recruitment. (S6O-03369)
Our tax policies are grounded in evidence and we regularly monitor data on the tax base throughout the year, as well as engaging with business organisations to understand the trading conditions that they face. The latest data from His Majesty’s Revenue and Customs shows that the number of payrolled employees in Scotland has grown to a near record high, while separate HMRC research has recently shown that Scotland has attracted thousands of taxpayers from the rest of the United Kingdom since 2017-18. That is contributing to record income tax receipts, with Scottish income tax now forecast to raise around £18.8 billion in 2024-25.
The minister is keen to quote figures that are four years out of date. Since then, we have seen massive tax hikes in Scotland. He talked about evidence and data. Well, here is some evidence and data. Someone who earns £50,000 or more in Scotland will pay 20 per cent more tax than they would in any other part of the UK. It is not a sustainable position that that is not affecting the private sector’s ability to recruit. Every commentator says it—the Institute of Directors, the Scottish Chambers of Commerce, Scottish Financial Enterprise and even the Scottish Fiscal Commission are warning of the effect of tax divergence on recruitment. Will the minister not accept that the business sector is telling us and the Government that Scotland’s increased tax levels are hammering its ability to recruit people to well-paid jobs in Scotland?
I will start with a point of consensus. It is exceptionally important to engage with business and to work constructively in a shared endeavour for economic growth.
Here is where I take a slightly different view. First, the most recent data that we have to base our assumptions on is from 2021-22, and it shows that there was net positive migration to Scotland across all income tax bands.
Secondly, it is important to look holistically and in the round at, for example, the significant divergence in average property prices in Scotland from those in the rest of the UK and the significant difference in average council tax compared to the rest of the UK. If a young professional is fortunate enough to be in the position of earning £50,000 a year and they have been through an undergraduate university course in Scotland, unlike their counterparts in England they will not be carrying the better part of 30 grand of tuition fee debt.
Across a range of measures, we use our progressive income tax policies in Scotland to deliver a competitive environment as well as the best social contract that is on offer anywhere in these islands.
Opposition members often highlight concerns about the potential impacts of Scotland’s progressive tax system. Can the minister say any more about what assessment the Scottish Government has made of the recent HMRC research, which indicates that thousands more taxpayers have moved to Scotland than have left each year in the period after Scottish income tax was introduced?
The reality is that, ever since income tax was first devolved, Opposition parties have claimed that even the slightest policy divisions would lead to an exodus from Scotland. Recent HMRC research dispels that. Growing numbers of taxpayers are leaving the rest of the UK for Scotland, with net in-flows averaging 4,200 taxpayers each year between 2017-18 and 2021-22. In the last year for which there is available data, taxable income grew by around £200 million due to that movement of taxpayers. I will leave it to others in the Parliament to explain how slashing taxes and running down public services would make Scotland a more attractive place to live.
Local Government Funding
To ask the Scottish Government what its position is on whether it has funded local government adequately to deliver the services that it has responsibility for. (S6O-03370)
The Scottish Government recognises the challenging financial circumstances that local authorities and, indeed, the entire public sector are currently facing. Those challenges were considered and were reflected in the local government finance settlement, which is providing local authorities with record funding of more than £14 billion in 2024-25, which is a real-terms increase of 2.5 per cent compared with the previous year. It is the responsibility of individual local authorities to manage their own budgets and to allocate the total financial resources that are available to them on the basis of local needs and priorities.
Councils and residents in South Scotland and beyond are feeling the true impact of successive SNP budgets, backed up by the Greens, that have taken the axe to council funding and services. Does the minister understand the level of cuts in local authorities that his Government has imposed on the poorest communities in Scotland? Is it not the case that Scotland is now suffering from two out-of-touch, out-of-road Governments that it would be far better off without?
No, I do not agree. We have just heard about the number of local authorities that have had to serve section 114 notices in the rest of the UK, where the SNP is not in Government.
I will talk about the rises that have come to South Scotland in comparison with the 2023-24 budget. In Dumfries and Galloway Council, there is a 5.7 per cent increase; in East Ayrshire Council, there is a 5.2 per cent increase; and in East Lothian Council, there is an 8.5 per cent increase.
I see that time is running out, Presiding Officer.
In Scottish Borders Council, there is a 6.2 per cent increase; in South Ayrshire Council, there is a 6.7 per cent increase; and in Midlothian Council, there is a 7.6 per cent increase.
We all recognise that these are challenging times for everyone in public service, but it is absolutely clear that the Scottish Government has prioritised local services and local government to the best of our ability.
I have two requests for supplementaries. I intend to take questions from both members, but they will need to be brief.
Last year, the Scottish Government made a commitment, via the Verity house agreement, that it would introduce multiyear funding for council budgets, and, in November, Shirley-Anne Somerville made that commitment for the voluntary sector. I ask again, when is that going to happen?
The member will not, I think, find any division across the chamber on the importance of multiyear budgeting. However, that is absolutely impossible given the volatility of the current system in which the UK budget comes solely in-year for us, with no certainty and no multiyear aspect. It is absolutely something that this Government would want to take forward, but we would need to do so in partnership with local government and the UK Government.
With the Scottish Government providing record funding of more than £14 billion to local authorities, as has just been mentioned, can the minister provide any update regarding the work that is under way to empower local government, including a new fiscal framework?
Work on the fiscal framework is really important to the Scottish Government, and it is being taken forward as part of our collaboration with the Convention of Scottish Local Authorities. We are working closely with COSLA to agree a local framework. We published an update just last December, and we are working towards the fiscal framework being in place, subject to that collaboration, in advance of the 2025-26 Scottish budget.
Bute House Agreement
To ask the Scottish Government whether it still plans to deliver the shared policy programme contained within the Bute house agreement, in light of reports that many of its policies have been discarded. (S6O-03371)
The Bute house agreement played a central role in our aim of building a greener, fairer and independent Scotland. It made possible a number of achievements, including delivering a progressive project that prioritised the national health service and public services over tax cuts; free bus travel for under-22s; bringing ScotRail into public ownership; and committing the first £75 million of the 10-year just transition fund for the north-east and Moray.
However, the First Minister, for the reasons that he set out last Thursday, took the decision to end the Bute house agreement. Any policy decisions will be notified to Parliament in the normal manner.
What is the point of the current First Minister dramatically chucking the Greens out of the front door only for the next one to sneak them in round the back?
The Government will get on with governing as a minority Government and, in doing so, we will reach out to those who share our progressive values and who want to work with us in a constructive manner. That will be the case for the Opposition parties across the whole Parliament. The question for them is whether they can rise to the occasion.
That concludes portfolio questions on finance, Deputy First Minister responsibilities and parliamentary business.