Wellbeing Economy, Fair Work and Energy
Good afternoon. The first item of business is portfolio question time. The first portfolio is wellbeing economy, fair work and energy.
Torness Power Station
To ask the Scottish Government what its response is to the announcement by EDF that its ambition is to extend the life of Torness power station. (S6O-02958)
Although the Scottish Government does not support the building of new nuclear fission power stations in Scotland under current technologies, we are supportive of extending the operating lifespan of Torness if strict environmental and safety criteria continue to be met.
Torness has contributed significant value to Scotland’s economy over several decades, and the facility plays an important role for the East Lothian community. Extending its power generation will provide supply as the capacity of renewable alternatives is increased.
New data shows that nuclear accounted for 16 per cent of Scotland’s electrical output in 2022. Over its lifespan, Torness power station has produced enough electricity to power every Scottish home for 29 years, but, when it is decommissioned, the Scottish National Party will block any further nuclear development in Scotland. European nations including Belgium, the Czech Republic, France, Hungary, the Netherlands, Romania, Slovakia, Slovenia, Spain and Sweden will all harness nuclear energy as part of their net zero journey. Why not Scotland?
Craig Hoy mentions quite a lot of countries that are continuing to use nuclear technology for fuel, but he does not mention the major economies of Europe such as Germany that are not.
One of the reasons that we are not putting any of our efforts into nuclear is that offshore wind will provide the security of supply that we need. I also mention pumped storage hydro, which the United Kingdom Government has not supported in any significant way. Nuclear has favourable contracts for difference conditions, UK funding and a regulated asset base model that reduces risk for developers, but pumped storage hydro does not have any of that. Nuclear costs £92.50 per megawatt hour, whereas offshore wind is £37.65 per megawatt hour. Nuclear is far too expensive.
The Cabinet Secretary for Wellbeing Economy, Fair Work and Energy will visit Torness in the near future. We recognise that the station has made a significant contribution to Mr Hoy’s region.
I am grateful that the Government is now celebrating the contribution that Torness has made, but I am disappointed that it is not putting efforts into nuclear. How will the Scottish Government ensure that the baseline continues for periods of up to 24 hours when there are no renewables and the water storage has fallen and turned its turbines?
Martin Whitfield has mentioned on many occasions that he is pro-nuclear energy, and he does so again today. The Scottish National Party remains of the position that it is not necessary to invest in nuclear for Scotland when we have an abundance of renewable energy.
I mentioned pumped storage hydro. That sector has not been able to utilise any market mechanisms that the UK Government has put in place for other technologies, such as nuclear. That is a distinct unfairness, given that pumped storage hydro is able to plug gaps in intermittent supply from offshore and onshore wind. The energy that is available from pumped storage hydro is significant.
South of Scotland Enterprise (Funding)
To ask the Scottish Government whether it will provide an update on future funding for South of Scotland Enterprise. (S6O-02959)
South of Scotland Enterprise has made a significant impact since its launch in 2020. Last year, the agency provided tailored advice and support to more than 1,100 enterprises. It invested £10.5 million into businesses and communities and a further £5.4 million into strategic projects.
We have prioritised funding for SOSE to the extent that is possible, given the extremely challenging funding settlement. The 2024-25 budget allocates almost £27.4 million to the agency to support economic and community development across the region. SOSE is committed to boosting investment, accelerating opportunities and helping businesses and communities to grow and achieve their potential. We will keep working with it to support those shared ambitions.
South of Scotland Enterprise was launched four years ago. Since it started, its funding has been cut year on year. This year, it was cut to £34.5 million, which was down nearly £3 million. Next year, as the cabinet secretary has said, its funding will be slashed to £24.7 million. The promise—which is in the financial memorandum that I am holding— has been broken of a fair share per capita of population equivalent to the funding of Highlands and Islands Enterprise. Businesses have been betrayed. Will SOSE be expected to cut its operating and labour costs to ensure that it can deliver its five-year action plan on that budget?
The funding that was provided in the autumn statement fell well short of what we need. Scotland needed more money for infrastructure, public services and pay deals; instead, the autumn statement delivered a real-terms reduction in the block grant. [Interruption.] It is a bit rich for Conservatives who are pro-austerity to complain about its impact.
You are breaking your financial memorandum promise.
Throughout this session, since it began, I have heard almost constant commentary as members have put or responded to questions. I ask all members to cease that.
As I said, it is a bit rich for Conservatives who are pro-austerity—a decade and a half of austerity—to come here and complain about the impact that austerity has on services.
In that context, we have prioritised funding for the enterprise agencies to the extent that we possibly can. The budget allocates more than £307 million to enterprise agencies. If the Conservatives wish to see a change, they are more than welcome to suggest cuts for elsewhere in the budget—or, even better, to persuade their colleagues at Westminster to stop the cuts at source.
Will the cabinet secretary provide further detail on how Scottish Enterprise’s blueprint for economic growth, which was launched on Monday, will help to deliver a more successful, fairer and greener economy?
I was pleased to be at the launch of Scottish Enterprise’s new strategic focus, which has three key missions at its heart. It is about ensuring that we support the energy just transition, that we have innovation at the heart of our economy and that we attract capital investment that improves productivity. We will keep working with Scottish Enterprise, SOSE and Highlands and Islands Enterprise to ensure that those key areas of investment are supported.
The budget cut to South of Scotland Enterprise represents some 20 per cent. That is coupled with a 12.8 per cent cut to Highlands and Islands Enterprise and a 15.2 per cent cut to Scottish Enterprise. What assessment has been made of the impact that that will have on headcount and, critically, the number of businesses that, collectively, those agencies will be able to support?
We continue to work with all our agency partners to ensure that the budget that they have available, which we have been able to prioritise, goes as far as possible towards ensuring that the service that they provide is well tailored to the areas that they serve and the sectors that we must continue to support.
If Labour has a proposition to change the allocation that goes to enterprise agencies, the Deputy First Minister and I would, of course, welcome that. However, to have any credibility, Labour will need to suggest what areas need to be cut back from elsewhere in the budget.
Budget (Offshore Wind Supply Chain)
To ask the Scottish Government how its budget for 2024-25 will help to develop the offshore wind supply chain to ensure that Scotland benefits from the reported global expansion of wind energy. (S6O-02960)
The budget kick-starts our commitment of up to £500 million over five years to anchor Scotland’s offshore wind supply chain, with an investment of £67 million in the next financial year. Our strategic investment will stimulate and support crucial private investment in the Scottish supply chain to maximise the economic opportunities and benefits from Scotland’s offshore wind potential.
It is welcome that the Scottish Government is providing the support that is needed to stimulate and support the growth of the sector, which is particularly relevant to my constituency, Aberdeen South and North Kincardine. That said, the reality remains that real-term cuts to the Scottish Government’s capital investment budget, which have been imposed by the United Kingdom Government, risk undermining our ability to invest in our energy transition. Will the minister outline how the full capital borrowing powers of an independent Scotland could make such investment much more achievable? [Interruption.]
I hear groans from the Conservatives, because Audrey Nicoll is pointing out that it is absolutely obvious that, at just £450 million per year, or 0.2 of gross domestic product, our ability to borrow to invest is severely constrained compared with that of an independent country. At a time when the Organisation for Economic Co-operation and Development has said that the transition to green energy will require an additional investment of up to 1.5 per cent of GDP per year, that is just not enough.
The Scottish Government has outlined plans to set up a dedicated building a new Scotland fund to invest up to £20 billion during the first decade of an independent Scotland and lay the foundations for a green and fair net zero economy. Other nations across Europe are making significant investments in transitioning, and we should be able to do that, too.
We all welcome the focus on the offshore supply chain and the fantastic opportunities for our economy, but we need to get on and realise them. The First Minister made that commitment in October last year, but my understanding is that only £20 million has been allocated so far. Will the minister confirm how the funding will be distributed, what mechanism will be used and when we will see the money making a difference on the ground? For example, will she highlight what ports will benefit from the investment?
There are a number of issues in Sarah Boyack’s question. I note that £87 million has already been allocated, and I have mentioned the figures from the budget. Other work is also being done to support the supply chain.
The member mentioned infrastructure. Work is on-going on the strategic investment model; that has been taken forward by the Scottish offshore wind energy council, which I co-chair. That is attracting £9 billion of capital expenditure, which will be leveraged through private investment and the funds that I have outlined that will be delivered by the Scottish Government.
A significant amount of joint working is being done in the sector. It would not be appropriate for the Government to take a top-down approach and say what the industry should be doing. We are working with the industry. It knows what it needs to deliver on the ScotWind and innovation and targeted oil and gas—INTOG—leasing rounds, and we want to work with it in the room at all stages of the process.
Energy Infrastructure Projects (Consultation)
To ask the Scottish Government whether it plans to review the consultation process for energy infrastructure projects. (S6O-02961)
The power to alter the Electricity Act 1989 to change the legislative basis for consultation processes under that act is reserved to the United Kingdom Government. However, the UK Government’s transmission acceleration action plan, or TAAP, makes it clear that changes to the consenting regime in Scotland under the 1989 act are necessary to accelerate the determinations process, and the UK Government has committed to a review. The Scottish Government supports such a review, and we will work with the UK Government to progress it.
The Scottish Government is currently undertaking work to streamline the consenting regime for offshore energy infrastructure projects, including reviewing the consultation processes.
North-east residents who are affected by the Scottish and Southern Electricity Networks pylon and substation proposals have increasingly shared their concerns with me about the consultation process for the new infrastructure. They feel that it is being railroaded through. That has impacted the community’s wellbeing and has caused significant distress to many. Surely there must be a better way of engaging with affected residents. As energy infrastructure projects ramp up, will the minister commit to listening to communities about the way in which the consultations are run and work with the developers to improve them?
The simple answer to that question is that I will not only listen, but I am listening and I am working with the industry to improve those consultations. It is important to mention that.
I appreciate Tess White’s support, given that pre-application consultation with the community is led by developers. Although pre-application consultation is mandatory in town and country planning systems for bigger infrastructure capacity of over 50MW, it is not mandatory. The Electricity Act 1989 could be reformed to include that.
I would very much welcome the support of Tess White and her UK Government colleagues not only to make community engagement mandatory in cases such as the one that she mentioned, but to make community benefits mandatory. I have been liaising with my UK Government counterparts on the issue, and I am afraid that I have not had agreement on that. I would therefore very much welcome Tess White’s support in those endeavours.
Despite being at the mercy of volatile and unstable UK energy and climate change policy, how will plans to develop a green industrial strategy for Scotland bring about the investment that is needed for energy infrastructure projects?
I appreciate where Colin Beattie is coming from. He raises a very important point about policy certainty, which is absolutely crucial for investment. When a UK Government flip-flops on climate change policy, we lose out to companies that would otherwise invest in the UK, and they go elsewhere, where the policy regime is better. I give the example of the United States Inflation Reduction Act.
The global transition offers enormous economic opportunities for Scotland, which is why we are developing a green industrial strategy that sets out how the Scottish Government will help businesses and investors to realise those opportunities. It will offer a clear view of the economic sectors and industries in which we have the greatest strength and the most potential, and of what the Government will do to support them. In covering themes such as skills and investment, it will bring the full weight of Government to bear and give the private sector the confidence to make decisions to invest in Scotland, if not the wider UK.
Glasgow Prestwick Airport
To ask the Scottish Government whether it will provide an update on the latest expression of interest in buying Glasgow Prestwick airport. (S6O-02962)
At the Economy and Fair Work Committee meeting on 6 December, I set out details of an expression of interest in purchasing Prestwick airport. Other parties have also approached Glasgow Prestwick with a potential interest.
Due to commercial sensitivities, as Mr Simpson will understand, it would not be appropriate to share further details, including the identity of an organisation behind any expression of interest, at this time. However, I will endeavour to update Parliament at the earliest appropriate point, should a proposal be received.
I thank the cabinet secretary for that very interesting answer. From what he said, it sounds as though there are two expressions of interest on the table. There have been a number over the years, and they have always hit a barrier. Can the cabinet secretary tell us exactly what the Scottish Government is looking for in a buyer for the airport?
I thank Graham Simpson for his constructive question and acknowledge his on-going interest in this area.
The Scottish Government intends to return Glasgow Prestwick airport to the private sector at the appropriate time and with the best opportunity. Any decision to sell must be informed by what is right for the long-term success of the business and the contribution that it makes to the local economy.
The airport is not being actively marketed for sale at present, but it is understood within the aviation industry that ministers are open to considering credible purchase offers. Any potential purchaser must demonstrate how it will maintain Glasgow Prestwick airport as an operational airport and maximise its economic benefits and employment potential. We must be confident that any sale would represent good value for the taxpayer and put the business on a firm footing.
As I said, I am happy to continue to liaise with Mr Simpson, the committee and Parliament as the expressions of interest progress.
Budget (City Centre Recovery and Small Businesses)
To ask the Scottish Government what impact its budget will have on city centre recovery and small businesses. (S6O-02963)
The Scottish Government’s £685 million non-domestic rates relief package will see the small business bonus scheme being maintained and continuing to be the most generous scheme of its kind across the United Kingdom. The basic property rate has been frozen at 49.8p, and more than 95 per cent of non-domestic properties will continue to be liable for a lower property tax rate than such properties elsewhere across these islands.
The commitment to the £1.9 billion city region and regional growth deals remains, with the forthcoming budget providing £203 million to support them and the work of the Scottish Cities Alliance.
The Scottish Retail Consortium has said that the Scottish budget will cause “self-inflicted economic harm” and that its plan for a new levy
“smacks of incoherent policy-making within Government”.
All that comes on top of the Scottish National Party’s failure to pass on the 75 per cent rates relief to retail businesses. [Interruption.]
Let us hear the member.
Does the minister accept that the cumulative effect will stifle the economy, further hinder the retail sector, prevent city centre recovery and, ultimately, pass additional costs on to Scottish consumers?
The measure that the member outlined is currently subject to a consultation. We will listen to all views, including the member’s, and we will await the outcome of that consultation before moving forward.
This is another example of a Conservative MSP complaining about some of the budget proposals after the dismal budget settlement that the Scottish Government received from the Conservative UK Government. I urge the member and her colleagues to put as much pressure as possible on their Conservative colleagues in the UK Government to recognise the extraordinary pressures that Scotland and our budget are under as a result of those UK policies, so that we can address some of those concerns.
Scotland’s small businesses are facing higher energy costs, labour shortages due to Brexit, and the impact of inflation on goods and services due to United Kingdom Tory Government mismanagement of the economy. Given the paltry consequentials that the Scottish Government has received, which severely limits its ability to repair some of that damage, what continued calls is the minister making to the UK Government to provide further much-needed support?
Gordon MacDonald raises an important issue. The latest data from the business insights and conditions survey show that the main concerns for businesses in December 2023 were energy prices, which is an issue reserved to the UK Government; falling demand, which is influenced by policies at UK Government level; and inflation in the cost of goods and services, which is influenced by Tory economic mismanagement at the UK level.
The Scottish Government is raising those and other issues with the UK Government. For example, we are calling on the UK Government to help with the costs by introducing a VAT reduction for business energy bills, and for it to make changes to the skilled worker visa provision, reduce VAT for the tourism and hospitality sector, and act on a number of other issues, so that the UK can step in and help the Scottish business community. I hope that the UK Government will do that sooner rather than later.
Budget (Economic Growth in North Ayrshire)
To ask the Scottish Government what measures in its proposed budget will support economic growth in North Ayrshire. (S6O-02964)
Our proposed budget includes a range of measures to support economic growth in North Ayrshire and the three missions of equality, opportunity and community. They include continued rates relief for businesses, which is part of a national package worth £685 million for 2024-25. The region also benefits from our investment in digital connectivity across Scotland, which has increased from £93 million to £140 million.
Such measures will benefit the North Ayrshire economy. Added to that is our continued support of the Ayrshire growth deal, in which we are investing £103 million over 10 years to transform the economy of the wider region.
A recent report by the Trades Union Congress has shown, among other things, that the UK is the only G7 economy in which real household income per head has not recovered to pre-pandemic levels. It describes that as
“a damning indictment on the Conservatives’ economic record”,
and it says:
“Their failure to deliver decent growth and living standards over the last 13 years has left millions exposed to skyrocketing bills—and is pushing many ... into debt.”
We have low growth, high inequality and a Westminster-inflicted cost crisis. Does the cabinet secretary agree that Scotland could do so much better for our citizens with full fiscal autonomy as an independent nation once again?
Yes, I absolutely agree with Ruth Maguire’s assessment. Today’s rise in inflation will exacerbate the United Kingdom cost crisis challenge that businesses and households face.
The Scottish Government is limited in its ability to unleash Scotland’s economic potential. Too much decision making regarding our economy still rests at Westminster. We remain locked into the UK Government policy-making decisions that the Resolution Foundation says have doubled the productivity gap with France and Germany since 2008 and given the UK stagnant wages, inequality levels that make a typical household income £8,300 worse off and an economy that is 2.5 per cent smaller than it would have been in the European Union. That is while Scotland’s economy has experienced faster earnings growth than the rest of the UK in 2023, 4 per cent greater gross domestic product growth per person, and double the UK’s annual productivity growth since 2007.
Ruth Maguire is right. For us to truly reach our economic potential and match the growth, productivity and wider economic performance of our European neighbours, we need to take our place as an independent nation in the EU.
Will the cabinet secretary explain how his Government’s decision to slash funding for Scotland’s economic development agencies in the budget will benefit economic growth across Ayrshire, or does he subscribe to the view of his Scottish Green colleagues that economic growth is something to be avoided?
The Government supports continued economic growth, and we support our enterprise agencies and the role that they play to deliver that. It is quite rich for a Conservative member who supports austerity being inflicted on Scotland and the rest of the UK to come here and complain about its impact. If the member is serious about enterprise budgets being increased, he needs to talk to his Westminster colleagues to ensure that our settlement is a fair one and is not a real-terms cut to our budget.
Finance and Parliamentary Business
Local Authorities (Provisional Revenue Allocations)
To ask the Scottish Government what its provisional revenue allocation is for local authorities for 2024-25. (S6O-02966)
Despite a real-terms reduction in the Scottish Government’s block grant, the Scottish Government has provided local government with record revenue funding in 2024-25, and the local government settlement’s share of the discretionary Scottish budget has also increased. Together with the funding that is provided to support a council tax freeze, councils will receive almost £13.4 billion of revenue funding next year.
The figures independently reported by the Scottish Parliament information centre clearly show a 5 per cent increase on last year’s provisional budget—one of the largest increases seen over the past decade—but the Convention of Scottish Local Authorities and others regularly challenge the figures and claim that they do not include additional obligations that arise or additional cash that is given to councils during the course of any given year. Can the minister assure Parliament that the figures in the provisional budget statement are accurate and are based on like-for-like budgets in previous years? Can he suggest any further mechanism that might allow the Government and all stakeholders to reach agreement on the figures that are used in future provisional budget announcements?
I confirm that the local government settlement has increased by £795.7 million, which is equivalent to a 6 per cent cash-terms increase, or 4.3 per cent in real terms. The figures that the Scottish Government uses are as required by the written agreement between the Scottish Government and the Finance and Public Administration Committee. We have compared the 2024-25 draft budget with the 2023-24 draft budget, which provides the most accurate like-for-like comparison of available funding at this stage in the budgetary cycle. Adopting any other approach would go against the agreement with the Finance and Public Administration Committee and the Parliament, and it would potentially be misleading to Parliament.
In relation to the revenue allocations for local authorities, what has happened to the new fiscal framework between local and central Government, which the Accounts Commission said would be delivered by September 2023 and which was supposed to include multiyear settlements?
A huge amount of work is on-going to achieve agreement on the fiscal framework between the Scottish Government and our partners in the Convention of Scottish Local Authorities. Clearly, it has proven to be more complex than was expected. Everyone is of the view that it is important that we get this right, because it is an important step forward.
We absolutely accept the aspiration to get the agreement in place as soon as possible; that will be to the benefit of not only the Scottish Government and local government, but the Parliament. We are all working hard, but it is important that we get this right. We are taking forward a partnership between the Scottish Government and COSLA. No one side can drive this forward at pace. We need to work out how best we can achieve a fiscal framework that works for everyone, including the Parliament.
Local authorities across Scotland are struggling to meet the needs of citizens within the current financial set-up. The Accounts Commission highlights that the total budget gap in local authorities has increased to £725 million for the next financial year, which is almost double that of the previous year. Does the Scottish Government consider that that is in line with good governance practice?
One important thing in the Accounts Commission’s recent report was its assertion that no Scottish local authority was at risk of going bankrupt, as has happened down south. That shows a real difference in the way that the Scottish Government treats our local government partners compared with the way that local government is treated south of the border.
It is clear that this is a difficult settlement for us all in Scotland. The autumn statement did not provide the resources that Scotland requires, so the Deputy First Minister had to make difficult decisions in setting the draft budget, and I absolutely appreciate that local government colleagues across Scotland will have to make difficult decisions in setting their budgets.
Participatory and Deliberative Democracy
To ask the Scottish Government whether it will provide an update on the work it is undertaking to deliver its commitments on participatory and deliberative democracy. (S6O-02967)
The Scottish Government’s vision for public participation is that people can be involved in the decisions that affect them, making Scotland a more inclusive, sustainable and successful place. Officials have been progressing work to deliver on recommendations by identifying the skills and resources that are required to provide effective support for public participation across Government. I anticipate that, by February, I will be able provide further information on how the work will be progressed.
What role does the minister see citizens’ assemblies playing in the future of Scotland’s democratic process?
Citizens’ assemblies are best used for complex issues of national significance, and they remain a priority of the Government. We remain committed to high-quality participation. However, in many instances that is better approached through smaller-scale methods such as lived-experience panels. At present, much of our public participation work is delivered through such smaller-scale methods, which will focus on establishing the skills and resources to raise the overall standard of participation.
If the citizens’ assembly recommends the abolition of the council tax, will the Government back it?
As I said, we are listening to the various panels that we have. Mr Rennie is already jumping the gun and making decisions for the citizens’ assemblies. The point of the participation is for the public to have their say, and we take advice from them.
Vehicle Excise Duty (Devolution)
To ask the Scottish Government what discussions it has had with the United Kingdom Government regarding the potential future devolution of vehicle excise duty. (S6O-02968)
We have made a number of attempts to engage the UK Government on motoring tax reform without any meaningful response. The Cabinet Secretary for Transport, Net Zero and Just Transition wrote to the UK Government in October 2023, setting out the actions that the UK Government needs to take to accelerate the transition to net zero, and called on it to take a comprehensive approach to reforming motoring taxation to help deliver our climate change ambitions. If the UK Government is not willing to take the actions that are needed, it should devolve powers so that the Scottish Government can.
The recent RAC survey of potholes across the UK estimated that there are at least 1 million potholes UK wide, yet the UK Government collected around £7.3 billion in 2022-23 in vehicle excise duty—better known as road tax. That money is completely swallowed up by the Treasury. Does the minister agree that it would be far fairer if Scotland collected its own road tax and used it appropriately—for example, by ring fencing it? Some of the money in the 2022-23 figures would provide Scotland with £700 million per annum, not simply to plug potholes but to maintain the network.
I agree with the sentiment of Christine Grahame’s point that it would enable the Scottish Government to deliver on priorities in Scotland if we had that share of vehicle excise duty and were able to make those decisions here. It could be used to address some of the issues that Christine Grahame has alluded to or to help to reduce car travel by 20 per cent by 2030—which is our ambition—and to fund more sustainable travel and infrastructure that meets the needs of people in Scotland.
Budget (University Funding)
To ask the Scottish Government what discussions the finance secretary has had with ministerial colleagues regarding the potential impact of the reduction in the funding allocation for Scottish universities in its proposed budget on graduate skills development and employability. (S6O-02969)
Our block grant funding for the budget, which is derived from United Kingdom Government spending decisions, has fallen by 1.2 per cent in real terms since 2022-23. Against that challenging fiscal environment, tough decisions have had to be made. I have had a number of discussions with the Cabinet Secretary for Education and Skills about funding for her portfolio, as I do for every portfolio.
Although the 2024-25 budget is the most challenging budget that has been delivered under devolution, it still allocates nearly £2 billion to universities and colleges to support their delivery of high-quality education, training and research. We will work with the Scottish Funding Council and the sector on how to use the available budget to best effect in line with our priorities.
The Scottish Government has committed up to £90 million in 2024-25 to employability support. That underlines our commitment to the no-one-left-behind approach as we, together with local partners, support those who need it most.
The Scottish Government is set to provide guidance to the Scottish Funding Council on budget allocation for the 2024-25 academic year on the basis of a real-terms cut of more than £141 million to the council’s budget in the financial settlement for higher education in the 2024-25 fiscal year. In the light of that, alongside the shocking admission by the finance secretary that more than 1,200 places will no longer be available to Scottish students, will she confirm that there will be no additional budget cuts to university teaching grants in the current academic year as a consequence of the December budget, and will she provide information on what alternative routes for success will be made available to school leavers in Scotland?
Let us remind ourselves of the origins of the 1,200 places to which Sharon Dowey referred. They were funded by United Kingdom Government Covid moneys, which then stopped. Despite our efforts to make the UK Government continue to provide those Covid moneys, it did not do so. Despite that, the Scottish Government continued to fund the places for two years on a temporary basis, on the clear understanding that that was not a sustainable position. [Interruption.]
Let us hear the cabinet secretary.
Instead of complaining about the impact of her Government’s cuts to Scottish Government budgets, perhaps Sharon Dowey should have put a bit more effort into lobbying her UK Government partners for a better funding settlement for Scotland. That would have meant that we could get a little bit further, but it might have just been too much effort for Sharon Dowey to do that.
Yesterday, the Deputy First Minister was unable to tell MSPs how many university places for Scottish students would have to be cut to meet the £28.5 million reduction in university funding in her budget. Universities Scotland says that one of two things will happen: there will be either far fewer students or far less money per student. Universities Scotland is clear that it is up to the Scottish National Party Government to decide, so which is it?
As I said at the Finance and Public Administration Committee’s meeting yesterday, the Scottish Funding Council will have to work with universities in relation to the number of places. I have been clear on the funding source for the 1,200 places and the reasons why we cannot continue to fund them. Aside from that issue, we will work with the SFC to identify the remaining savings that are required, which amount to less than 2 per cent of the budget. The number of places will be agreed with the Scottish Funding Council.
In a really tough settlement, £2 billion has been delivered for higher and further education. If Michael Marra or anyone else in the chamber believes that more funding should be provided for higher education, they can suggest from where else in the budget the money should come. As part of the budget process, I look forward to hearing from Michael Marra what the spending priorities should be.
Economy 2030 Inquiry (Public Finances)
To ask the Scottish Government what its response is to the recommendations outlined in the final report of the economy 2030 inquiry, “Ending Stagnation: A New Economic Strategy for Britain”, as they relate to public finances in Scotland, including those relating to taxes and local government investment. (S6O-02970)
We welcome the report. In particular, I agree with its assessment of the United Kingdom economy as a “stagnation nation” characterised by low growth and high inequality. That combination has led to a fall in UK living standards relative to peer economies. The report also recognises the UK’s poor record on public investment relative to other countries in the Organisation for Economic Co-operation and Development and the need to provide sustained investment.
That is the key reason why Scotland needs full powers to drive economic growth—powers that independence would transfer to the Parliament so that we would no longer be held back by the UK Government’s anti-growth policies. Using the powers that we have, we will continue our efforts to grow the economy in Scotland, reduce inequality and invest in public services across the country, to deliver a wellbeing economy.
The Tories have imposed the highest tax level on record. Meanwhile, income inequality in the UK is higher than in any comparable European economy. The report calls for better, not just higher, taxes. Yesterday, we discussed the visitor levy, which is a common form of income generation in Europe. Does the minister agree that, although most taxpayers in Scotland continue to pay less income tax than in the rest of the UK, we remain hamstrung by the majority of UK tax policy and are prevented from fully delivering a fairer tax system and reducing income inequality?
I agree. There are two fundamental issues. First, the number of fiscal powers that are reserved to the UK Government means that we are exceptionally limited. Secondly, there is the way in which the UK Government conducts fiscal policy. Beyond the catastrophic mishandling of the mini-budget, we still have a cycle of fiscal events that seek to serve political purposes more than to soundly manage public finances. For example, we are still to find out what our final budget position is for this year through supplementary estimates. With regard to the financial position for next year, we are awaiting a budget on 6 March, in which—potentially or potentially not—rabbits may be pulled out of the hat. That is not a way to govern public finances, and it stands in stark contrast to the Scottish Parliament’s approach where, collectively operating within those restrictions, a budget is introduced and scrutinised long in advance of the start of the financial year. There is much that the UK Government and, indeed, the UK Parliament could learn from the way in which we do things in this chamber.
Hospices (National Funding Framework)
To ask the Scottish Government what discussions the finance secretary has had with ministerial colleagues regarding the allocation of funding for the development of a national funding framework for adult and child hospices in Scotland. (S6O-02971)
I held discussions with cabinet secretaries and ministers in the run-up to setting an extremely challenging budget, which will deliver funding of more than £19.5 billion for national health service recovery, health and social care. Despite that investment, the system is under extreme pressure as a result of the on-going impact of Covid, Brexit, inflation and United Kingdom Government spending decisions. It remains for integration joint boards to plan and resource hospice care, using the integrated budget that is under their control. We highly value the vital support that hospices provide to people and continue to work on developing a national guidance framework.
I do not praise the cabinet secretary very often, so she may enjoy this moment. During her time as health secretary, it was very welcome that a five-year funding framework for child hospices in Scotland was developed, which has now come to an end. This year, the hospice sector is reporting that it has been destabilised by rising staffing costs, especially as a result of the agenda for change NHS pay awards. In future budget discussions, will the Scottish Government agree to ensure that a sustainable funding model for hospices has an in-built mechanism for future NHS pay awards to recognise the knock-on effects on pay pressures for the hospice sector? Will she agree to meet the sector to discuss that further?
I recognise Miles Briggs’s long-term interest and work on the matter, as well as his role on the cross-party group on palliative care. It is a complex area, as I know Miles Briggs is aware. Some of the pay issues that he described are complex, for example in relation to commissioned services. We need to work through those issues carefully. I know that hospice and health and social care partnership leaders welcome the honest and frank discussion that they had with the Minister for Public Health and Women’s Health, which was convened in December, and health and social care partnership chief officers have already followed through with their own discussions. The minister and her officials will continue to work with chief officers and independent hospices in order to support longer-term sustainable planning and commissioning for the sector.
I know that the minister has written to everyone who was involved in the round table to stress that she is keen to build on the dialogue that has been opened, and she will continue to work on the matter through the draft national guidance framework. I would expect some of the issues around pay to be resolved as part of that.
I would be very happy to suggest that the minister have another meeting with Miles Briggs to discuss the matter further. I will keep a close eye on developments.
I thank Miles Briggs for lodging his question, which goes beyond year-to-year budget settlements. Indeed, I think it goes beyond even a five-year basis. As we face demographic change, there will be increasing pressures, and hospices are only partially funded by the state.
I ask the cabinet secretary to reflect on that point, and on our need for a genuine, long-term solution to reflect the changing need that we will have for the hospice sector and end-of-life care in general.
Much as I said to Miles Briggs, I say to Daniel Johnson that I have a lot of sympathy with the point that he makes. Some of the issues are complex but, ultimately, the national guidance framework that the Minister for Public Health and Women’s Health has been developing is the right place to try and resolve these matters. Some of them relate to pay, and some relate to commissioned services and how they sit within the wider health and social care landscape.
As I said to Miles Briggs, I will keep a very close interest in the development of the framework. The minister leads on this matter, and I will draw to her attention the fact that Daniel Johnson has raised what are very important matters here today.
Independent Scotland (Industrial Policy)
To ask the Scottish Government what analysis it has undertaken of the potential impact on Scotland’s exchequer and public finances of the measures referred to in the speech by the First Minister on 8 January. (S6O-02972)
The speech set out measures for effective industrial policy in an independent Scotland, including a programme of targeted investment through the building a new Scotland fund. Modelling shows that a fund of an equivalent scale to the proposed building a new Scotland fund would have both a short-term demand effect and a longer-term supply effect by increasing long-term productive capacity and providing a sustained boost to the economy. The speech also highlighted how Scotland lacks macroeconomic powers, including over migration, with economic modelling suggesting that, with higher levels of migration, a growing labour force would have a positive economic impact.
In that speech, the First Minister referred to a Resolution Foundation report that stated that, if the United Kingdom had
“the average income and inequality”
of similar countries,
“the typical household would be £8,300 better off.”
The First Minister added that
“If we use the same analysis for countries that are similar to Scotland”,
households here could be £10,000 better off.
Does the cabinet secretary agree that those figures serve as a stark reminder of the failure of Westminster governance and that only through the full powers of independence can Scotland’s true potential be realised?
The speech served as a stark reminder of the economic stagnation that the UK is in. For far too many people, the UK economy has stopped working. It is characterised by low growth, high inequality and poor productivity, which are the key drivers of living standards.
No one is saying that an independent Scotland could achieve transformation overnight. Whether we succeed or not will be down to our decisions as a country. However, the success of countries similar to Scotland, such as Denmark, Ireland and Norway, surely demonstrates the potential prize of independence and improving our economic performance.
Fiscal Policies (Rural Economy)
To ask the Scottish Government how its fiscal policies support the development and growth of the rural economy. (S6O-02973)
Scotland’s land-based and marine sectors are vital to our economy, and that is why the Scottish budget has allocated more than £700 million to agricultural support and related services, along with £97.9 million across Scottish Forestry and Forestry and Land Scotland and £93 million across Marine Scotland and support for fisheries and aquaculture.
Scotland’s non-domestic rates relief package includes rural rates relief and the United Kingdom’s most generous small business rates relief. The hospitality sector in the islands will get 100 per cent relief for hospitality, capped at £110,000 per ratepayer.
It has to be said that the UK Government has failed to meet previous European Union funding levels, has cut capital funding and has not provided certainty regarding any post-2025 rural funding.
I thank the cabinet secretary for that answer, but the budget has slashed funding in vitally important portfolios, including support for bus and rail services. In cash terms, the agriculture and forestry budgets have been cut by £32 million and £34 million respectively. It has also been recently reported that no homes have been secured through the rural affordable homes for key workers fund.
Does the cabinet secretary not realise that those decisions are actively undermining the growth and development of rural economies, because the fiscal policies do not make rural Scotland a viable place to live and work?
The UK Government’s real-terms cuts to the Scottish budget have consequences for all parts of our budget. That is the reality of the difficult decisions that we have had to make. A 10 per cent reduction in capital budgets affects infrastructure investment in rural Scotland as well as in urban Scotland, so Tory MSPs cannot pitch up here with their list of asks when their Government has slashed the funding for Scotland’s public services. [Interruption.]
Let us hear the cabinet secretary.
We will continue to invest in Scotland’s rural economy. We have invested and will invest in rural housing, and we will make sure that we work with partners to deliver on the priorities for rural Scotland. However, that is no thanks to the UK Government’s funding settlement.
Brian Whittle is talking about choices. In December last year, a headline in The Scottish Farmer read:
“Upland farms are facing a cut of 37% in support payments as direct payments are being phased out with new schemes failing to bridge the gap.”
That was in relation to farmers in England and Wales, not Scotland—a UK Government choice. More than half of Scotland’s agricultural land is dedicated to upland sheep farming and mixed beef cattle and sheep farming, and the cabinet secretary, Mairi Gougeon, confirmed in committee today that less favoured area payments will be maintained in the current funding cycle. Does the cabinet secretary agree that the treatment of farmers in England is definitive proof that the development, growth and prosperity of our rural economy is best served by this Scottish National Party-led Government and its commitment to active farming, food production and direct payments—and even more so in an independent Scotland?
Jim Fairlie has utterly exposed the hypocrisy of the Tories in this Parliament and in the UK Government, and their chuntering from a sedentary position shows that he has done so very effectively indeed. I cannot agree with Jim Fairlie more.
As I said in my final point to Brian Whittle, the UK Government has failed to meet previous EU funding levels, despite all the promises that were made during the Brexit debate. The UK Government has cut capital funding and has not provided any certainty whatever around post-2025 rural funding. The Tories should get their act together before coming here and demanding action from this Government. They should be getting on the phone to their own Government colleagues before coming to complain here.
Before I draw this part of the session to a close, I remind members to reflect on where they are. I may even have witnessed the spectacle of a member who was out of his seat and still commenting on proceedings. That is simply not acceptable. We have a great privilege in representing the people of Scotland in this chamber, and I ask all members to remember that at all times.
Portfolio question time has now concluded.
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Point of Order