Plenary, 26 Jan 2006

Meeting date: Thursday, January 26, 2006

Official Report 726KB pdf

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Budget (Scotland) (No 3) Bill: Stage 1

The next item of business is a debate on motion S2M-3854, in the name of Tom McCabe, that the Parliament agrees to the general principles of the Budget (Scotland) (No 3) Bill.

Today we embark upon the final stage of the 2006-07 budget process. As the Parliament is aware, this is a culmination of seven months of hard work by officials, committee members and ministers to ensure that we spend our money in the right places.

The Finance Committee published its stage 2 report on the draft budget on 14 December last year. We welcome the report's constructive approach to improving the budget process. Our response, which we published this week, makes it clear that we view many of the committee's recommendations favourably. We will continue to work with the committee on several areas that are of concern to it, in particular the presentation of cross-cutting information in the budget documents. I hope that that is a clear indication of our commitment to transparent and rigorous scrutiny of the Scottish budget.

Much has been achieved, but it is important that I indicate clearly that the Scottish Executive readily acknowledges our obligation to work with the committee to further improve the budget process. Of course, although we have made a lot of progress in improving the clarity of the documents, the nature of finance means that there will sometimes be changes in the treatment of our figures. I know that that can be annoying and on occasion even confusing, but regrettably it is an inevitable consequence of the need to keep up to date with accepted accounting and financial practices.

In that context, I want to explain one change that has come into effect in this year's budget bill and which has had an impact on the published figures. The change, which is in the presentation of Scottish Water's budget, has arisen as a result of Audit Scotland's request to present the published budget in a manner that is more closely aligned to the consolidated accounts. The presentational change does not change the scale of Scottish Water's budget. The main elements are the introduction of the cost of capital figure for Scottish Water, which appears in the accounts, and the removal of the loan payment and income figures, which do not appear in the accounts.

As members know, the budget bill is a key part of our parliamentary calendar. It is at the centre of everything that the Executive does: it provides the means to implement all our policies and programmes; it allows the vital institutions that make our society cohesive to flourish as they educate our young, care for our sick, and build and maintain the physical infrastructure that underpins our economy; and, of course, it gives life to the visionary partnership agreement that is doing so much to enhance our society.

The formal subject of the debate is consideration of the general principles of the Budget (Scotland) (No 3) Bill. A fundamental principle in any democratic system is that Parliament should approve the Government's spending plans.

I take the minister back to the point that he made about infrastructure. A significant amount of expenditure in the budget is earmarked for Scottish Water's capital programme, to which he referred. Is the minister satisfied that the dispute between Scottish Water and the Water Industry Commission for Scotland will in no way inhibit the Government's ability to ensure that the planned investment in the budget can be delivered to improve water and sewerage infrastructure? Without that improvement, a number of communities—many of which I represent in Perthshire and Angus—will experience severe constraints on their ability to develop, because of the poor water and sewerage infrastructure.

I give the Parliament and Mr Swinney the absolute assurance that the Government is determined to ensure that the necessary investment takes place and that any infrastructure constraints that hold back development are removed. If there is any indication that that situation does not prevail, we will not hesitate to take action.

The Scottish budget process is uniquely tailored to ensure that as many people as possible can contribute to the debate, which ensures that our budget is spent transparently and efficiently, with the clear purpose of delivering on our vision for a better Scotland.

The origins of our spending plans for 2006-07 lie in the spending review of September 2004. The 2006-07 budget process began four months ago with the publication of the draft budget, which allowed for consultation of the public and parliamentary committees. Its purpose was to present the Executive's priorities and high-level strategy. The committees' responses were pulled together in the Finance Committee's report, which we debated in December last year. I say to Mr Swinney that that was the time when changes to our spending plans could have been proposed. As Parliament knows, no changes were proposed, which indicated broad support for our plans.

Mr McCabe virtually invited me to intervene. At pages 22 and 23 of its report, the Finance Committee calls on the Executive to use additional resources to rectify several matters, such as the penalising of local authorities through efficiency savings and the inequity of baseline cash reductions, and notes the pre-budget report. Does the minister accept that that suggests that the committee wanted the Government to look again at its provision for local authority budgets? Is that not a fair indication that we are not all dancing in the aisles at the budget and that some of us have substantial concerns about the Government's decisions? I invite the Government to reflect on that.

We believe that people are dancing in the aisles, because many people and many institutions will do well from this visionary budget. We think that there has been much rejoicing that the massive investment in our public services will continue. Far be it from me to suggest the language and terminology that should be used in a Finance Committee report. I readily acknowledge some of the concerns that were expressed in the report, but they were not expressed in the terms of an amendment to the draft budget at that time.

Our engagement with individuals and organisations, to which I referred, resulted in the circulation of more than 1,300 copies of our draft budget documents, alongside their internet publication.

Since 1999, we have achieved significant progress in improving the budget process, but I acknowledge that it is still complex. The challenge is to continue to search for ways in which to provide information throughout Scotland and to develop processes that allow meaningful involvement. We have one of the most open budget scrutiny processes of any Parliament but, as I have said, there is no room for complacency. We will continue to work hard to promote transparency and we will do so in conjunction with the Parliament. We will of course continue to seek to involve the people of Scotland in our processes and our decision making.

The budget builds for the future; it will build up our infrastructure, such as our schools, our hospitals and our transport network. We will strive to deliver excellent public services by ensuring that services meet individual needs and that our investment is matched by reform when necessary, so that it delivers returns. Those are the things that people care about and which make a real difference to them. Our initiatives seek not to promote a dependency culture, but to provide people with genuine choices about how they live their lives. This budget provides a basis for doing just that and I commend it to the Parliament.

I move,

That the Parliament agrees to the general principles of the Budget (Scotland) (No. 3) Bill.

There is much in the budget that the Government has proposed of which we are highly supportive. I encourage the Government to spend the allocations appropriately and to ensure that sufficient progress is made in delivering on the commitments that it has set out in its budget document.

I was a member of the Finance Committee when the Parliament was established in 1999 and returned to the committee this year. The budget process has developed enormously in the intervening years. I commend the Parliament's other committees for the substantial contribution that they make to scrutinising the budget in the policy areas for which they have responsibility, which enhances the Parliament's overall scrutiny process.

Members will not be surprised to hear that the budget issue that I am concerned about is the content of the settlement for local authorities. I raised a point about that with the Presiding Officer a few moments ago, which I will not spend time pursuing now. Mr McCabe may witness much dancing and rejoicing at the Government's budget in various institutions around the country, but there is not much dancing or rejoicing going on in local authority headquarters. I think that Mr McCabe is familiar with the president of the Convention of Scottish Local Authorities, Councillor Pat Watters, who certainly did not feel like dancing or rejoicing when he came to this week's meeting of the Finance Committee to express deep reservations about the funding settlement for local authorities and the consequential burden that they will face on issues such as equal pay.

I am interested in Mr Swinney's comments about local government finance. He is right that I am well acquainted with the president of COSLA, with whom I have engaged in various discussions in the recent past, most recently on Monday of this week.

Although local authorities are expressing a view about their financial situation—especially the situation that they will face in 2007-08, I stress—they acknowledge explicitly that they can now deliver manifestly different and significantly better services than those that they could deliver even four or five years ago and that that is a direct result of the increased finances that have been made available to them.

That may be the case, but on 28 December Mr Watters said that local authorities faced a £400 million black hole in their finances. That does not suggest to me that they will be doing cartwheels about the settlement.

There are financial issues that local authorities must resolve. For example, they have had years in which to come to terms with the equal pay provisions and they should have been making provision to meet them. I find some aspects of the councils' arguments difficult to accept, but the funding gap on current service provision is an issue. To resolve that issue, ministers should reassess the contents of the Finance Committee's report and take action to deal with the funding gap that it identifies.

In the parliamentary debate on 12 January, Mr Lyon mentioned how important it was for local authorities to use their reserves to tackle some of the issues in question. He cited the fact that, according to the Accounts Commission, local authorities had £1.6 billion of reserves. When I checked out that figure, I found that they had only £1 billion of reserves—what is £600 million between friends—and that it was not the Accounts Commission, but Audit Scotland that reached that conclusion. It is misleading to suggest that local authorities have a massive amount of reserves that could deal with all the issues in one go.

I encourage ministers to reflect on the financial settlement for local authorities; I would have forced Parliament into a vote on the matter, if I had been successful in lodging an amendment to the motion. I do so for one very important reason: based on the current financial settlement, I cannot believe that local authorities in Scotland can deliver council tax increases that are within the 2.5 per cent target that ministers have set—a figure that is closely allied to inflation.

Glasgow City Council has a commendable record in that regard. Indeed, Mr Gordon lectured me on that record in Parliament only a couple of weeks ago. Although the council has managed to maintain below-inflation increases, it now says that it will have to abandon its inflation-related target. I am sure that countless other local authorities will have to deliver council tax increases that are higher than the rate of inflation. That will be the direct consequence of one of the budget components—the local authority financial settlement—being not good enough to enable the local authorities to deliver services for the people of our communities.

We face above-inflation council tax increases, which will add to the punishment that council tax payers have suffered over the years as a result of the 55 per cent increase in council tax that we have seen since this Government came to power, or an assault on the services that vulnerable people in all parts of our communities depend on.

You must finish now, Mr Swinney.

If Mr Smith had been paying attention earlier, he would have known that I am in my last minute and therefore unable to take an intervention. I am sure that his intervention would have been as pathetic as the one that he made on the same point in a previous debate, which was met with derision in the chamber.

You must finish now, Mr Swinney. You are over your last minute.

People in Scotland face either council tax increases or cuts in local authority services. I encourage ministers to reconsider the local government settlement.

Our scrutiny of the Executive budget is one of the more important roles that the Parliament undertakes. Perhaps the relatively poor attendance in the chamber this afternoon is less to do with members dancing in the streets and more to do with them dancing down Dunfermline High Street.

It has been said that, as spending rounds become tighter, the pressures on the Scottish budget will also become tighter and our budget scrutiny will become more important. In reality, budget scrutiny is as important in a relatively generous year as it is in a year in which a tight settlement is made. The point on which I agree with the minister—possibly Mr Swinney agrees, too—is that value for money should be at the core of everything that the Executive does.

It is easy to become fixated on the financial numbers in a budget debate; after all, the numbers are very important. However, we need to look rather more deeply into the budget than at the figures alone. We need to understand not only the way in which the money is spent and how that changes year after year, but what it is delivering. It is important to recognise that what the budget is delivering is not the same as what it is buying. We often hear the Executive boast about its additional spending and sometimes about additional staff. What we ought to be concerned about, however, are the outcomes. Getting that right is very important, although I recognise the difficulties in doing so. However, I think that most people would concede that the Executive is not there as yet.

I will take an example from the education budget. Improving education is a desirable goal, which may involve increasing teacher numbers or providing better teaching—the two are not necessarily related. Ultimately, it is about raising the overall level of attainment. When we look at the relevant targets in the draft budget, we see that they are for 53,000 teachers by September 2007 and targeted measures to reduce class sizes. We could debate the appropriateness of those measures, but we should focus instead on the fact that they are not in themselves targets to improve education, but targets on measures that may do so—the two are not the same thing. The budget includes one target on improving attainment, but it is set only for the lowest fifth of secondary 4 pupils; the budget says nothing about the rest of the school population.

I could have taken an example from any of the budget headings, but the education targets illustrate the importance of getting the measures absolutely right to enable us to measure value for money.

The minister did not refer to the work of the independent budget review group. Perhaps he will update us on its work in his closing speech.

Mr Brownlee's comments on education are pertinent. However, when we talk about 53,000 teachers and our other investments in education, it is important to note that more than 50 per cent of our young people now go on to further and higher education. More of our people are graduating than at any other time in our history. That would seem to be an outcome for the investment that we are making in education.

It is, to some extent, an outcome. However, we would be going down a very long and winding road if we were to accept that point.

Mr Swinney and the minister alluded to the Finance Committee report, which made much about the difference in treatment between local authorities and Executive departments. In its response to the committee's challenge on the different efficiency targets, which members of the committee received today, the Executive said:

"we chose not to apply a straight percentage efficiency target across the board since this assumes that everyone is as efficient or as inefficient as the next one".

That is a very reasonable principle, but when it comes to applying efficiency targets to local government the Executive does not seem to be going down that route. Instead, it seems to be applying the same percentage across the board. In a recent answer to my colleague David Davidson, the minister confirmed that efficiency savings that were deducted at source were not allocated to individual local authorities. Where is the internal logic?

There is a great deal of scope for making the budget process more transparent and the documentation more useful. I am grateful to the minister for his comments on that issue. We need to have a much better debate not just about how much we spend, but about where we spend the money and what real, definable outcomes it delivers.

This budget marks another important step in delivering Liberal Democrat policies within the coalition. The detail in the spending of some £28 billion is bound to provoke criticism, especially from those who take a different political view, but the impartial onlooker can now see positive changes in education, support for transport and the environment—indeed, in almost every part of Scottish life.

Within the budget year, increased numbers of teachers will be working at the proverbial chalk face. That can only underline the coalition's commitment to a better-educated Scotland. In transport, many major capital projects are under way, despite lengthy delays in getting them on the road or rail track. In my area, the reopening of the Stirling-Alloa-Kincardine railway line is moving ahead, and there are other projects that will help the train to take the strain. The arrival in April of the concessionary travel scheme may be seen by some as a burden on the public purse, but the consequential benefits for health of increased take-up under such a scheme are far reaching and difficult to quantify. If members ask anyone who partakes of the scheme about it, they will hear positive comments.

I know that there is concern about the local government settlement, but the percentage increase in funding is above inflation, coming in at 3.2 per cent above last year's levels.

Will the member give way?

No—I have only four minutes.

Earlier this week, along with colleagues on the Finance Committee, I heard the pleas from COSLA and council officials regarding the added burden that they will face as a result of dealing at long last with the issue of equal pay. They will face the added financial burden of introducing single status, which, we may remember, was supposed to be cost neutral. From information that the Finance Committee gathered from the chief executive of COSLA, it was apparent that that may not happen for three years and that there will be pressure on council budgets until then.

As I said during last week's debate on council tax, this is a challenging period for local government. However, I believe that many councils are now bringing fresh thinking into the services that they run and to how they will meet their financial targets. Some of the old work practices are being binned and councils are more focused on how best they can deliver all-important services.

As a Liberal Democrat, I would like the financial rigour that councils are experiencing to be carried over to all other parts of government. As a member of the Finance Committee, I shall play my part in examining parts of government to ensure that we are getting the due outcomes from taxpayers' cash investment. As I stated at the beginning of my speech, in the short lifetime of the Parliament most services have received extra financial support. Now we should be seeking positive results from that investment. Inevitably, if the planned efficiency savings come through as planned, that will include pruning back expenditure in areas that will not affect the public, provided that that has no impact on front-line services.

We must ensure that the public sector in Scotland is as alert to financial efficiency as private businesses are. We must also ensure that the current view that life in the public sector is somewhat cushioned compared with working in private business is eradicated. In my view and that of the Liberal Democrats, the budget settlement is a good one for Scotland. I believe that it is also a good settlement for the people of Scotland. I support the motion.

Like Mr Swinney, I have taken part in many budget debates since the Parliament was established, and I readily acknowledge that there have been helpful changes in the process. One of the remaining weaknesses was highlighted by Mr Swinney in a point of order. There are regular complaints from the Executive parties that the Opposition does not lodge amendments. We are attempting to do that, but we need to find a better method that will enable us to have a genuine political debate around the choices that must be made and our priorities.

Does Mr Adam remember that, three years ago, Nicola Sturgeon went about the process in the right way and the matter was dealt with? The issue is not that the Opposition does not have the capacity to move amendments but that, on this occasion, it is not doing it at the right time or at the right stage in the process.

I do not accept Mr McNulty's point. I acknowledge that the only previous budget bill amendment that we could debate was lodged by Nicola Sturgeon. However, if we are genuine about democracy, we should make it simpler to have a genuine debate about alternative budgets. The current process does not allow that.

I would like to move on and to deal with some of the issues, particularly those relating to the local government settlement. I was intrigued by Mr Arbuckle's speech, which seemed to run counter to what the Executive says in that he suggested that we face a problem. I will be interested to hear Mr Arbuckle's colleague's winding-up speech because I want to see whether the Liberal Democrat minister will say the same as the Liberal Democrat finance spokesperson.

As well as there being a tight local Government settlement for the current year, some significant costs will have to be borne by local authorities in relation to the single status agreement and on-going equal-pay cases. Some of the money for that—and the associated retrospective payments—might have to be found in the budget for the coming year. A variety of figures have been bandied around in relation to those retrospective payments: figures as high as £1.2 billion have been mentioned, which is not an amount that can be found from current revenue.

As far as I can see, three options are open to councils to deal with the problem. The first is to increase council tax, but if all of the costs were to be met that way, the increase in council tax would be not 2.5 per cent or even 12.5 per cent; it would be a lot higher than that, so it is not a realistic option. Secondly, there might be council reserves that could—and perhaps should—be used to deal with the costs, but it would be irresponsible and imprudent of councils not to keep at least some reserves, which would mean that not all the reserves could be used.

The third option—which I believe is most likely—is that there will have to be the biggest fire sale of council property since the end of the regions. When the regions were being wound up, many industrial estates and other property holdings were sold off to sweeten the elections for the new authorities and to ensure that assets in one area could be used in an area that they could not otherwise be used in following reorganisation. I understand that South Ayrshire Council is talking about selling off golf courses and that the City of Edinburgh Council is thinking about selling its holding in its own development company in order to raise £40 million. We are not talking about small sums of money. The city in which I live and which I represent faces a potential bill of tens of millions of pounds. I want to know which of the three options that I set out will be recommended by the minister in order to enable the council to meet that cost.

I do not think that the argument that the issue is only to do with COSLA and the unions stands up. Although it is true to say that there have been increases in the budgets of local authorities over the years, there have also been increases in burdens. No matter how often ministers are asked to separate out the new burdens in terms of the increases that are available, silence is the usual response.

Will the member give way?

I will give way if the minister is prepared to supply that information.

I point out that, over and above the core revenue for local government, there is in excess of £1 billion in other funding streams, many of which address the new burdens that the member is talking about. Let us not talk only about the core revenue local government settlement; let us talk about all the taxpayers' money that heads in that direction—a not inconsiderable sum of money.

I note that I did not get an answer about what proportion of the increase in the local government settlement covers new burdens. I hope that, during his winding-up speech, Mr Lyon will make a commitment to provide that in the future.

Some arrangements lead to significant differences in uplift. The Executive has put a floor on that uplift to even out some of the differences that result from the formulae that it uses. That minimum level is 2 per cent. Aberdeen City Council has been bumping along at the bottom, on the minimum uplift, for a very long time and it currently has the third-lowest aggregate external finance per head of population in Scotland.

You should be finishing now, Mr Adam.

That amount is way below the mean, as a consequence of which we face very significant cuts in council services, as well as a large rise in council tax. My colleague, Mr Swinney, suggested that the general approach to local government finance needs to be reconsidered. We need seriously to look in particular at what to do at Executive level about the back pay that will have to be paid at some point, and that we will have to pay—

You must finish, Mr Adam.

I will.

Three years ago, Donald MacRae of Lloyds TSB told the Finance Committee that there was a risk that the increases in public spending in the budget would

"make Scotland's overall economy more dependent on the public sector."—[Official Report, Finance Committee, 28 October 2003; c 370.]

Peter Wood of DTZ Pieda Consulting felt that the political priority that had been given to growing the economy was not reflected in budget allocations, and expressed his concern about the lack of a rationale for the increases in different portfolios. Our experts were not arguing at that time against more public spending. They were saying, first, that if growing the economy was the top priority, then that should be reflected in the budget allocations, not just to the enterprise portfolio but across other portfolios that contribute directly or indirectly to economic developments, which would include roads and the water infrastructure.

Secondly, they were arguing that we must ensure that the way money is spent produces "revenue payback", as Alf Young puts it, in the form of a more prosperous and vibrant Scottish economy. During the past six years, there have been year-on-year expenditure increases at levels that have been unprecedented in my lifetime, but we need to ensure that the money is well spent.

Thirdly, both our experts felt that the balance between capital and revenue expenditure should be shifted in favour of capital spending because of its importance to economic growth. More money has, of course, been made available for soft services such as health and education, as well as for infrastructure renewal and new projects. Our job in the Finance Committee is to ensure that ministers concentrate investment on securing long-term gains, whether through improving skills, through taking advantage of research and technological change, through upgrading transport, hospital or schools infrastructure or through regeneration projects that deliver transformation in the social and economic circumstances of areas such as Clydebank, in my constituency.

I believe that significant progress has been made since that time. As Jack McConnell pointed out at First Minister's questions earlier today, two thirds of the jobs that have been created in Scotland since devolution have been in the private sector, and Scotland's economic performance relative to other parts of the United Kingdom has significantly improved, according to the relevant figures. The allocation of resources is not the sole indicator of priority.

We must kill off the fallacy that economic growth is higher here than it is elsewhere. Economic growth has been reindexed every year, the date of reindexation currently having been rolled forward to 2003. It is like indexing Tom Farmer's salary against that of his hairdresser so that, one year, his hairdresser will get a proportionately higher increase. That is an absolute fallacy, which has to be shot down. Does Des McNulty agree that reindexing on that rolling basis is not a reasonable way to measure data?

I would have thought that, as an accountant, Jim Mather would realise that that is more or less standard business practice. It is strange that he takes exception to it.

Progress has been made in progressing major capital projects. The schools regeneration project has been implemented across Scotland, housing in Glasgow has been refurbished under the aegis of the Glasgow Housing Association and progress has been made on the Clyde waterfront project. Those are all steps in the right direction.

As we know, there is a long lead-in time for major capital projects, so we must ensure that we press ahead with projects that are unarguably of benefit to Scotland, such as the upgrading of the M8 and the M74 extension. However, we must be prepared to take hard decisions when necessary so that we can progress urgently required projects—whether or not they are in the current programme—while removing or delaying projects that become increasingly hard to justify if new cost projections and information cast doubts on their benefits. The process of budget management must be a constant re-examination of priorities; it must be about directing resources appropriately.

Over the past three years, the Executive has directed resources towards capital expenditure and longer-term benefits. I have no doubt about the positive impact that capital expenditure on the scale that is envisaged in the budget, and which is projected in the infrastructure plan that was published earlier this year, will have for the Scottish economy. We are moving in the right direction, not just in volumes of expenditure or in the benefits to economic growth and employment, but in our legacy for the future. We need to do that as well as possible; that is the responsibility of ministers and of Parliament.

The Finance Committee raised concerns about some issues; for example, we are concerned about the number of targets that ministers set. Earlier this year, the Finance Committee made a submission to the Public Administration Select Committee at Westminster about the management of change following concerns that arose from evidence that the Finance Committee took. Our view, which coincides with that of the select committee, is that ministers need to choose and to communicate clear priorities rather than to set too many targets. They should concentrate on key national priorities rather than on micromanagement and they should move from targets to trends as their basis for managing progress. The Finance Committee has said repeatedly that there are too many targets and that some of them obscure rather than clarify what the Scottish Executive is trying to achieve. There is also sometimes too great a focus on activities, rather than on outcomes. The use of targets within portfolios is too frequently an impediment to progress on cross-cutting priorities.

That said, significant progress has been made. The Finance Committee does not argue that there is no place for targets but that they must, where they are used, be properly quantified to ensure not only that spending departments meet their targets but that the targets improve public services. We could thereby assess whether better outcomes were being secured.

I am keen that effort be concentrated on areas in which progress is possible now; for example, linking allocations to output in areas such as teaching staff numbers—on which the Executive made a welcome recent announcement—housing completions and other positive measures. The Executive should concentrate on meeting its strategic targets rather than focus on developmental activity measures or ticking off partnership commitments. I am a wee bit disappointed by the Executive's response to that section of the Finance Committee's report. The Executive claims to be informed by best practices—the Finance Committee was impressed by how the Prime Minister's delivery unit focused on particular issues and got them sorted out—but the committee is not entirely clear that the Executive has quite the same tight focus as the Prime Minister's delivery unit. The Executive's view might need to be refreshed.

You should be finishing, Mr McNulty.

I hope that ministers will consider that more seriously.

The minister is absolutely right that the big issue in local government finance will be next year, particularly when we consider the forward projections and the uplift against inflation. Ultimately, the test of the minister is what he will bring forward for next year. I hope that he can find ways of resolving some of the problems that local government faces this year. Let us be clear that given the issues of equal pay, the single status agreement and the uplift, there will be a real financial issue next year. We can see that already.

You must finish now, Mr McNulty.

I hope that ministers will pay attention to that in considering future budgets.

I am trying to be as even-handed as possible with time but, if I say that a member's time is up, that is what I mean. Members are running over their times hugely. If they read the Official Report tomorrow, they will find that they have all been getting a minute or two extra. If we continue like that, somebody will have to fall off the end.

I will try not to fall off any ends, Presiding Officer.

To comment on Jim Mather's rather strange intervention, I say that it is odd that, when statistics come out that support the SNP's case, it rushes out a press release, but when the statistics do not support its case, it rubbishes them. There is no consistency in how the SNP deals with issues. I am afraid that I do not agree with a word that Mr Mather said.

I agree with Derek Brownlee on one issue—only one: we should consider what the budget is supposed to deliver and not just the raw figures. It is important to bear in mind that the budget is delivering the Liberal Democrat-Labour partnership agreement priorities. We now have more doctors, nurses and health professionals than ever in our hospitals and communities. It was announced this week that record numbers of people are now employed in the health service.

By 2007, 53,000 teachers will be in post, which will lead to smaller class sizes and improvement in attainment as the years go by. We have more police on the streets, record crime clear-up rates and a better environmental record. The budget will deliver free eye and dental checks and new investment in the dental profession in the national health service, if dentists will take up the money that is available.

Funding for colleges and universities is to increase by almost a third, which is significant, and we are extending vocational education training to 14 to 16-year-olds. We have made record investment in transport—£1 billion by 2006, 70 per cent of which will go into public transport. We have abolished the tolls on the Skye bridge and, from April, we will extend free off-peak bus travel for older people from local services to national services. There is also to be a significant investment of £1.2 billion in affordable housing in the next three years.

All those substantial investments are delivering our programmes, which are on issues that are important to communities. I am delighted with the significant investment in the rail network in Fife, which has brought improvements to a system that is under strain. The additional investment that will come in the next few years will bring further improvements, particularly at Waverley station. The provision of additional carriages and platform extensions have significantly improved public transport in Fife.

We must consider whether the extra money delivers what it is meant to deliver. In yesterday's members' business debate, I expressed concerns about whether the money that is being put into cancer treatment in Fife is delivering. It is important for the Executive to ensure that the bodies that are charged with delivering policies actually deliver and make use of the money that we give them. For example, in the NHS, we must ensure that cancer care is improved through the additional money that we put in.

In education, money has been going to local government to help it to reach the target of 53,000 teachers, but we must ensure that teachers are employed. In Fife, the record on educational attainment is not as good as it should be. The quality of education that Fife Council's Labour administration has provided has let down our children—last year, the council did not employ the additional 93 teachers for which the Executive gave it funding. Let us try to ensure that this year the council's budget, which will be announced in a couple of weeks, provides the extra teachers for which it has received extra money.

I want to scotch the myth, which we hear from the Conservatives and the SNP every time we have a debate about local government, that the council tax has increased by 55 per cent since the Executive came to power. It has not; it has increased by 55 per cent since 1997, although 10 per cent of that increase came in April 1997, when the Conservatives were still in Government. Since the present Administration in Scotland came to power in 1999, the council tax has increased by only 28 per cent.

What has the rate of inflation been?

I do not deny that the increase has been greater than inflation, but it has certainly not been 55 per cent, as the SNP and the Conservatives claim; it has been nearly half that, which is significantly less than they claim. It is important to get those facts right and on the record.

Significant additional funding has gone to local government from central Government. In fact, since 2002-03, funding from the Scottish Executive to local government has increased by £1.6 billion; it is 25 per cent higher than it was in 2002-03. That significant increase has enabled local government to improve on many services. It is important that we deliver improvements to our services, which is why we are trying to ensure that—as the budget document says—local government continues to deliver additional support in education, significant increases in care for the elderly, additional investment in police services, extra resources for road maintenance, additional provision for environmental programmes—that basically means recycling—and protection for existing services. All those areas are being funded by additional money.

I know that the local government settlement will be tight, but it would be even tighter under the Scottish National Party because the SNP wants to cap local government spending. It has a policy of capping. I do not know exactly how capping will solve the problems in local government spending. The final question for the SNP—

Will the member give way?

I am sorry—I am over time already.

I have a final question for the SNP, which I hope it will answer in its response to the debate. The SNP says that it wants to give more money to local government, but where will that money come from? What services is the SNP planning to cut in the budget in order to provide that additional money to local government? It is important that the SNP tell us that because the people need to know.

I support the points that have been made by John Swinney and Brian Adam on the equal pay settlement. It is the biggest issue in the budget and in the debate. A number of members have mentioned the need to assess the outcomes of financial decisions that are taken in Parliament. The minister has said that it is nothing to do with him and that he has increased the allocation to local authorities. I accept that there has been an increase, but the anticipated bill for equal pay over several years—wages that 50,000 low-paid workers, mainly women, are entitled to—is £700 million. It would be ridiculous for Parliament to tell local authorities to find that. Parliament should play a role in ensuring that the outcome is equality. What is the point in increasing the promoting equality budget from £8 million to £13 million? We do not need glossy leaflets—it is not that type of campaign—but outcome-based equality.

I agree with Des McNulty that one of the problems is the question of what will be proposed. I ask the minister whether there is to be any attempt to put money in contingency funds. Different councils will pay out the settlement over different periods. The outcome at the moment is that councils are trying to batter down the expectations of the women who are entitled to those wages and back pay. They are trying to force down the settlements that women workers are receiving and to make them as low as possible. That is not equality. The budget is supposed to lead to political priorities; instead, nobody wants to settle the matter and women workers will have to accept that the councils cannot afford equal pay. I and other members urge the minister to reconsider the matter. I am not suggesting that the Scottish Executive should pay the whole £700 million, but let us not have the outcomes that we have at the moment.

I agree with Brian Adam that if we do not go in that direction, there will be a need for crisis management down the line—we know that it is coming and we understand what the crisis will be. In 1995-96, the Tories made huge budget cuts in local authority allocations, which was one of the biggest crises in Scottish local government in the 1990s. I do not know whether members remember, but there were wholesale withdrawals of vital services: schools were closed, minibuses were withdrawn and there were no drivers for disabled clubs. There was a load of cuts, not just in jobs—or in not filling vacancies—but through actual closure of services. As well as an asset sell-off, that is what we face. It is short-sighted not to get involved in a meaningful discussion with the local authorities on how they will pay the £700 million.

Parliament believes in equality. We set the national framework, which I agree with and with which ministers have said they agree, so the Executive has to take some responsibility for funding it. I urge the minister to reconsider his decision; I urge him not to allow the women who have been due the money for decades to be scapegoated yet again by the Executive and local authorities and to be the losers. They should not be held to ransom by being told that, if they insist on getting the money that they are entitled to, some services will have to close. How did we end up in this situation?

Does Frances Curran agree that the last thing we need is for lawyers to intervene? Does she share my concern that 2,500 cases have been lodged in the courts, more than 1,000 of which are in Glasgow and 100 of which are in the north-east?

I agree absolutely. It is ludicrous that women are having to go to lawyers to try to get a fair settlement instead of being offered it by local authorities and the Scottish Executive.

I ask the minister to reconsider—otherwise, there will be a crisis. There will be all sorts of campaigning; the unions and local authorities will be up in arms and the minister will be forced back to the drawing board. We should show some maturity and make contingency plans before that happens.

Another day, another budget debate—and there is another one to come in a couple of weeks' time. The budget underpins everything that the Government in Scotland does. Whatever the rhetoric of Government, what matters is where the money goes. It is in the spending that we see the truth that lies behind the statements of ministers and others, so this is a vital debate.

I am disappointed that we will not have a chance today to vote on the amendment that was lodged by John Swinney, which highlighted a key point that has also been made by the SNP in one of its debates and by the Finance Committee in its report. It is vital for ministers to address the issues that John Swinney and the Finance Committee have laid out.

Frances Curran highlighted the fact that we are putting burdens on local authorities without providing the finance to pay for them. Local authorities will have two options: to increase council tax or cut services. Neither option is desirable and each would hit the poorest and most disadvantaged the hardest. I ask the minister, when he responds to the debate, to come forward at last with some succour for those who will be affected by the local authority settlement.

I move on to a subject that has not been discussed in the debate. As ever, the budget document contains a lot of nice platitudes about sustainable development, which is one of the key priorities at the heart of public policy. I reiterate the concerns that have been raised by the Finance Committee and by me in previous debates about the way in which the priority of sustainable development is related to spending. I reiterate my disappointment that the minister refuses to set out information that ties the priorities to spending decisions. However, this debate is about the numbers and it is worth talking about what has happened in the budget in the past and about what is projected to happen in the future.

In the transport budget, we see big increases in real terms in spending on rail, ferries and bus services in 2002-03 and 2003-04, but no change in 2005-06, 2006-07 and 2007-08. In the environment and rural development budget, we see big increases in the budget for the strategic waste fund in 2002-03, 2003-04 and 2004-05, but after that the budget is at a standstill. The Executive has made strides in opening new stations. That has not happened in England and Wales. Andrew Arbuckle, among others, mentioned the opening of new railway lines in Scotland. That shows a welcome commitment to sustainable development, but will it continue?

When the Scottish Parliament was established in 1999, Scotland's recycling rate was the worst in Europe. It was abysmal. Things have improved dramatically since then. Our recycling rate is no longer abysmal and the worst in Europe—it is below average. Our performance has gone from abysmal to poor. Can we hope that such a rate of improvement will continue? We are not seeing the appropriate increases in the budget figures.

I am worried by the evidence that the Finance Committee heard on 10 January when it considered the 2005-06 budget revisions. Some £48 million had been cut from the money for rail services in Scotland—the figure was down to £212 million from £260 million. The minister said that a large part of that cut was because of delays in such things as track access grants and that the money would be spent later from the central unallocated provision. I seek a reassurance from the minister that that will happen. In the meantime, at least some of the money that was allocated to rail services in last year's budget is being spent on roads. It is much the same story with the strategic waste fund, which is down by £30 million to £82 million. The flood and coast protection fund is down by £9 million to £6.5 million.

Revisions will always be needed because unexpected problems will occur when money is being spent and there are demand-led programmes that rely on local authorities and other bodies applying to the Scottish Executive for funding. If they do not apply for that funding, the money cannot be spent. However, as the convener of the Finance Committee said,

"there is a pattern of making commitments to spend money on rail and not following through on them. We find that there is an underspend on the rail budget, whereas there seems to be a persistent overspend on the roads budget. There is a budgeting issue in respect of the management of rail expenditure versus the management of roads expenditure."—[Official Report, Finance Committee, 10 January 2006; c 3261.]

We have a problem when there is a move from revision to a pattern of revision and when promises have been made in the budget and lovely words have been spoken about the future sustainable development of Scotland but spending patterns and revisions show that cash is not in fact being made available.

Fundamentally, there is a problem with the Executive's priorities. The Executive can produce sustainable development strategies until it is blue in the face, but until it moves away from its obsession with increasing gross domestic product, those strategies will not be properly reflected in budgets and those budgets will not result in real spending. The Executive has said in its latest sustainable development strategy that it does not believe in growth at any cost. Like the promises that it makes in budgets that tend not to be met as fully as we would hope, that statement must still be tested.

The budget contains many good things. I hope that some of them will be achieved and that money will be spent where the Executive promised to spend it. I look to the ministers to reassure us that the budget will be implemented.

As we know, the Finance Committee produced a critical report on the budget process. The report highlighted particular failings in the Executive's efficiency savings and local government finance proposals. When he gave evidence, the minister told the committee that it was impossible to state how much was being spent on the Executive's three cross-cutting themes—economic growth, equal opportunities and sustainable development. Nobody seems to know how the money is being spent in the Executive, so Conservatives are entitled to ask whether the Scottish people are being offered value for money for all the additional millions of pounds that are being poured into services.

Despite the huge surges in spending, the delivery of public services appears to be getting worse. Each year, £1,400 more—24 per cent more—is spent on every Scot than is spent on every person who lives south of the border. The Executive's per capita levels of spending on all the key services—health, education, housing and transport—are higher than those in England and Wales, but what about the quality of delivery? Despite all Iain Smith's fine words and all the extra bodies that he said are being recruited, 22,000 more people are on waiting lists than were on waiting lists in 1999 and some 7,000 out-patients wait more than a year for treatment. There are 1,100 more senior bureaucrats in the health service than there were in 1999, which is a 40 per cent increase.

Criminal offences have increased by 15 per cent. Drug crime has increased by 40 per cent and fire raising and vandalism have increased by 60 per cent in the past six years.

Attacks on school staff are up by 124 per cent, and exam results for the lowest 20 per cent of students—the key group that needs most help—remain consistently low.

The one area where the Executive could make a big difference is business rates. However, instead of cutting rates, as its colleagues in the National Assembly for Wales have done, it has chosen to keep rates above the level in England and thereby put Scotland at a competitive disadvantage. We hear that the uniform business rate will be established next year—guess when—just before the election. Surprise, surprise.

It is a fact that the biggest growth industry in Scotland is Government, this at a time when there are continuing job haemorrhages in manufacturing. The recent redundancies at Lexmark are only the latest in a catalogue of nearly 2,000 job losses in the first 26 days of this year alone.

Of course we need appropriate numbers of policemen, teachers and nurses, but with the public sector now accounting for something like 54 per cent of Scottish GDP, Tom McCabe must look at the 12 per cent increase in Scottish Government staff since 1999 and the 40 per cent increase in the number of full-time staff employed by the quangos.

Can Mr Brocklebank confirm that the Conservative policy is to cut £1 billion from the budget?

I do not know where on earth the minister got that. I always like to let the Lib Dems intervene, especially these days when every day we get another refreshing revelation from them, but that one was hardly a work of genius.

If economic growth really is the Executive's top priority, the minister has to understand that the staggering growth of the public sector is stifling the ability of private business to generate wealth. Moreover, the differing approaches to dealing with targets—whereby some departments can keep what they save while others have had their baselines reduced and the money reallocated elsewhere—are simply not consistent with the overarching commitment to improve efficiency.

The Executive has spent six years pouring more and more money into public services, yet all that Scotland has to show for that is more people on waiting lists, more crime, no improvement in educational attainment, a faltering economy and an army of more bureaucrats. That is not a budget strategy to bring any comfort; it is a strategy for spend, spend, spend, with little reference to value for money.

In another context, when financial disaster was staring him in the face, Burns wrote:

"But, Och! I backward cast my e'e,
On prospects drear!
An' forward, tho' I canna see,
I guess an' fear!"

That could have been written to describe this budget strategy.

We go now to the closing speeches. I call Elaine Murray to close for the Labour Party.

How long do I have, Presiding Officer?

Officially four minutes, but I can probably allow a degree of latitude in this closing round—let us call it five minutes.

Thanks very much.

I thought that we had had this debate on 21 December and it was only on reflection that I realised that that was the debate on the Finance Committee report at stage 1. Perhaps the case could be made for bringing the two debates together to deal with some of the problems that John Swinney referred to about who can make amendments at what time. It is a little confusing to have a group of budget debates together because it is difficult to know who is discussing what at what time. That is especially the case today because the motion seeks approval for spending plans that have already been announced and discussed. Indeed, there have been plenty of opportunities over the past year to question ministers after ministerial statements and during Executive debates about the way in which the Executive structures its expenditure.

The minister was right to flag up the transparency of the process. When the committee met in Elgin, transparency was one of the points raised during the public session. There is a lack of understanding among the general public—possibly even in the Parliament—of how transparent the budget process is in Scotland compared with how it is elsewhere.

I will comment briefly on Ted Brocklebank's totally selective and suspect use of figures. Attainment in education in Scotland is increasing. I do not deny that there is a problem with the bottom 20 per cent and the Executive has policies to address that, but it is not the case that attainment in education is not increasing.

I was grateful to the Executive for its response to the Finance Committee's report. I flag up one or two points to which I appreciate the minister might not be able to respond immediately although they have arisen from the way in which the Executive responded. I am grateful to the Executive for agreeing to continue to investigate the way in which health boards' allocations are presented to make them more transparent and for agreeing to review the presentation of the cross-cutting information—to which Ted Brocklebank referred—to make it much clearer how portfolios contribute financially to the Executive's cross-cutting objectives.

However, there are one or two things about which I would like to know more. For example, ministers stated in their response that the health board savings of at least 1 per cent are not being deducted "from any existing plans". Does that mean that they are not being deducted at source from the baseline budget before any increases are added for spending pressures or specific projects? That is not exactly the same thing.

Des McNulty mentioned the mechanisms for monitoring the delivery of the partnership agreement and the fact that they are being informed by the approach of the Prime Minister's delivery unit. The Finance Committee took fairly detailed evidence from Professor Barber about the focused way in which progress towards particular targets is being monitored and overseen by the Prime Minister himself in England and Wales, and I wondered how that informing was being translated into practice in the Executive's monitoring of its progress towards implementing the partnership agreement.

It has been clarified that pay provision in education is excluded from efficiency savings, but that is not the same thing as education being excluded from them. At one point, the Finance Committee thought that education itself was excluded. There are issues with making efficiency savings in education, because some councils—including Dumfries and Galloway Council—are making proposals that would reduce the education services that they provide, such as the support for children with additional support needs. We need to monitor that and ensure that cuts in councils' services do not run counter to the Scottish Executive's intentions.

It is still the case that councils are treated differently from Executive departments in having to find the £197 million of efficiency savings from their budgets by 2007-08. The Finance Committee is conducting a short-term inquiry into the effects of the single status agreement and retrospective equal pay claims and I assure the ministers that all members of the committee will be just as rigorous in interrogating council officials and councillors as we are in interrogating ministers. We will not roll over and say that councils should be paid all the money that they demand, but there is definitely an issue with their ability to afford the equal pay claims. COSLA has agreed that the single status agreement is the responsibility of the individual councils, but the councils have a problem in finding what could be larger than anticipated amounts of money for equal pay claims. I call on the ministers and COSLA to have realistic discussions about that. There is no point in councils presenting the Executive with a huge bill and, without substantiating that bill, demanding that it pay up, but it is necessary to continue to have realistic dialogue about how that might be resolved.

To be frank, although the debate has been worthy, it has been rather dull. I was even looking back with some nostalgia to this morning's lively exchanges until my good friend Ted Brocklebank injected some life into this debate, for which I am grateful.

It is only fair to acknowledge that in this and previous budgets public spending has reached not high but record levels. Scotland is now attaining, if not surpassing, Scandinavian levels of public expenditure. Unfortunately, Scotland is not matching that with Scandinavian levels of service.

Although I accept that health spending has risen by 70 per cent since devolution, the reality for people on the ground is different. We now have NHS 24 in place of GPs providing 24-hour cover. Throughout the country, local accident and emergency units have closed. Access to NHS dentists, which was available seven years ago, is now lacking. People's experience is that increases in public expenditure are simply not matched with improvements in service.

Derek Brownlee acknowledged the imbalance between inputs and outputs. That is a serious issue for the Executive. We must ensure that public money is spent as appropriately and as wisely as it can be. However, from the evidence available, it seems that we are not seeing the benefits of the additional sums spent. That is important because, during the past few years, we have enjoyed very large budget increases and that will not go on for ever. Whoever the Chancellor of the Exchequer is in years to come, finances will start to contract. If we have not been able to improve the services for people in Scotland when we have had huge budget increases, how will we do it when the budget inevitably contracts?

During the past six or seven years under devolution we have missed the opportunity to use the additional sums to invest in long-term infrastructure, particularly transport projects. Perhaps we missed the opportunity in the first three or four years of devolution to make such key decisions and investments. We will regret that.

Ted Brocklebank referred to the growth in public sector employment. The Tories have no problem with employing people to fill important front-line jobs. We all want there to be more nurses, teachers and policemen. The sad thing is that too many of those jobs are non-productive. Ted Brocklebank referred to the 40 per cent increase in staff working for quangos such as the Scottish Environment Protection Agency and other regulatory bodies. The fear is that such bodies have grown like Topsy; they are increasing the burden of bureaucracy and stifling the private sector. We hear farmers complaining about the SEPA regulations, as Mr Lyon will know, and private businesses complaining about the level of regulation coming from other quangos. We have to ensure that if we increase employment in the public sector, we do so in productive areas and we do not allow people just to fill in forms and become watchdogs, which is an additional and unnecessary burden on the private sector.

I turn to the question of the local government grant settlement. We are all well aware of the concerns about the rise in the council tax and we could bandy statistics around endlessly. The fact is that council tax has gone up, is going up and will continue to go up by more than the rate of inflation. That will continue to be a burden on people whose incomes are not going up at the same rate.

On that basis, and notwithstanding how fast the council tax went up under the Conservatives, would the member support an income-based system for local government finance?

No, I would not, although I dare say we could have a debate on that that would go on for the rest of the afternoon. Most western democracies have some kind of property-based taxation; there is nothing unusual in that. The problem with an income-based system is that it simply shifts the burden of taxation from those who are paying at the moment to hard-working families. I am not surprised that Mr Smith's Liberal Democrat colleagues down south are now revising their policy on local income tax, if they can find a leader to take that on after today's events. I think that they will find that a local income tax creates more problems than it solves.

There is scope for more savings to be made in local government. South Ayrshire Council, where the Conservatives have just taken over the administration, has already been able to save £4 million by axing the enterprise and infrastructure department. The council has not cut services; it has simply ordered the delivery of services in a different way.

Council chief executives are paid tremendous salaries. The average chief executive salary in the councils in Glasgow, Edinburgh, Fife, North Lanarkshire and South Lanarkshire—our five largest councils—is £138,000. That is more than the First Minister is paid. I do not deny that those people do important jobs, but should they be paid more than the First Minister? That seems to be very strange.

I could go on, Prime Minister—I am sorry, Presiding Officer; I was promoting you for a second there. I could go on, but time will not allow me to talk about efficiency savings. If the Executive is determined to use its money as efficiently as possible, it will have our support.

I will take up the point about efficient government in due course, but first I record my permanent misgivings about an expenditure-only budget. I hanker for a budget that raises its own revenue. In my experience, the only budget that works is one in which people are spending to save on costs, to maximise revenue and to bolster the balance sheet. None of that happens in Scotland so we have no basis for effective financial management.

We have heard another self-congratulatory budget speech from the minister. It is not consistent with the messages that we are getting from local authorities or with the ramifications of the local government financial settlement. We have the prospect of a double whammy of council tax rises going beyond 2.5 per cent—for Iain Smith's benefit, I ask what a 2.5 per cent target is if it is not capping—and service cuts. And that is before equal pay and single status descend on the shoulders of the local authorities.

The thing that exposes the weakness in the Executive's approach is the efficient government process. I recently submitted a question to the Minister for Finance and Public Service Reform, which said:

"To ask the Scottish Executive whether all savings listed in the Efficiency Technical Notes in support of the Efficient Government Programme are net of redundancy payments and the cost of capital and/or other spend-to-save disbursements."

The answer was:

"Where investment was justified to enhance or sustain service delivery, and not solely in order to secure efficiency gains, capital costs and redundancy payments are not taken into account when calculating the efficiency saving. In any project where efficiency improvement was the primary rationale, the treatment of development and redundancy payment costs will be considered on a case-by-case basis, and will be reflected in future iterations of the Efficiency Technical Notes."—[Official Report, Written Answers, 20 January 2006; S2W-21967.]

Well I never. In the business community, where I come from, that would never be acceptable. Any efficient business will carry out an accurate cost allocation. In no other way can proper efficiency be achieved. In business, to consider the costs and projections of savings in retrospect is so laughable as not to justify consideration. Further down the line, businesses would also do a post-implementation audit. We are talking here, however, about the governance of our country. The efficiency savings are a joke and they will be what we always said they would be—what the Minister for Finance and Public Service Reform claims them to be—and no audit will disprove that. It is murky, it is messy and it is not what we see in other places.

We had the minister and the permanent secretary in front of the committee, and I took them through the process that others have used in order to achieve proper savings. It is simply a three-stage exercise. First, one sets worthy outcomes, framed in outcome terms that everyone clearly understands. Then, there is a process of achieving those savings under strict statistical and accounting control, down to recording the costs even beforehand. Finally, it must be open to the involvement of all stakeholders, including council tax payers and councils. None of that is happening. Is that why we are not achieving our true priorities? Is that why we are not achieving growth? I wear as a badge of pride Iain Smith's disagreement with my assertion that reindexation is designed to knock out the comparability of our economy with economies elsewhere, because that is exactly what it does. It makes our economy a closed economy and it makes us a banana republic, as long as it is managed by the current Scottish Executive. It creates a false feedback loop, designed to fool the people of Scotland.

Other statistics on the spending of its money have been produced by the Executive, but the labour participation statistics ignore the migration of people out of Scotland to other parts of the UK economy. There may be high levels of employment, but we should look at the incomes that people are earning. A third of the people in this country are earning less than £6.50 an hour. That is 820,000 people, all of whom are now about to come under greater pressure from the remorseless, above-inflation rises in council tax, thanks to the Executive's mismanagement of the budget.

Earlier, Derek Brownlee made the effective point that the way in which the savings have been applied—and we have it in writing today—has not been a "straight percentage efficiency target" because, the Executive tells us, that

"assumes that everyone is as efficient or as inefficient as the next one"

and it

"penalises those who have worked hard".

However, the Executive puts all local authorities in exactly that position, and that is utterly outrageous. In a moment, the Deputy Minister for Finance, Public Service Reform and Parliamentary Business is going to stand up and defend the Executive, when he could also be defending Argyll and Bute Council, whose frugality, honesty and hard work differentiate it from many of the other 31 councils whose record he will be justifying in the same basket and with the same burden. [Laughter.] Laughter from the Labour benches just reinforces the whole nonsense of the Executive's existence, shored up by people who are willing to see data distorted and local authorities put under pressure. Local authorities are now under pressure to sell their very assets, which proves that there is no balance sheet mentality.

Iain Smith asked where the money was going to come from. The money comes from growth and from the fact that this is not a zero-sum game. The money comes from the approach advocated by Charlie McCreevy, not 20 years ago or 10 years ago but right now. He talks about making his economy more competitive and about doing that through the vehicle of getting more people into work, getting more skills in place and building infrastructure, and doing so because his country knows how to run both sides of the profit-and-loss account and its balance sheet. The Irish run their whole economy to make it competitive. We cannot do that until we do the same, and members of the Executive parties can laugh all they like, because when we reach that day they will be gone.

Today's debate has been about agreeing the principles of the Budget (Scotland) (No 3) Bill. Once again I am pleased to see that no one has proposed that we could operate without such a bill, which underpins everything that we intend to do in the coming year.

A number of colleagues have made suggestions about the bill's contents, which I will address. Despite those suggestions, no amendments were proposed to the budgets at the appropriate time back in December—I recognise that Mr Swinney wished to move an amendment today.

For Mr Lyon to be comprehensive in his comments about the fact that no amendments to the bill were submitted during the Finance Committee's consideration of it, it would be fair to acknowledge—this relates to the point that Mr McNulty made—that we raised issues in the Finance Committee report and looked for the Government to respond positively to the genuine concerns that were shared by members of five political parties on the Finance Committee. To say that no alternative was put forward at the time of the Finance Committee report is inadvertently to mislead members of Parliament.

I will deal with that point later. I recognise that there are concerns. The SNP, in particular, has consistently raised genuine concerns that we have debated previously.

I was going to say that it appears that not only are we all agreed on the need for the bill and on the principles that have been set out by my colleague Tom McCabe, but there also seems to be agreement on some of the detailed contents of the budget. Mr Swinney was generous enough to recognise that.

I will pick up on one or two of the issues that have been raised in the debate this afternoon. Mr Swinney raised concerns about balances. I confirm for him that figures taken from local authorities' audited accounts for 2004-05 show that, in total, councils had more than £1.5 billion held in usable reserves and balances as at 1 April 2005. When ring-fenced funds are excluded, the accounts still show that more than £1 billion in usable reserves are available to them. As I understand it, the chief executive of the Convention of Scottish Local Authorities confirmed in evidence to the Finance Committee that significant sums from that amount were available to address some of the pressures that councils face.

Will the minister give way?

I want to make progress.

Brian Adam wanted to know what proportion of the local government settlement was for new burdens. That is another fair point. No new burdens were imposed on local government for core services as a result of the settlement. As Mr McCabe mentioned, new burdens for local government as a result of specific Executive initiatives were funded through the £1 billion of other grants that we provide to local authorities.

It has been said on many occasions that we have been less than generous to local government in our spending plans. We believe that that is not the case. Local government has enjoyed big increases in recent years. By March 2008, core funding through aggregate external finance will have increased by 55 per cent since 1999-2000. Total funding of £30 billion over the next three years will enable local authorities to increase their spending on services to record levels.

We were also pleased to announce last month that the Improvement Service had reported to the finance ministers that councils are on course to deliver £122 million in efficiency savings in 2005-06. I believe that everyone in the chamber would wish to congratulate councils on their progress, which puts them well on course to deliver the efficiency targets that we set them.

That substantial sum can, of course, be redeployed to meet current pressures. I expect councils not only to sustain those efficiency savings, but to build on them in the coming years. In some ways that addresses the point that Murdo Fraser rightly made: that we must ensure that the resources that we put in deliver more and better front-line services. Our plans on efficient government aim to target resources so that we derive better outcomes from the money that we spend.

It is worth stressing that the budget is important because of the impact that it will have, which several members—in particular Iain Smith—mentioned. The budget will allow us to continue to invest in our schools, our health service and our transport infrastructure. That is vital to improving the lives of ordinary Scots.

The budget is a key part of the plans that were announced in the spending review of 2004. As we have said many times, growing the economy is our top priority. The budget will help to deliver on that promise. It will deliver excellent public services, support stronger, safer communities and develop a confident, democratic Scotland. It is a budget for enterprise, opportunity and fairness and I am sure that it will command the Parliament's support.