Hansard

I thank Elaine Smith for securing the debate. Viewed in the wider context of the increasingly extreme political and economic challenges that are being faced by other eurozone nations, it is even more important that the Parliament focuses on the economy and how we can act collectively in the best interests of the people of Scotland.

Before I turn to some of the specific points that have been made in the debate, I will say a bit about the STUC’s there is a better way campaign, the budget, the common ground that the STUC shares with us, and the Scottish common good. The Scottish Government has long recognised the convergence of interests and is committed to working closely with the STUC. It represents more than 640,000 people across Scotland and its campaign is also an important contribution to the debate that we need to have about how best to support businesses, communities and the people of Scotland.

The campaign has four elements. The jobs element looks at investment in manufacturing skills, infrastructure and the green economy to help to support job creation. The services focus is about keeping spending at decent levels to protect public services and drive the economy forward. There is a fair taxes element. Essentially, the proposition is that raising taxes when the economy recovers is a more efficient and fair way to reduce the deficit. Finally, the focus on a living wage recognises that low pay remains a problem for many workers in Scotland.

Let us compare each of those elements in turn with the budget that the Scottish Parliament has just agreed. The budget recognises the link between investment and jobs and, in the face of massive reductions in our capital budget from the UK Government, we have taken decisive action to boost capital spending next year and in subsequent years. We will transfer £100 million from this year to 2011-12 to supplement our capital budget. We have also launched an additional £2.5 billion programme of infrastructure that will be delivered through not-for-profit distribution models to boost investment in public works. Those measures enable us to confirm that our capital programme will include the construction of the new Forth crossing, the new south Glasgow hospitals project and our ambitious schools programme. We will also create 25,000 modern apprenticeships, which is a record, and a further investment of £10 million will support employment creation by focusing on new starts and encouraging small companies to expand their business base. We have asked public sector workers to accept pay restraint to protect jobs and maintain demand in the economy.

On services, we agreed a local government settlement with the Convention of Scottish Local Authorities. The settlement reflects our joint determination to improve outcomes for the people of Scotland and local government’s key role in the economic recovery of our communities. That agreement will enable local authorities to maintain delivery of shared commitments that impact on households throughout the country, to maintain the council tax freeze, to keep 1,000 police officers on our streets, to meet the needs of the vulnerable and elderly through the councils and the national health service working together to improve adult social care, to continue with the curriculum for excellence, and to protect teaching jobs, and so on.

On tax and using economic growth to reduce the deficit, I simply stress that we are required to operate within a housekeeping allowance that is imposed by the UK Government.