Hansard

I welcome the debate and the Finance Committee convener’s remarks, and I endorse the proposed changes to the written agreement. The proposals reflect careful consideration by the Government and the committee, and are a consensus view on how we should reflect the impact of the Scotland Act 2012 in our budget process.

The decisions that we take collectively about public expenditure are among the most important for which we are responsible. They impact on our economy, our public services, the environment and our citizens. The procedures that we follow when taking such decisions have served us well since devolution, but we must ensure that they remain robust as the surrounding financial and constitutional context changes. I have experienced at first hand, in opposition and in my time as the finance secretary, the strength of our budgeting arrangements. They support a transparent and consultative approach to decisions about public spending and compare well with practice in other legislatures.

The budget process, as detailed in the written agreement, strikes an effective balance between the respective roles of Government and Parliament. The process reflects the importance of our committee structure and provides scope for detailed scrutiny and debate with stakeholders. Over time, the Scottish Government and the Finance Committee have worked together to refine the written agreement to reflect changing circumstances and to support effective parliamentary process. We have worked to pursue shared interests in effective presentation of the budget document, and have changed the emphasis of the document to include an increasing focus on the achievement of better outcomes for our citizens, and on the need for strategic consideration of the content and development of the public finances.

The implementation of the Scotland Act 2012 requires us to make further changes to the written agreement. With effect from 2015-16, the Scotland Act 2012 will devolve responsibility for landfill tax and stamp duty land tax, as well as the power to borrow to support capital investment. We welcome those developments while noting that, together, devolved taxes and capital borrowing will represent a relatively modest 2.5 to 3 per cent of devolved expenditure.

As the updated written agreement makes clear, the Government will set out its proposals for the bands and rates of the two taxes in the draft budget 2015-16, which is due to be published in October. We will also provide a commentary on the income that we expect the taxes to generate and the forecasts that underpin our plans. To support parliamentary and wider scrutiny of the draft budget, we are establishing the Scottish fiscal commission, which will provide an independent commentary on the Government’s tax receipt forecasts.

The written agreement also makes it clear that committees and individual members have the scope to advance their own tax proposals—provided that they form part of a balanced budget proposition—while reserving legislative responsibility for setting tax rates and thresholds to the Government. Through that approach, we can support effective public scrutiny and debate while delivering reasonable certainty in the budget process, which is necessary for effective planning of public expenditure and helps taxpayers’ preparations.

We will also, building on the material that was presented in last year’s document, set out in the draft budget further information about capital borrowing, which will all form part of the Government’s integrated capital plan to stimulate and improve the performance of the Scottish economy.

The agreement, looking further ahead, notes that additional changes will be needed in due course to reflect the introduction from 2016-17 of the Scottish rate of income tax. Of course, the Government will engage closely with the committee in the formulation of all amendments and revisions to the agreement that are required to facilitate implementation of proper scrutiny of arrangements for the Scottish rate of income tax.

Of course, I stand ready to work with Parliament to consider the implications for our processes of a positive vote for change in the referendum later this year.

I look forward to working with the Finance Committee, and colleagues across the chamber, through this year’s budget process, and I commend to Parliament the proposed updates to the written agreement.