Meeting of the Parliament 14 December 2017
I remind members of what I have already said about the local government settlement, which is that what I am proposing is far better than they were forecasting or expecting. On the specific point about using powers, I say again that, if councils used their powers to increase council tax by up to 3 per cent, that would put local authorities into real-terms growth.
Patrick Harvie covered the point on tax structure. He is right to say that, being a minority Government, we had to engage, consult and listen. I have certainly been doing that, as is evidenced in our proposition; however, I also want to give stability to the country. We all have to compromise in a Parliament of minorities. I have embarked on engaging in an open and inclusive style, to ensure that we can come to some sort of consensus on tax—and that should continue.
We set out four key tests on what we would do with income tax, which were to raise revenues for public services; to use the tax system in a way that protects lower-income earners; to have a system that delivers progressivity; and to support our economy. That relates to how we choose to spend those resources, too. I specifically mentioned the top rate of tax earlier, and Richard Leonard and Patrick Harvie have both touched on it. The Government has decided to set the top rate of tax at the level that raises the greatest amount of money. That is a sensible and progressive thing to do, so that those resources can be invested without deterring investment to Scotland.
We do not set the pay policy for local government, but we have set out what I think is a very fair public sector pay policy for those areas under our control, which is using the pay policy in a progressive fashion, just as we have done with the tax policy. There are sufficient resources within the settlements proposed to support a fair pay settlement.
My final point is one that Patrick Harvie made. The chancellor gave us no extra money for pay and said very little on the subject in a UK context. There is the independent pay review specifically for health, which we will look at very closely; I have set out our position in that regard. Given that we have had no new resources—in fact, we have had a real-terms reduction in the resources that fund pay—we have had to make decisions that are necessary to support our public services and properly remunerate our public sector workers, and I have tried to do that in the fairest way possible.