Meeting of the Parliament (Hybrid) 09 March 2021
I congratulate the cabinet secretary on reaching agreement with two other parties this year.
It is good that the UK Government is continuing to borrow into 2021-22, so that both it and we can continue to deal with Covid and, I hope, help the economy to recover. I accept that it may not yet be the time to raise taxes, because we want people who have spare cash to be out there spending it as soon as possible in order to keep businesses and jobs going.
On the other hand, I do not think that the public finances can afford tax cuts. The Conservatives have suggested tax cuts—in particular, that there should be no LBTT on transactions of more than £145,000. There are a number of reasons why that is not a good idea. First, the NHS and local government need the money for public services. Secondly, the policy does not help those who are in greatest need and who do not own their own homes. Thirdly, it does not even help many ordinary folk who buy a flat or a house for less than £145,000. For example, flats in the estate where I live go for about £70,000.
I was intrigued to see that the Conservatives down south are looking at increasing corporation tax in the medium term. That is a bit of a change of tack for them, and I say that it is welcome. I hope that the Tories in this Parliament will welcome the need for increased taxation if we are to protect public services.
On the subject of taxation more generally, as the cabinet secretary pointed out in her letter of 2 March to the Finance and Constitution Committee, we are “limited” when we do not have
“full devolution of tax powers”.
Income tax, in particular, is a problem. It is still, in essence, a reserved tax, with the Scottish Government having the power only to vary rates. The UK income tax system is far too complex to start with, and it is made worse by having national insurance as a separate and highly regressive tax on top.
On the spending provisions, I very much welcome the record spending on the NHS, the focus on mental health and, of course, the increase to a 2 per cent pay rise for most public sector workers. I accept that most of us would like higher increases for many workers, but we have to live within our means.
The reality is that, even with UK borrowing, there are limits to spending. We have increased NHS spending over a number of years. If Opposition members feel that we have not given enough to local government, as Annie Wells has just said, they must think that we have given too much to the NHS. Those are the two main parts of our budget, so providing more for one almost inevitably means providing less for the other.
On capital spending, I very much welcome the continued emphasis on housing—especially on social rented and other affordable housing. In recent years—and even right now—in the Glasgow Shettleston constituency we have affordable housing going up in Dalmarnock, Bridgeton, Parkhead, Calton, Baillieston and Shettleston itself, to name but a few places. We cannot overstate how important such housing is. It means that people can have good-quality housing that they can afford, it helps people to overcome fuel poverty and, as we have seen in recent months, it gives young people the space to study effectively, even when that is being done remotely.
I am always uneasy when we talk about longer-term borrowing for revenue costs, be that by individuals or by the country. However, we should certainly be borrowing for capital expenditure, especially for housing. It is disappointing that the UK Government has cut back on our capital spending, especially financial transaction money.
Such housing investment gives our communities long-lasting assets, at the end of the day, and it creates jobs and boosts the economy along the way. It should certainly be possible for the Scottish Government to borrow prudently, as local authorities can, rather than having artificial limits placed on it by Westminster.
Overall, I am very pleased to support the budget. It has been a strange year, and it looks as though 2021-22 will not be normal either, but we can have confidence, in Scotland at least, that the public finances are in safe hands.
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