Hansard

There are really two reasons behind the Scottish Conservatives’ request for this debate. First, the 30-minute statement last week, with less than an hour prior to that in which to digest a significant amount of economic analysis, did not provide satisfactory time for parliamentary scrutiny. Secondly, we have the first projected longer-term outline of the Scottish Government’s fiscal policy since 2011—we welcome that timeline—so we believe that extended scrutiny is essential, particularly at a time of challenging economic circumstances.

I will begin by stating some key facts. The Scottish Fiscal Commission’s December 2021 statistics showed that the Scottish Government’s overall budget for 2022-23 would no longer receive on-going Covid funding as the pandemic eased. What is also correct—the cabinet secretary should know by now that all the experts’ statistics, including those from the Scottish Parliament information centre and the Institute for Fiscal Studies, confirm this—is that the block grant that was received from Westminster was the largest in real terms in the history of devolution and is set to rise in real terms during this parliamentary session; that the Scottish Government received about £15 billion of additional Covid spend for the previous two financial years; and that the Scottish Government has had £7 billion more to spend than it expected four years ago.

Here are some more facts. Income tax revenues are growing more slowly than the income tax block grant adjustment. The Institute for Fiscal Studies has predicted that income tax revenues will be about £428 million less than would have been the case if income tax had remained in the United Kingdom tax structure. From 2024-25, the UK income tax rate will reduce to 19 per cent, but there are no signs of the Scottish Government making the same commitment yet—I will come back to that. Social security spend in Scotland is set to rise from 10 to 14 per cent of the resource budget. The size of Scotland’s labour force is reducing, and the labour market participation rate is falling.

Then there is the huge black hole in the public finances, which, yet again, the finance secretary told the Finance and Public Administration Committee does not exist—[Interruption.] On top of those facts is the backdrop to the current economic situation. As Dame Susan Rice spelled out last week, the war in Ukraine, the significant increase in global energy prices and difficulties in international supply chains—most especially those that relate to China—are creating serious challenges for every economy in the world.

It is perfectly true that there is greater uncertainty in the economy than there was in December 2021, when forecasts were published. What is also correct—I repeat a view that I have expressed in several debates in the chamber—is that aspects of the current fiscal framework exacerbate the uncertainty. It does not help that there are considerable time lags and often divergence between the forecasts of the SFC and those of the Office for Budget Responsibility, and it does not help that the framework is not inflation adjusted—two aspects that I hope will be resolved when the current negotiations on a new fiscal framework are concluded.

The cabinet secretary cannot blame the fiscal framework on Westminster. It was her predecessor, John Swinney, as well as UK Government ministers, who signed up to it in 2016.

The long and short of it, confirmed by all economic forecasters, is that the Scottish Government is spending too much in comparison with what it is raising. If the cabinet secretary does not like the term “black hole”, let me try the term “shortfall”. I remind her that, last week, David Phillips of the Institute for Fiscal Studies said:

“A series of expensive spending commitments on top of underlying spending pressures mean that the Scottish Government faces a multi-billion budget shortfall over the next four years”.

We know that, as a result of all that, the cabinet secretary has decided to make savage cuts to public sector jobs. The New Statesman offered the view that that will include many jobs in Government agencies and quangos—Transport Scotland, Marine Scotland, Food Standards Scotland and the Scottish Environment Protection Agency were all mentioned in its article. We will see what happens in that regard.

I am sure that the public will find it difficult to understand why on earth substantial, real-terms cuts are to be made to our police, who are on the front line of keeping our communities safe; local government services; trade and enterprise; tourism; and our universities, which the cabinet secretary admitted yesterday are integral to the realisation of the national economic transformation strategy, and which play such a vital role when it comes to research and development and innovation.

That is the same public who will see the profligacy of the Scottish National Party Government in wasting vast sums of public money on ferries that do not sail, Burntisland Fabrications, Prestwick airport and the malicious Rangers Football Club prosecution—the list goes on. Of course, there is also the £20 million for preparing for a second referendum.