Hansard

Okay. I would like to come back to Mr Marra in greater detail on that. I met the Scottish Fiscal Commission earlier today and we will continue that engagement. However, we are looking at a range of ways in which we can better engage with businesses. Mr Marra might be aware of some of the First Minister’s comments about our engagement, particularly with business, in recent weeks; I will come on to that. To give Mr Marra some comfort now, I will say that the Government will be voting with the Labour Party on its amendment to the motion today.

More broadly, following the election, we need to look at engagement in the round and consider whether that is the best context. Without making a decision on my feet today, I give Mr Marra an undertaking that I will write to him. I was in a discussion with the First Minister earlier today on those matters, and I do not want to prejudge the outcome of that.

We have to grow the economy—we all understand that—but the Government is not focused on tackling child poverty to the detriment of economic growth. Rather, that economic growth creates the necessary conditions whereby child poverty can be eradicated. It is not growth for its own sake, but growth to help support our people. We are rightly focused as a Government on creating the conditions for that growth, by supporting good jobs, attracting investment and maintaining high-quality public services. That is exactly why, as I said to Mr Marra, the Government will support the Labour Party’s amendment.

Ultimately, economic growth underpins all that we do in relation to fiscal sustainability. By boosting employment and investment, we expand our tax base, which in turn helps to fund the public services that our people rely on.

We know that, alongside growing the economy, reform is essential. That is exactly why the First Minister has appointed Ivan McKee to lead this work at Cabinet level. Yesterday, the First Minister and I met all senior civil servants in the Scottish Government to talk more to that mission. Next week, alongside Mr McKee, we will meet the leaders of our public bodies on exactly the same subject matter.

The public finances are challenging, and I do not shy away from that reality. However, there are opportunities here for more efficient ways of working. There is cross-party support to reduce the number of public bodies in Scotland, and I am sure that colleagues will engage with Mr McKee directly on that.

Colleagues who served in the previous session of Parliament will recall that we reinforced our commitment to ensuring that the public finances are on a sustainable footing through the medium-term financial strategy, which was published last June. Thanks to the decisions that were taken by the Government, more than half of Scottish taxpayers—as we heard during First Minister’s questions—are now expected to pay less income tax in 2026-27 than they would if they lived in England. We will keep it that way over the course of this session of Parliament. Unlike in other parts of the UK, our people will continue to benefit from free tuition, free prescriptions and no peak rail fares. Having applied that progressive approach to residential land and buildings transaction rates also ensures that those who buy the most expensive properties pay proportionately more tax.

On council tax, we are continuing to work with local government to build cross-party agreement on the future of council tax in Scotland. This Government exists in a Parliament of minorities, so I recognise that we need cross-party support to allow reform to be delivered on council tax, but I also recognise that council tax is a regressive form of taxation. We will, therefore, publish analysis later this year that will help to form an evidence base to inform any wider reforms, subject to Parliament’s support.

We have also given councils much greater flexibility to increase the charges for second and long-term empty homes, ensuring that, where housing is owned as a form of wealth rather than a lived-in home, more can be charged for it. On non-domestic rates, the basic property rate is the lowest it has been since 2018-19, and the small business bonus scheme remains the most generous of its kind in the United Kingdom.

However, we are now reaching the limit of what we can do with our devolved taxation levers. The UK Government has the powers to tax wealth far differently than it has done, but it has chosen instead to take short-sighted decisions, such as the decision to increase employer national insurance contributions, which has damaged the economy and created additional pressures on public services. If the UK Government is not willing to instil fair and progressive change in that area, it should give the Scottish Government the powers to do more. In the meantime, we are determined to do all that we can with the limited powers that we have. That includes aiming for a better balance between taxation of labour, income and wealth.

Scottish income tax provides about 80 per cent of devolved tax revenues, and our policy choices since devolution have resulted in the most progressive income tax system in the UK. However, we want a tax system that is even more resilient and gives us a broader set of tools to respond to economic shocks and future fiscal challenges. We are already taking action where we can. We are delivering on our commitment to introduce air departure tax in April 2027 and, through this framework, we will introduce a private jet tax from April 2028. We know that private jets produce significantly more—