Meeting of the Parliament (Hybrid) 10 February 2022
I think that we can all agree that the backdrop to the budget has been extremely challenging. We have considerable uncertainty. We have talked about rapidly rising inflation, a cost of living crisis, energy price hikes and so on.
Against that backdrop, we must acknowledge that the UK Government has added its own challenges for the Scottish Government, with the constant changing of reliable consequential figures and, fundamentally, its lack of respect for this Parliament.
The response of the UK Treasury to the wider economic conditions remains unclear. The Bank of England has started a process of regular interest rate rises and, although that has received little comment in this Parliament, it is setting out on a path of unwinding quantitative easing. No one can be certain of the consequences of that—least of all, I suspect, the Bank of England.
That backdrop, which it is very important for us to understand, of course leads to pressure to increase Government expenditure on every front. No area has been immune from such pressures, and we have heard multiple calls from across the chamber today to raise department allocations and expenditure on virtually everything. It cannot be overstressed that the cabinet secretary and her ministerial team face all those pressures with a largely fixed budget. As someone coming into the chamber for the first time, I cannot understand why it is so hard for the Opposition parties to understand that. The calls for increased expenditure are simply not matched by suggestions of where budget cuts should be made. Opposition members seem to imagine that there actually is a magic money tree after all.
A further issue about which I have spoken before is the uncertainty and fast-changing forecasts that the Scottish Government must contend with. The forecasts from the Office for Budget Responsibility determine the size of the block grant adjustments for both devolved taxes and welfare benefits, and the forecasts from the Scottish Fiscal Commission affect tax revenues and welfare spending. That is a headache—and more so if the outcomes are significantly different from the forecasts and given the limited ability to carry forward, which the cabinet secretary has already pointed out.
For me, the question is how we should judge the budget. Perhaps there is a test. Amidst that background and the challenges that we face, has the Government come up with a balanced, fair and proportionate set of proposals? Furthermore, is there flexibility to allow for adjustments as circumstances evolve? As a member of both the Finance and Public Administration Committee and the Economy and Fair Work Committee, I think that the cabinet secretary and her ministerial team have done a remarkable job to satisfy those tests.
The scrutiny of the budget by the Finance and Public Administration Committee was detailed and thorough, given the time and resources that were available. Our report identifies the importance and challenges of the fiscal framework and of the negotiations that take place. Among the evidence that we examined, I was impressed by the paper “Options for reforming the devolved fiscal frameworks post-pandemic”, which was authored by the three Davids: Professor David Bell, David Phillips and David Eiser. They argued persuasively for increased flexibilities in borrowing and reserve drawdowns in normal times. They also sought the reintroduction of funding guarantees and extended borrowing powers during times of rapid change and adverse shocks such as those that we have experienced in the Covid-19 pandemic.
Scrutiny of a budget can become dauntingly technical, but we cannot forget the need for transparency and clarity for the citizens of Scotland. Rather than asking about the intricacy of the fiscal framework, they might ask—probably encouraged by the media—why there was an underspend of £580 million for 2020-21. When asked about that during an evidence session, the cabinet secretary responded with her typical clarity and candour:
“It is illegal for me to overspend. Therefore, as we get closer to the end of the financial year, coming in under budget is a bit like landing a 747 on a postage stamp.”—[Official Report, Finance and Public Administration Committee, 21 December 2021; c 32.]
In other words, that is a function of the quite ridiculous process of how we need to manage our budget. Earlier today, I tweeted:
“you wouldn’t run a business like this - so why are the SG expected to run a country like this?”
I have already had my say on tax, during the debate on the Scottish rate resolution. However, from some of their earlier comments, I notice that the Tories still fail to pick up on the fact that, as was mentioned last week in the Spotlight on Corruption report, £290 billion is lost every year to the UK GDP as the result of corruption. Last week, I called on Murdo Fraser to condemn that, but he did not. Perhaps he might like to do that today.