Meeting of the Parliament 04 February 2025
I will be very clear that it was the SNP and Labour who took that away from them and are now only partially restoring it.
Those are not just my warnings. The budget ignores deep-seated problems in the structure and sustainability of Scotland’s public finances. Audit Scotland has expressed misgivings about the failure to deliver the radical modernisation that our public services urgently need. The Scottish Fiscal Commission has sounded alarm bells about the affordability, sustainability and desirability of the SNP’s social security policies. Scottish Financial Enterprise has raised concerns about the consequences—most notably, behavioural change—of the SNP’s tax policies.
We could opt to have a modern, dynamic and competitive economy in Scotland, and we should not have to justify the case for lower taxation. It should be for the SNP Government to explain why it has made Scotland the highest-taxed part of the United Kingdom. There is an economic and moral case for low taxation, but the SNP cannot see it. All things being equal, lower taxes should deliver increased growth and higher living standards but, sadly, both are absent in the SNP’s big-state Scotland.
Under the SNP, the Scottish tax base has grown at a slower rate than the tax base in the rest of the UK, and Scottish salaries have failed to keep pace with those south of the border. Devolved income tax decisions mean that Scottish taxpayers are paying £1.7 billion more than they would pay if we had the same rates and thresholds as the rest of the UK, but the net funding for the Scottish budget is only £838 million. The Scottish Fiscal Commission calls that an “economic performance gap”. I call it a lost decade and more dogma under the SNP’s misplaced priorities.
When Shona Robison gave her budget speech, it looked for a moment as if she might have learned from the mistakes of the past. She said:
“I thank those with the broadest shoulders who are paying a little bit more”.—[Official Report, 4 December 2024; c 29.]
In reality, however, what did her thank you mean for Scots who earn £30,000? It meant a tax cut of just £1.21 per month. The budget confirms that the thresholds for the basic and intermediate rates will rise by 3.5 per cent in April but that, as the convener of the Finance and Public Administration Committee said, the top three bands will remain frozen. That means that the number of higher-rate taxpayers in Scotland is expected to jump from 490,000 to 550,000.
In contrast, we proposed a package of bold, forward-looking, growth-generating tax cuts for those on middle incomes to make Scotland more competitive with the rest of the UK. We would offer targeted tax cuts to businesses, including to Scotland’s struggling pub and hospitality sectors. [Interruption.] Mr Swinney is chuntering away.
Ministers will, of course, assert that the higher taxes are used to deliver its social contract with the Scottish people. However, let us look at the reality of that social contract. Winter fuel payments were stripped from most pensioners last winter. The number of Scots who are in pain and relying on private healthcare is at a record high, and the number of economically inactive young Scots, too many of whom are now parked on benefits, hit 210,000 last year. Despite all the rhetoric, that is the reality of the SNP’s social contract with Scotland.
This year, even with Labour’s national insurance tax on jobs, the budget settlement delivers a real-terms increase in revenue spending and an uplift in the capital budget. However, as the Institute for Fiscal Studies has warned, more money alone will not fix our public services, and it is not alone in saying that. Dr Iain Kennedy, chairman of the British Medical Association Scotland, said that new funding will
“never alone be the answer to solving the NHS crisis.”
Audit Scotland warns that the Scottish Government’s plans for the future of the public sector workforce are too vague, with the Auditor General for Scotland, Stephen Boyle, questioning the Government’s commitment to “right-size” the workforce. This year, the cost of the public sector workforce will absorb 54 per cent of the Government’s revenue budget. Last week, we discovered that the number of senior civil servants has risen by nearly 500 in just two years. I ask the minister, when he sums up, to say something to the public sector bodies that are saying that they need to address the size of their workforce and are therefore calling for flexibility around the policy of no compulsory redundancies. Ministers must look seriously at that.
The greatest risk to Scotland’s public finances lies in the SNP’s welfare policies, and that risk has grown as a result of the SNP’s 11th-hour decision to mitigate the two-child benefit cap. The Scottish Fiscal Commission forecasts that social security spending will increase from £6.3 billion in 2024-25 to a staggering £8.8 billion by the end of the decade. I ask the minister, when he speaks, to say how that will be paid for. On current trends, the Scottish budget will crumple under the weight of the welfare bill as a result of a political choice that has been taken by ministers.
This is the wrong budget for Scotland. It fails to tackle waste or deliver reform, it fails to reverse damaging trends on welfare, and it fails to deliver growth. It will pass with the support of the Greens, Alba and the Liberal Democrats and because of the abject weakness of Scottish Labour, but it will not pass with our support. I agree with what Shona Robison said at the weekend. A dividing line has been drawn, and we know exactly where we stand in relation to our political opponents. We stand on the side of taxpayers, businesses and public services, and that is why we will vote against this rotten budget tonight.
14:59