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Meeting of the Parliament [Draft]

Meeting date: Wednesday, February 7, 2024


Portfolio Question Time

Wellbeing Economy, Fair Work and Energy

The Deputy Presiding Officer (Liam McArthur)

Good afternoon. The first item of business is portfolio question time. The first portfolio is the wellbeing economy, fair work and energy. I invite members who wish to ask a supplementary question to press their request-to-speak button during the relevant question. There is quite a bit of interest in supplementaries, so I make the usual plea for brevity in questions and in responses.

Business Confidence and Promotion of Entrepreneurship

1. Pam Gosal (West Scotland) (Con)

To ask the Scottish Government what measures it will take in the next financial year to boost the confidence of those operating in the business sector and to promote entrepreneurship. (S6O-03054)

I draw members’ attention to my entry in the register of members’ interests, which shows that I own shares in commercial properties, from which I receive no remuneration. I have no running businesses.

The Minister for Small Business, Innovation, Tourism and Trade (Richard Lochhead)

The Scottish Government is fully committed to boosting the confidence of our business sector by establishing Scotland as a world-class entrepreneurial nation, which is underpinned by our 10-year economic strategy.

We absolutely believe in the potential for Scotland to be recognised as one of the best countries in which to start and grow a business. We continue to support entrepreneurship, with more than £13 million of funding allocated in the next financial year, and we have also provided £307 million to our enterprise agencies.

Pam Gosal

Research carried out by Survation found that many Scots are increasingly looking beyond Scotland for job opportunities, thanks to the Scottish National Party’s higher taxes. Self-employed people and business owners were the most likely to think about the shift, with 47 per cent saying that they would consider relocating.

Does the minister accept that the First Minister’s vaunted new deal for business is not working? What action will the minister take to make Scotland an attractive location to live and work in?

Richard Lochhead

In the past few days, I have spoken to a number of businesses in Scotland that are expanding and recruiting more people. They are very confident about the future, particularly in many of the tech sectors and in energy transition areas of the economy. It is an exciting time just now in parts of the Scottish economy, and I do not think that we should talk Scotland down as an attractive location for people to live and work in.

We are also finding that many people are relocating to Scotland, particularly from London. I have spoken to companies that are recruiting well from London because people want to move to Scotland for the quality of life and for the other benefits of Scottish Government policies.

Of course, we must pay close attention to the issues that the member has raised and to the views of the business community. Our new deal for business is the best forum for doing that at the current time, and we are listening carefully to what businesses are saying.

Fergus Ewing (Inverness and Nairn) (SNP)

In the next financial year, businesses in the hospitality sector south of the border in the United Kingdom will receive 75 per cent rates relief; here, they will receive zero relief. Given that those businesses—including hotels, pubs, restaurants and some visitor attractions such as bingo clubs in my constituency—incurred major debt to survive the lockdown during Covid, that is a serious competitive disadvantage. Will the minister urge the Scottish Government, in the forthcoming budget, to match that lifeline rates relief for Scotland’s hospitality sector?

Richard Lochhead

I thank Fergus Ewing for highlighting the challenges that many hospitality businesses in Scotland face at the moment. It is a mixed picture. I have spoken to many hospitality businesses that are expanding and are investing significant amounts of resource for the future. I have just returned from a tourism summit in Islay, where I spoke to many local businesses. There are many challenges on Islay, and throughout the whole country, in the hospitality sector. However, under Scottish Government policy, we estimate that 63 per cent of hospitality businesses will not pay any rates whatsoever. Of course, as part of the current arrangements, the budget extends to relief for island hospitality businesses, to help to address the particular challenges that many of our islands are facing.

We continue to look at all those issues, but we face a very difficult budget settlement from the UK Government, so we cannot achieve everything that we would like to achieve in the draft budget. Many of the factors that the hospitality sector has expressed to me relate to increased raw material costs due to inflation, increased interest rates and increased energy bills, so the source of the problem is very much at the UK level. We continue to bring those matters to the UK Government’s attention, as well.

I ask for briefer supplementary questions and responses.

Daniel Johnson (Edinburgh Southern) (Lab)

There is a good deal of concern about the impact that the draft budget will have on our enterprise agencies. Will the minister outline how many businesses were supported by enterprise agencies in the past year as compared with pre-Covid times?

Richard Lochhead

I am happy to look into that. As I am sure that the member would have expected, I do not have the figures to hand. However, I met enterprise agencies this morning and they were pointing to some of the significant success of companies that they have been supporting over the past year. I expect official statistics for that to be released in the coming weeks.

Our enterprise companies are carrying out a great deal of fantastic work supporting our business community in Scotland. That is why our exports and inward investment projects in Scotland are doing very well compared with the rest of the UK. The enterprise companies are doing a fine job supporting the business community.

Energy Networks (Discussions with United Kingdom Government)

To ask the Scottish Government what recent discussions it has had with the United Kingdom Government regarding actions that can be taken to preserve energy networks following periods of bad weather. (S6O-03055)

The Minister for Energy and the Environment (Gillian Martin)

As the member rightly outlines, policy and regulation of energy networks in the UK, including their operation, maintenance and resilience, are reserved to the UK Government.

Scottish Government officials maintain regular contact with UK Government counterparts on energy network resilience topics. Last week, Scottish Government resilience division officials attended a UK Department for Energy Security and Net Zero meeting at which winter energy risk and disruption contingency planning were discussed.

We are also working with the Office of Gas and Electricity Markets, the National Grid electricity system operator and the industry on reforms to and expansion of the electricity grid, so that electricity networks are robust, effective and work for Scotland.

Foysol Choudhury

Storm Isha saw thousands across Scotland lose power, with some people not being reconnected for more than a day. That greatly impacted those with disabilities or mobility issues who require electrical equipment to live and complete tasks in their homes. What discussion has the Scottish Government had with the energy networks in Scotland regarding additional help and reimbursement for those who have additional needs, when they are left without power due to energy disruption and blackouts?

Gillian Martin

Foysol Choudhury outlined a situation that I brought up as a back bencher following the aftermath of storm Arwen, when many thousands of people in my constituency had no power for seven days. I am always keen to pick up that issue with the operators. We had a constructive meeting with SSE plc and Scottish and Southern Electricity Networks—I think that that was last week—on their rolling maintenance programmes for lines, and for preventing damage to those lines in storms, which includes tree cutting, as well as on their work to update their vulnerable customer registers so that they know when to step in and help people who have vulnerabilities such as those that the member outlined.

Great work is being done by local authorities, police services, fire services, healthcare services, and response and resilience services working with electricity suppliers to learn lessons from storm Arwen and subsequent storms. Furthermore, last week, the Cabinet Secretary for Wellbeing, Fair Work and Energy and I had a discussion with the electricity system operator on reforms and expansion of the network.

I call Sarah Boyack to ask a very brief supplementary.

Sarah Boyack (Lothian) (Lab)

The minister did not mention our railway network. Given its increasing electrification, what work is being done to have a cross-UK discussion to ensure that the electricity supply to our railway network is reliable and resilient?

Gillian Martin

I am happy to refer that question to Fiona Hyslop, who has responsibility for transport. However, Sarah Boyack makes a good point. Increasingly, as we move towards further electrification of our network, we need to take resilience planning into account.

Town Centres (Support)

3. Bob Doris (Glasgow Maryhill and Springburn) (SNP)

First, I declare an interest: I am a trustee of the charity Spirit of Springburn, which is currently active in its efforts to develop a local place plan for the area that will help to boost town centre regeneration, which is relevant to the question that I am asking.

To ask the Scottish Government how its cities strategy supports town centres within cities to be vibrant destinations, which offer a range of services and amenities to support the community. (S6O-03056)

The Cabinet Secretary for Wellbeing Economy, Fair Work and Energy (Neil Gray)

We are committed to supporting the vibrancy of our towns within cities as we continue to implement the world-leading town centre first principle and support progress through the town centre action plan. That plan is our call to action, locally and nationally, to revitalise our towns and support the delivery of enterprising communities and town centre living.

In collaboration with Scotland’s Town Partnership, we support the Scotland Loves Local campaign, which aims to encourage people back into local towns, to increase footfall and, ultimately, to support businesses to offer diverse services and amenities for local communities, which is an economic multiplier.

Bob Doris

I welcome that, but for city-based town centres the pull of city centres and the lure of out-of-town shopping create a significant double challenge, particularly in areas with high levels of deprivation. What account does the city strategy take of the challenges that are faced by town centres within cities, such as in Springburn in my constituency? Are dedicated funds available to support them, such as the former town centre regeneration fund, which previously benefited Maryhill in my constituency?

Neil Gray

I recognise Bob Doris’s long-standing interest in the issue, given his work for the Maryhill Burgh Halls and the continuing programmes of work that he supports in his constituency.

As I have said, we continue to support our world-leading town centre first principle as a joint commitment to encourage people back into towns and to put the health of our town centres at the heart of decision making. That is underpinned by the fourth national planning framework, which recognises towns within our cities as national assets and seeks to promote and facilitate development. I understand that Glasgow City Council has established a local place plan development fund to support communities to develop local place plans. That will be ever more important as the role and usage of town centres change with people’s changing shopping habits.

Paul Sweeney (Glasgow) (Lab)

I am deeply disappointed to learn today that the latest round of the regeneration capital grant fund has been put on hold due to the announced cut in capital spending on that fund from £62 million to £45 million. That will affect four projects in Glasgow, including one that I chair, the Springburn Winter Gardens Trust, which has applied for essential capital funding. What will the minister do to expedite decisions on funding and ensure that the capital fund for critical programmes is protected?

Neil Gray

Mr Sweeney will understand the financial landscape in which the Scottish Government is operating. A 10 per cent cut to our capital budget coming down the line and increased costs against capital allocations because of inflation make some projects very difficult to progress. He will understand that a review of all the projects by the Deputy First Minister is under way.

I understand the importance that Mr Sweeney places on the fund, and I recognise the good work that it can do. We will continue to keep it under review to ensure that our town centres can continue to receive our support.

South of Scotland Enterprise (Four-day Working Week Pilot)

4. Emma Harper (South Scotland) (SNP)

To ask the Scottish Government what discussions it has held with South of Scotland Enterprise regarding any preliminary analysis of the outcome of its recently implemented four-day working week pilot. (S6O-03057)

The Cabinet Secretary for Wellbeing Economy, Fair Work and Energy (Neil Gray)

The aim of the four-day working week public sector pilot is to assess the environmental health and wellbeing benefits and efficiency gains that a four-day working week could bring. The pilot will ensure that meaningful insights are gained into the benefits and risks of a four-day working week approach.

The Scottish Government has held one high-level discussion with South of Scotland Enterprise on the future interim evaluation of its four-day week pilot. The meeting did not cover details of the results, as the interim evaluation is still pending completion and analysis by SOSE and Autonomy, which is the expert partner organisation.

Emma Harper

I met the SOSE leadership team on Friday last week and heard how the pilot is already beginning to boost staff morale, increase productivity and contribute to greater wellbeing in the workplace. Will the cabinet secretary comment on the ways in which the Government is working with business to show the evidence on whether a four-day working week is beneficial?

Neil Gray

Conversations with business employer organisations on a more flexible approach to the employment market continue. We hold forums, including through the new deal for business group, to look at the economic impacts of a more flexible labour market approach. We also look at its impact on the trading environment of those organisations, as the approach could provide them with access to a wider pool of potential employees because of the greater flexibility that it could offer. Obviously, commercial decisions will be made by individual employers, but those discussions will continue.

Ivan McKee (Glasgow Provan) (SNP)

What additional costs will SOSE incur from its limited budget as a consequence of implementing the policy? What assessment has been made of how much it would cost were the policy to be implemented across the entire Scottish Government and its agencies?

Neil Gray

I note Ivan McKee’s long-standing interest in this area. SOSE has not incurred any direct costs from volunteering to participate in the pilot. There are small staffing costs related to the time that is devoted to engagement with Autonomy, which is the expert partner supporting the work. The pilot will ensure that meaningful insights are gained on the benefits and risks of a four-day working week approach but, as it is a pilot, no assessment has been made of the cost to implement the policy across other public sector bodies, including the Scottish Government.

International Exports (Support for Growth)

To ask the Scottish Government how it is supporting the growth of international exports. (S6O-03058)

The Minister for Small Business, Innovation, Tourism and Trade (Richard Lochhead)

The publication “A Trading Nation—a plan for growing Scotland’s exports” guides our approach to increasing Scotland’s international exports. As part of that plan, we have added more international trade specialists, nearly doubled the GlobalScot network, increased our trade envoy network from four to 11 and run a programme of major events at events such as the Dubai expo, COP26—the 26th United Nations climate change conference of the parties—and COP28.

In 2022-23, Scottish Enterprise support helped to achieve £1.73 billion of projected export sales. There are sector export plans on technology, life sciences and other key sectors. We have worked with the Scottish Chambers of Commerce on delivering 100 trade missions under the programme that we have with it, generating £20 million in projected export sales.

Audrey Nicoll

In recent weeks, we have seen more of the same from the fallout of Brexit. A trade deal with Canada has broken down and, although new import controls have constrained Scotland, our neighbours and friends in Northern Ireland, who also voted to remain in the European Union, get a completely different deal. Over the weekend, we have also seen that, because of Brexit, even a former Scottish Labour leader voted for the Scottish National Party during the European elections. Does the minister agree that that demonstrates not only that the Tory UK Government is making up its Brexit policy as it goes along but that Labour cannot be trusted to stand up for Scotland on this highly important issue?

Richard Lochhead

Audrey Nicoll is correct. Brexit has been an unmitigated disaster for Scotland. Although we expect the Tories not to support Scotland on this issue, it is particularly disappointing that the Labour Party will continue with its pro-Brexit policy, which is causing so much damage to Scotland. [Interruption.]

Also disappointing are the exchanges between members on the Labour and SNP front benches, which will cease.

Richard Lochhead

So much for a union of equals. We are paying close attention to the welcome progress in Northern Ireland, while recognising that the barriers to trade do not exist there under the current proposals, whereas Scotland, which likewise voted against Brexit, will continue to have barriers in trading with Europe. That is completely unacceptable. Many businesses the length and breadth of Scotland are suffering as a result of Brexit, which we voted against.

If the SNP is so keen to support international exports, why has it opposed every trade deal that has been done by the United Kingdom Government?

Richard Lochhead

I recall very well that a former rural affairs secretary in the UK Government spoke out against his Government’s trade deals, such as the deal with New Zealand and other countries, because those deals betrayed Scotland’s farmers and rural industries. As the UK Government goes round with the begging bowl post-Brexit, trying to get deals at any cost, it is important that the Government in Scotland remains vigilant in standing up for Scottish industries and making sure that they are not betrayed by the Tory Government.

City Centres (Large Retail Stores)

6. Roz McCall (Mid Scotland and Fife) (Con)

To ask the Scottish Government whether, as part of the implementation of the recommendations of the city centre recovery task force report, the role of larger retail stores in city centres is being considered. (S6O-03059)

The Cabinet Secretary for Wellbeing Economy, Fair Work and Energy (Neil Gray)

The implementation of the recommendations in the task force report is led by the Scottish Cities Alliance, of which the Scottish Government is a member. The report identifies seven priority outcomes to ensure that city centres have a strong and vibrant offer to attract visitors, residents and tourists, as I referred to in answer to a previous question. It did not consider the detail of the role of larger retail stores.

Retail is an important component of a vibrant city centre economy. Our retail strategy encourages our retailers to promote city centres as retail and cultural destinations.

Roz McCall

According to the Scottish Retail Consortium, larger retail stores employ a high share of retail jobs and provide a significant share of low-cost everyday essentials for customers. Shops that are liable for the higher property rate have been paying more than their English counterparts for the past eight years, and now there is a threat of a rates surtax on grocers.

Given that the city centre recovery task force report already emphasises the need for out-of-town larger retail stores to be restricted and the prominence of large department stores on Scottish high streets, why does the cabinet secretary believe that Scottish stores are better placed than their counterparts down south to pay more rates?

Neil Gray

I assume that Roz McCall still supports the austerity agenda that has been the hallmark of the United Kingdom Government’s policies over the past decade and a half. That has pushed us into having to look at broadening our revenue base. Discussions with the likes of the Scottish Retail Consortium are on-going. Indeed, the Deputy First Minister, Tom Arthur and I are due to meet the Scottish Retail Consortium this afternoon as part of the consultation on a retail surtax.

On non-domestic rates, 95 per cent of businesses in Scotland pay less in rates than businesses elsewhere in the UK pay, and the small business bonus scheme means that 100,000 business properties in Scotland are taken out of paying rates altogether.

Even in a difficult financial landscape, which has been made worse by decisions that have been taken at UK level, we are still investing in and supporting the trading landscape for businesses in Scotland.

Gordon MacDonald (Edinburgh Pentlands) (SNP)

The city centre recovery task force is supporting Scotland’s eight city centres at a time when businesses are facing increases in the cost of food and goods as a result of new import controls. The UK Government estimates that new Brexit red tape will cost businesses an extra £330 million a year. Seven years after Scotland rejected Brexit, what is the Scottish Government’s assessment of its impact on retail and businesses?

Neil Gray

Business survey data shows that many businesses in the retail and wholesale sector continue to report additional costs due to Brexit, with 30 per cent of businesses in Scotland reporting additional costs—21 per cent said that there were additional costs due to red tape, 14 per cent reported higher transportation costs and 9 per cent faced extra tariffs. Brexit is directly responsible for that.

Clearly, the position with imports and exports varies by sector, but I am still to hear a positive view of Brexit from a business and economic perspective; there are only negatives. It is clear that, whichever party is returned to government after the UK general election, the economic pain will continue, because Labour and the Conservatives are signed up to a Brexit Britain future and the economic drag that Brexit causes. Independence is the only way back into the European Union.

Highlands and Islands Enterprise (Funding) (Women in Business)

To ask the Scottish Government what assessment it has made of the potential impact of the reduction in funding for Highlands and Islands Enterprise on women in business. (S6O-03060)

The Cabinet Secretary for Wellbeing Economy, Fair Work and Energy (Neil Gray)

We have prioritised funding for Highlands and Islands Enterprise to the extent that is possible, given the extremely challenging settlement, but the reduction in its budget will require it to revisit its plans for 2024-25 and to be rigorous in deciding what activity it can support. I know that HIE will continue to make a key contribution to achieving the Government’s objectives, including through its support for women in business. I have had regular engagement with the chair and the chief executive in recent months, and I will meet them again shortly to discuss how we can continue to work together to achieve our joint ambitions of boosting investment, accelerating opportunities across the region and maximising the impact of available resources.

Beatrice Wishart

Shetland is rightly proud of its world-famous textile and knitwear heritage, and Shetland wool week attracts knitters from around the globe to the islands each autumn. HIE faces further cuts to its budget, which, in total, will have been cut by 40 per cent since 2018-19. There is significant concern that funding will not be available for small women-led businesses in the creative industries in Shetland to help them to address the current threat to their businesses. Changes in the operation of the textile facilitation unit at UHI Shetland mean that individual local producers face a serious challenge to continue the production of their innovative designs, which are very much in demand. What can the Scottish Government do to ensure that HIE is in a position to support women in business who want to keep that traditional sector alive?

Neil Gray

Beatrice Wishart makes a very fair point. The market has changed, and the popularity of traditional knitwear such as Fair Isle ganseys is evident and growing. Indeed, the offering from your constituency, Deputy Presiding Officer, is also evident. I am well aware of that. I will continue to work with Highlands and Islands Enterprise on what can be done to support that export potential and to ensure that those businesses, which are largely women led, as Beatrice Wishart pointed out, continue to be supported.

John Swinney (Perthshire North) (SNP)

In advancing the arguments that Beatrice Wishart put forward about encouraging more women to enter business, is the Government prepared to engage in dialogue with Women’s Enterprise Scotland to make use of the formidable resources, skills and capacity that it has to offer on that agenda?

Neil Gray

Yes, absolutely. I give John Swinney the assurance that, as he would expect, I have already had significant engagement with Women’s Enterprise Scotland and that I will continue to look at what more can be done to support women-led businesses and at how—through Ana Stewart’s report, “Pathways: A New Approach for Women in Entrepreneurship”—we can encourage a greater proportion of women to start their own businesses in the first place. We have invested millions of pounds over the past year and for this coming year in achieving that.

Fair Work (Progress Against Benchmarks)

To ask the Scottish Government whether it will provide an update on progress against the five fair work benchmarks in the national strategy for economic transformation. (S6O-03061)

The Cabinet Secretary for Wellbeing Economy, Fair Work and Energy (Neil Gray)

The Scottish Government reports on progress on the national strategy for economic transformation through its annual reports. The most recent, from June 2023, showed that, in 2022, 94.1 per cent of employees were in contractually secure employment and 35.4 per cent were affected by collective bargaining arrangements.

Updated estimates are available for the gender pay gap, which was 1.7 per cent for full-time employees in 2023. Estimates released last month indicate 89.9 per cent of employees aged 18 and over earned above the real living wage in Scotland last year. The latest employment rate in Scotland was 74.4 per cent for September to November 2023.

Jackie Baillie

It is disappointing that the SNP Government has decided to cut the £10 million flexible workforce development fund, a key intervention to support upskilling across the Scottish economy. As a result, some 2,000 employers and 45,000 learners will miss out on training opportunities from April.

Stephen Montgomery, director of the Scottish Hospitality Group, said that losing the fund

“is another sucker blow for many hospitality businesses who used and relied on this fund to develop career paths for their employees. It was seen for many employers as a great aid for recruitment and giving training for career progression, and it is essential that Scottish Government rethink this budget cut”.

Does the cabinet secretary agree with that statement, or does he think that Stephen Montgomery and many businesses, trade unions and colleges are simply wrong?

Neil Gray

I have received that representation and I understand the challenges that people face. I hope that Jackie Baillie understands the challenges that the Government faces as it has to take very difficult decisions in the financial landscape that we are entering.

I presume that that is the first of the Labour Party’s representations on the budget, because I believe that that has not yet arrived. If that is an area that Jackie Baillie wishes to see changed in the budget, we look forward to discussions on that. The Deputy First Minister is more than willing to have those discussions on a constructive basis.

In Scotland, we have lower unemployment, a narrower gender pay gap and the highest proportion of workers who are paid at least the real living wage. That is because of the investments that we are making compared with elsewhere in the United Kingdom, and we will continue to provide that support so that we have a strong workforce for employers in the future.

The Deputy Presiding Officer

Thank you. My apologies to those members whom I was unable to call. That concludes portfolio questions on the wellbeing economy, fair work and energy.

There will be a brief pause before we move to the next portfolio, to allow the front benches to change.

Finance and Parliamentary Business

The Deputy Presiding Officer

The next portfolio is finance and parliamentary business. Again, there is a lot of interest, so members who wish to ask a supplementary question should press their request-to-speak buttons during the relevant questions but should be brief in their questions. The responses should also be as brief as possible.

I advise members that questions 1 and 8 have been grouped together. I will take any supplementary questions after questions 1 and 8 have been asked and answered.

Budget 2024-25 (Local Authorities)

To ask the Scottish Government how much it has allocated to local authorities from its 2024-25 budget. (S6O-03062)

The Minister for Local Government Empowerment and Planning (Joe FitzPatrick)

The Scottish Government is providing record funding of more than £14 billion to local authorities, including funding for the council tax freeze. We have also allocated an increasing share of the discretionary Scottish budget to the local government settlement for 2024-25, highlighting the importance that the Scottish Government places on our local services.

Neil Bibby

The Institute for Fiscal Studies has found that the Deputy First Minister and Cabinet Secretary for Finance’s budget spin has been “misleading”. Meanwhile, the finance secretary told me in this very chamber on 1 November 2023 that the Government took advice from civil servants

“in the normal manner”—[Official Report, 1 November 2023; 21.]

regarding the council tax freeze announcement at the Scottish National Party conference. It has subsequently been revealed by The Daily Record that civil servants were, in fact, given just seven hours’ notice.

Does the minister agree with the comments that the finance secretary made to me in the chamber in November? If so, how can he stand up with any credibility and say that the decision was made in the “normal” way and expect us to believe it?

Joe FitzPatrick

There are two points there. I need to first unpack the point about the IFS. The Scottish Government brings forward its draft budget in line with the recommendations of this Parliament’s Finance and Public Administration Committee, comparing the draft budget to the draft budget.

On the council tax freeze, Labour members need to put their hands up and tell us what they actually think. The people of Scotland are absolutely clear that, in these difficult times, a council tax freeze is absolutely crucial. The question for Mr Bibby is whether he and his Labour colleagues support a council tax freeze or putting council tax up across Scotland.

I am asking you the question.

Will he back the people of Scotland, or does he want to increase the council tax?

As in the previous portfolio, we will have the questions asked and then answered without the person who has asked a question providing a running commentary.

Budget 2024-25 (Local Authorities)

To ask the Scottish Government what consideration is being given to increasing the funding settlement for local authorities. (S6O-03069)

The Minister for Local Government Empowerment and Planning (Joe FitzPatrick)

Despite a worst-case autumn statement that did not prioritise public services, the budget delivers record funding for local government. We will continue to work with the Convention of Scottish Local Authorities through the Verity house agreement to ensure the sustainability of local services.

We will continue to work with local government throughout the year ahead to ensure that we are able to provide the services that the people of Scotland want and need.

Katy Clark

It is not only the Institute for Fiscal Studies that is challenging the Scottish Government’s figures; COSLA also says that local government is facing a real-terms cut, given significant cuts to both core revenue and capital budgets, and that using reserves is not financially stable. Its figures are confirmed by the Scottish Parliament information centre.

Will the minister revisit the funding settlement?

Joe FitzPatrick

The starting point is to go back to my point that the budget figures that we produce are in line with the requirements of the Finance and Public Administration Committee.

We know that this has been an absolutely disastrous settlement for Scotland from the United Kingdom Government. Instead of backing up the Tories and saying that the Scottish Government needs to find more money from within that limited budget, surely Katy Clark will join the Scottish Government and call on the UK Government to use the spring budget to prioritise public services, to ensure that there is more money for Scotland, including Scottish local services.

We have a number of supplementaries.

Kenneth Gibson (Cunninghame North) (SNP)

Will the minister advise whether any Opposition party has come forward with alternative budget proposals, costed or otherwise, that would increase local authority funding? Given that Labour plans to have a bomb-proof UK manifesto that will mimic the Tories—with whom Labour is already in de facto coalition in Edinburgh, Fife, North and South Lanarkshire, Stirling, and West Lothian—has the minister had any indication whatsoever that a change in UK Government will mean greater resources being made available to the Scottish Government to allocate to our local authorities?

Joe FitzPatrick

On the first point, the Deputy First Minister has confirmed to me that there have been no suggestions from the Labour Party about how the Scottish Government could further increase the share of resource that is going to local government this year. There has been absolutely nothing.

On the wider point, Mr Gibson makes a very strong point. The Deputy First Minister met the Chief Secretary to the Treasury two weeks ago and made it clear that the UK Government needs to prioritise investment in public services over tax cuts in the forthcoming UK spring budget. Surely it is not unreasonable to expect support from not only those on the benches behind us but colleagues right across the chamber in calling for more spending for public services rather than tax cuts for the rich.

Liz Smith (Mid Scotland and Fife) (Con)

In its budget briefing yesterday, COSLA complained bitterly that the multiyear funding settlement, as set out in the Scottish Government’s medium-term financial strategy, has not yet been delivered. When will it be?

Joe FitzPatrick

I think that everyone knows that multiyear settlements would be better. However, given the massive uncertainty that we have in relation to the funding that this Parliament and this Government get from the UK Government, it would be disingenuous to give further multiyear settlements that are built on sand.

Budget 2024-25 (Inverclyde Council)

To ask the Scottish Government what dialogue it has had with Inverclyde Council regarding the Scottish budget for 2024-25. (S6O-03063)

The Minister for Local Government Empowerment and Planning (Joe FitzPatrick)

Scottish Government ministers and officials meet regularly with the Convention of Scottish Local Authorities and individual local authorities to discuss a range of issues. The Scottish Government has had extensive engagement with COSLA on behalf of all 32 local authorities in regard to the 2024-25 local government finance settlement.

Stuart McMillan

The minister will be aware of the social and economic challenges that those in my constituency face. I will always advocate for more money to go to Inverclyde Council, as I recognise the consequence of the COSLA-agreed funding formula, which only exacerbates our issues with population decline and deprivation, as it is heavily weighted towards an area’s population level. Can the minister indicate whether there is any scope for additional resource to go to Inverclyde Council? It is receiving a 4.8 per cent budget increase, which is lower than those of most other affluent council areas in Scotland, due to the aforementioned COSLA funding formula.

Joe FitzPatrick

Stuart McMillan is a strong advocate for his constituency, but it is important to acknowledge the role that deprivation plays in the funding formula and to recognise that Inverclyde Council continues to receive funding that is equivalent to £159 per head, which is 6.2 per cent more than the Scottish average and is equivalent to £12.3 million more overall than it would receive if funded at the Scottish average.

The Scottish Government remains committed to strengthening the Inverclyde economy, and it is considering investment proposals from the Inverclyde task force with that aim. The Minister for Small Business, Innovation, Tourism and Trade is due to attend the next task force meeting, on 20 February. As the member mentioned, the wider formula for distribution is a matter for COSLA. The Scottish Government is always keen to hear suggestions on that, but any action has to be taken in collaboration with COSLA.

National Care Service (Cost)

3. Sandesh Gulhane (Glasgow) (Con)

To ask the Scottish Government what analysis it has made of the potential impact on its medium-term financial strategy and future Scottish budgets of reports that the cost of a national care service could rise to £2 billion. (S6O-03064)

The Deputy First Minister and Cabinet Secretary for Finance (Shona Robison)

Our medium-term financial strategy will be updated later this year, and the medium-term financial framework for health and social care will be published this spring.

The cost of the national care service is continually reviewed, as is demonstrated by the recent update on the National Care Service (Scotland) Bill that was provided to the Finance and Public Administration Committee.

The £2 billion is quoted as a cost forecast for the bill, as introduced, over 10 years, and it does not reflect the proposed Government amendments for a new shared-accountability approach to delivery, so the figures that are quoted are therefore outdated. The update clearly sets out that, should Parliament accept the amendments at stage 2, the costs of implementing the national care service will reduce substantially to between £238 million and £345 million over 10 years. Finally, the bill also includes a commitment to breaks for carers, the cost of which would be between £393 million and £571 million over 10 years.

Sandesh Gulhane

I declare my interest as a practising NHS general practitioner.

I am glad that someone is getting an update, because the Health, Social Care and Sport Committee certainly is not. The Finance and Public Administration Committee is unhappy with the financial memorandum for the National Care Service (Scotland) Bill, and it is still scrutinising it. Given that the start date for the bill is many years in the future, how can we be confident that the money allocated will be enough? The Government does not even know the number of additional staff that will be needed to deliver the service on the ground. Given the Scottish National Party’s appalling record on public projects—notably the disastrous Edinburgh tram scheme—[Interruption.]

The Deputy Presiding Officer

Dr Gulhane, please resume your seat. As I have said on three occasions, could members please listen to the questions and the responses to them as respectfully as possible? Please complete your question, Dr Gulhane.

Sandesh Gulhane

It is incredible that John Swinney was laughing, after what was said about him.

Given the Scottish National Party’s appalling record on public projects—notably the disastrous Edinburgh tram scheme—will the cabinet secretary guarantee that the £2 billion cost, which is already £1 billion higher than it was previously, will not rise further? Or will it be another case of vastly escalated costs that are based purely on pursuing SNP dogma—

Thank you. Deputy First Minister.

Shona Robison

On infrastructure projects, of course, it was the Tories who voted for the Edinburgh tram system. I do not think that a Tory has any grounds to criticise—I could talk about HS2 and aircraft carriers. Sandesh Gulhane should have a little bit more humility when it comes to his Government’s infrastructure projects.

He also clearly did not listen to my answer when I said that the £2 billion is not the plan. I gave the revised figures clearly in my answer. Sandesh Gulhane should really update his knowledge of the position. His wilful misunderstanding of the costs of the national care service is a bit like his unedifying wilful misunderstanding of the public health evidence on minimum unit pricing. Perhaps he should go away and do his homework.

Michael Marra (North East Scotland) (Lab)

The Finance and Public Administration Committee has heard worrying and, at times, deeply confused evidence from the minister and officials suggesting that the cost of the original proposals, as introduced to Parliament and on which Parliament will be asked to vote at stage 1, could have been as much as £3.9 billion. Is it not the case that the Government has lost control of this flagship bill, which now amounts to little more than expensive bureaucracy? Can the Deputy First Minister confirm that the legislation will not lead to a single extra care worker being recruited or put a penny more in care workers’ pockets?

Shona Robison

We are putting money in care workers’ pockets through our commitment to the delivery of £12 an hour in the next financial year.

Michael Marra might not remember that the national care service used to be a Labour Party policy, but that party has now shifted on it for reasons that I do not quite understand.

I set out the figures very clearly in my initial answer. If they are accepted at stage 2, the cost of implementing the national care service will reduce to between £238 million and £345 million over 10 years. That is very clear, and I hope that the Labour Party will support it.

Cost of Living Support (Engagement with United Kingdom Government)

To ask the Scottish Government what its latest engagement has been with the UK Government regarding cost of living support. (S6O-03065)

The Deputy First Minister and Cabinet Secretary for Finance (Shona Robison)

I met the Chief Secretary to the Treasury two weeks ago and raised the continuing need to support people with the cost of living. I made it clear that the United Kingdom Government should prioritise investment in public services over tax cuts in the forthcoming UK spring budget. I again pressed the UK Government to introduce an essentials guarantee to ensure that universal credit enables households to cover the cost of essentials such as food and utilities.

Since 2022-23, the Scottish Government continues to allocate around £3 billion a year to policies that tackle poverty and protect people as far as possible during the on-going cost of living crisis.

Clare Haughey

As the cabinet secretary outlined in her answer, the Scottish Government is doing all that it can, with its limited powers and fixed budget, to improve living standards and address the cost of living crisis, including through the Scottish child payment, capping in-tenancy rent increases and freezing council tax.

However, Westminster is failing to act in the areas for which it has responsibility, including energy costs and spiralling mortgage bills. Does the cabinet secretary agree that the UK Government should have introduced a £400 energy bill support scheme to help households during the winter months, that it should have set up a social tariff to help more vulnerable customers, and that it should look to introduce mortgage interest relief to help home owners?

Shona Robison

As Clare Haughey rightly pointed out, the Scottish Government cannot mitigate everything that is connected with UK austerity. Many of the tools to tackle the cost of living crisis rest with the UK Government. I called on the Chancellor of the Exchequer to reinstate the £400 energy bill support scheme in last year’s UK autumn statement. I also called for a social tariff scheme that would provide a much-needed safety net for priority consumers, and we continue to press for that. The chancellor chose to ignore those calls, and prioritised tax cuts over public services. The UK spring budget is an opportunity for the UK Government to change course and support people with the cost of living.

Daniel Johnson (Edinburgh Southern) (Lab)

On the topic of utility bills, water bills are going up by 8 per cent, despite Scottish Water’s reserves now sitting at almost £2 billion. How is that justified, given that Scottish Water could clearly absorb or defer that increase?

Shona Robison

Over the years, Scottish Water has made sure that customers in Scotland have paid significantly less than customers south of the border. However, the investment plans that Scottish Water has are important because people want to make sure that the investment in infrastructure across Scotland is fit for purpose. Scottish Water’s infrastructure plans are contingent on its being able to raise the revenue that is necessary to make those investments.

Budget 2024-25 (Mid Scotland and Fife Local Services)

To ask the Scottish Government how its budget for 2024-25 will support the delivery of local services in the Mid Scotland and Fife region. (S6O-03066)

The Deputy First Minister and Cabinet Secretary for Finance (Shona Robison)

The budget delivers an additional £795.7 million of funding for all local authorities, including those in Mid Scotland and Fife. That is equivalent to a 6 per cent cash increase. The budget also baselines almost £1 billion of funding, prior to agreement on an assurance and accountability framework, to offer councils greater flexibility on how services are delivered.

Murdo Fraser

The Scottish Government’s budget for the coming year is up in cash and real terms compared with the current year, but it delivers savage cuts to local services. According to the Convention of Scottish Local Authorities, councils face a cut in core revenue of £62.7 million, compared with the current year.

In my region, Perth and Kinross Council is closing public toilets, restricting access—[Interruption.]

Mr Gibson. [Interruption.] Mr Gibson!

Murdo Fraser

In my region, Perth and Kinross Council is closing public toilets and restricting the opening hours of recycling centres, and there is a real prospect of Perth ice rink, the leisure pool and local sports centres being closed and not replaced. Who should residents in Perth and Kinross blame for those cuts in services—the Scottish National Party-run council or the SNP-run Scottish Government?

Shona Robison

I remind Murdo Fraser that the Tory-controlled United Kingdom Government did not give a penny for local government in the consequentials for 2024-25. It provided lots for business tax cuts, but not a single penny for local government.

If Murdo Fraser thinks that funding for local government is the overriding priority, why does he not have a word with the UK Tory Chancellor of the Exchequer to make sure that, in the spring budget on 6 March, we get more money for local government? That is where the issue begins.

I want to correct Murdo Fraser on the funding that is available to local government, which has increased by 6 per cent in cash terms and 4.3 per cent in real terms, taking into account the £144 million that is being provided to support the council tax freeze. In difficult circumstances, that is a fair deal—[Interruption.]

Mr Fraser, I encourage you not to follow the lead of Mr Gibson in shouting from a sedentary position.

Willie Rennie (North East Fife) (LD)

The leader of Fife Council, David Ross, has written to the First Minister to warn that Fife is teetering on the edge of a housing emergency. He has pointed out that the capital funding for the affordable housing budget has been reduced by 26 per cent, which, he says, is making the situation a whole lot worse. He wants the cabinet secretary to explain why that budget has been cut by 26 per cent when the overall capital budget has been cut by only 4.3 per cent.

Shona Robison

The capital budget is being cut by 10 per cent over the next few years. That amounts to a cut of £1.6 billion over this parliamentary session, which is a huge reduction in our capital availability. I put that matter centre stage at the meeting with the Chief Secretary to the Treasury.

Infrastructure investment is important, and that includes investment in affordable housing. As I made clear when I gave evidence to the Finance and Public Administration Committee, should the position as regards capital availability improve in the spring budget on 6 March, my overriding priority will be to improve the position of the affordable housing supply programme. However, I cannot confirm that until I know whether the spring budget on 6 March will bring an improved position on capital and resource spending or a negative position on capital and resource spending. I need to know that before I can make the decision.

Budget 2024-25 (Public Service Reform)

6. Ivan McKee (Glasgow Provan) (SNP)

To ask the Scottish Government what assessment it has made of how much money it expects to be able to reallocate from back-office costs to front-line services in the Scottish budget, as a result of its work on public service reform. (S6O-03067)

The Deputy First Minister and Cabinet Secretary for Finance (Shona Robison)

I set out a programme of actions alongside the budget in December to do just that. The budget provides envelopes within which we expect our public services to operate over the coming years, and we expect our partners across the public sector to shape their services in both the short and longer terms, driving efficiencies into their planning.

Reducing the cost of services is part of that, and we have made it clear that we expect all parts of the Scottish public sector, including the Scottish Government, to explore efficiency measures, including for the workforce, in order to extract maximum value from public spending. Work continues on developing metrics to capture the investment required and the savings generated across the long-term programme of reform.

Ivan McKee

Core Scottish Government running costs are now more than £700 million per year, and that does not include the running costs of 129 agencies and non-departmental public bodies. What is the total running cost of all those bodies, and by how much does the Deputy First Minister expect to be able to reduce those costs through the public sector reform programme?

Shona Robison

Our approach to reform includes testing public bodies on the scope that they each have to work more efficiently and with more impact, and not just alone but across organisations. On the size, function and operating challenges that bodies face, we consider that approach to be more effective than applying a standard running cost savings target to all bodies.

I would say that savings will have to be made—that is a key priority—through implementation of a number of corporate efficiency levers, including the single Scottish estate programme, the commercial value for money programme, national collaborative procurement and intelligent automation. All those aim to reduce costs, increase efficiency and deliver better outcomes.

Brian Whittle (South Scotland) (Con)

The Scottish Government has already hollowed out the backroom staff in public services such as Police Scotland, which means that police officers have to spend more time doing administration than working in their communities. How can the Scottish Government suggest that there are more cuts to be made to back-room staff?

Shona Robison

First of all, Brian Whittle should understand from the budget that, in difficult circumstances, we have prioritised front-line spend, including for police and fire services. He will see that in the budget. The move to the single organisation Police Scotland has enabled a number of reforms and efficiencies; I would be the first to recognise the efficiencies that Police Scotland has made.

In response to Ivan McKee, I say that, across the public sector, there are opportunities for organisations to share services, do things differently and use digital technology to deliver more effective and efficient services. Given the austerity budget that has been provided by the UK Government, those matters become even more important. We will get on with the reform that we need to make.

I always welcome positive suggestions, but they seem to be very few and far between.

United Kingdom Tax Reductions (Impact on Scotland’s Public Finances)

7. Evelyn Tweed (Stirling) (SNP)

To ask the Scottish Government what its response is, regarding any potential impact on Scotland’s public finances, to reports that the Chancellor of the Exchequer is considering reducing taxes in the UK budget in March. (S6O-03068)

The Minister for Community Wealth and Public Finance (Tom Arthur)

The UK Government should use any additional fiscal headroom to support public services, which it has decimated through 14 years of underinvestment. The International Monetary Fund agrees with that position and has advised the UK against further tax cuts, saying that proposed UK spending plans are “unrealistic” and that money should be spent prioritising health and education, for example, and reducing debt.

The Deputy First Minister met the Chief Secretary to the Treasury two weeks ago and made it clear that, instead of tax cuts, the Chancellor of the Exchequer must prioritise investment in public services, infrastructure and support for people in the cost of living crisis.

Evelyn Tweed

Recent UK Government spending decisions have meant that Scotland’s block grant has fallen in real terms by 1.2 per cent since 2022-23. Does the minister agree that the UK Government should use its spring budget to rectify the mistakes of the chancellor’s autumn statement and provide adequate investment in our public services, rather than prioritising tax cuts?

Tom Arthur

Although the UK Government has chosen to prioritise tax cuts at the expense of the national health service and other public services, our values and, therefore, our choices are very different.

Our missions and values are equality, opportunity and community, and the guiding principles of our 2024-25 budget are to protect people, to sustain public services, to support a growing and sustainable economy and to address the climate and nature emergencies. So, yes—we call on the United Kingdom Government to invest in those important areas in the upcoming spring budget, rather than offer more tax cuts.

That concludes portfolio questions. There will be a brief pause before we move on to the next item of business to allow front-bench members to change seats.