Seòmar agus comataidhean

I will take one more intervention.

I will in a minute.

Shona Robison has finally admitted that the council tax freeze will not be fully funded. The letter that councils received yesterday from the Deputy First Minister makes that very clear. That has been an issue for this budget.

I give way to the Deputy First Minister to tell us why she did not say anything about that at stage 2.

On Tuesday next week, the Parliament will hold its stage 3 debate on the Budget (Scotland) (No 3) Bill. I am sure that the debate will be just as robust as it was at stage 1 and just as robust as the questions were from all members of the Finance and Public Administration Committee at stage 2 consideration earlier this week. Today, however, is about standing orders procedure, which states that a rates resolution must be agreed ahead of the stage 3 process.

I want to use today’s debate not just to respond to some of the issues—it is already very clear why the Scottish Conservatives are so concerned about the Scottish Government’s current tax policy, which we believe echoes the concerns of many sectors across the country—but to consider some of the inherent difficulties in the budget process, which are difficulties not only for MSPs who have been engaged in the scrutiny of the budget, but for local government.

Back in October, we learned from the First Minister that there was to be a council tax freeze, even though such a move is under the remit of local authorities rather than for the First Minister to decide. It was abundantly clear that there was no consultation about that—in fact, allegedly, some members of the Cabinet did not even know about it. Local authorities certainly did not know about it. At a time when they were starting to plan ahead for their budgets, they had no idea whether the council tax freeze was to be fully funded. In the budget statement on 19 December, the Deputy First Minister said:

“the Government will fully fund the council tax freeze.”—[Official Report, 19 December 2023; c 11.]

However, the accompanying arithmetic made it abundantly clear that that was not the case, which is probably why Argyll and Bute Council has just voted to increase its council tax by 10 per cent.

Will the minister give way?

Can the Scottish Government tell the chamber what analysis it has done of comments by the business community, most especially people such as Sandy Begbie, who put on record last weekend that Scotland is becoming a “dangerous place” in which to create wealth?

What concerns us is the fact that the business community and those who are most likely to be in a position to stimulate economic growth are deeply concerned about the extent of the problems in this Government’s budget. Those problems relate not only to raising tax, but to the differentials between Scotland and the rest of the UK. Does Mr Greer accept that there is deep-seated concern in the business community?

What Liz Smith thinks and what councils think is that the decisions that have been made by the Scottish Government completely undermine the Verity house agreement and the ability of the Scottish Parliament to improve financial scrutiny of the budget. That is the issue for this particular rates resolution.

There have been other significant scrutiny issues during the budget process. During stage 2, the convener of the Finance and Public Administration Committee put on record concerns about potential behavioural changes following the tax changes. The minister has just said that the Government will keep a watching brief on that. The problem is that that watching brief will take place after the changes have been made, so the modelling—which I do not think the Scottish Government has actually done—is no more extensive than some of the recommendations that have been made by the Scottish Fiscal Commission. We do not know what the modelling process is.

It is exactly the same for the proposed surtax on business rates. I come back to the stage 2 discussions, during which the cabinet secretary said that there had been no discussion about that as yet, because the evidence had not been put before her. I do not understand how that can become a proposal if there is no evidence and the modelling has not taken place. That is a serious issue for the Parliament when it comes to the budget, because we must engage in the proper scrutiny process, and the rates resolution should reflect that.

As we know, it is clear that businesses in Scotland are extremely worried about the effect of the budget, of which there has been universal criticism. When I asked the cabinet secretary to name those sectors that supported the Government’s income tax changes, she could not provide me with any names, which is pretty telling.

Such scrutiny matters a lot. The Finance and Public Administration Committee fully accepted that the Scottish Government faces difficulties in light of the timing of the Chancellor of the Exchequer’s spring budget. However, in paragraph 142 of its “Budget Scrutiny 2024-25” report, the committee noted that the Scottish Government has so far failed to produce a full response to the Scottish Fiscal Commission’s fiscal sustainability report, which flags up the large, persistent black hole in the Scottish Government’s finances. In recent weeks, the Parliament has witnessed a great deal of discussion about that, and I am sure that we will come to that again at stage 3 of the budget bill.

On Tuesday, we will, I am sure, yet again debate our very different party-political approaches to the budget, but what really matters for the rates resolution is the Parliament’s ability to scrutinise what is behind the Scottish Government’s decisions. As Conservatives, we will not be the only people to express our deep-seated concerns about that.

To ask the Scottish Government whether it has conducted an analysis of the potential impact that its 2024-25 budget will have on primary care services. (S6O-03080)

Stage 1 of any budget process is obviously about political parties setting out their alternative choices for tax and spend, and I will come to that in just a minute.

I begin by acknowledging that the backdrop to this budget is exceptionally challenging. Global inflationary effects remain, with resulting impacts on supply chains and energy costs; labour markets are still unsettled following Covid and Brexit; and, as I said in last week’s budget debate, the cuts to the Scottish Government’s capital budget have been an issue, which has just been referenced by Kenny Gibson and was referenced by several key witnesses, including Professor David Bell, at the Finance and Public Administration Committee. There is no doubt about that, and I hope that that issue can be addressed by the chancellor in due course.

The Scottish Fiscal Commission has set out its usual, very objective analysis. It is more optimistic about earnings growth and short-run tax revenue income, which has been backed up by several other independent analysts, but it is still deeply concerned about the extent of the fiscal deficit and the potential for it to grow in the years ahead, given the commitments that the Scottish Government has made to increase health and social care and social security spending.

The SFC is also concerned about the fact that the Scottish economy has, for many years, been underperforming when it comes to economic growth. We know that, if the Scottish economy had grown at the same rate as the UK economy since 2017, we would have had around £6 billion more to spend. That might be just one reason why Audit Scotland has today criticised the Scottish Government for its lack of leadership, which rather undermines the Government’s assertion that everything wrong with the Scottish economy is the fault of Westminster.

I will not just now.

If the statistics are not stark enough, the reaction to the Scottish Government’s budget has also been bad. Indeed, I do not think that I have ever seen a worse reaction to a budget, such is the near-universal—and almost daily—condemnation from a vast array of stakeholders, including some of the SNP’s own back benchers. I am not sure whether they are all here today. Presumably, they are now wondering whether they should support the budget.

As Kenny Gibson rightly pointed out, the Finance and Public Administration Committee has had considerable concerns about the fiscal situation.