Malcolm calls for honesty in facing up to the challenges of the next ten years
Finance and Sustainable Growth: Strategic Budget Scrutiny Malcolm Chisholm (Edinburgh North and Leith) (Lab):
This is certainly the most important debate that we have had for some time, because the Finance Committee's report is on the key issue that we will have to address not only in the coming parliamentary session but in the coming decade. When I read the report yesterday, I was certainly impressed by the way that it cut through conflicting analyses of the financial situation to arrive at a very balanced view. It also made the important recommendation that a challenge function should be established in the Scottish Government. Even when we were in government, I found it unsatisfactory that a finance minister should have had such a large portfolio.

The various conflicting analyses have been aired again this afternoon. Perhaps Labour and the SNP can come to an informal deal on this issue with the acceptance that there has been a significant reduction in the amount of money that was previously announced. We can continue to debate whether the reduction is 500 million or 380 million, but the fact is that the money is less. Equally, however, there will still be real-terms growth in next year's Scottish budget.

It is nonsense to say that capital expenditure that has been brought forward somehow represents a cut. We must accept the reality of the situation, which is that, as the Scottish Government's director of finance said, there will be real-terms growth of 1.3 per cent. After that, we will, of course, have political arguments about the amount of money that we will receive, but the Parliament needs to concentrate on the more important question of how we make best use of it.

First, I want to consider the political context of this issue. The SNP keeps going on about what it calls cuts from the Westminster Government, but it absolutely supported the fiscal stimulus that that Government introduced. From today's reports and from figures that have been issued over the past week or two, we can see that that policy has been very successful. Given that the SNP accepted it, it has to accept its consequences, particularly the repayment of debt.

The Conservatives are in a different position, because they did not support the stimulus. However, if we had followed their advice, we would be in a far worse economic and financial situation. They also go on about overall levels of debt but, as I have said before in the chamber, debt as a percentage of GDP was less in every year between 1998 and 2008 than it was in 1997 when Labour came to power. Debt has increased only as a result of the fiscal stimulus and the effects of recession over the past few months.

Derek Brownlee:
In that case, why is it that between 1997 and 2008, before there was any sign of a recession and before the banks got into trouble, national debt doubled?

Malcolm Chisholm:
I think that I already answered that question when I said that debt was less in every one of those Labour years than it was in 1997 when the Conservatives gave up government.

That political argument goes on. However, in this Parliament, we must focus on how to make best use of the money that we have. We know for definite only about next year's budget and that thereafter any increase will not be as large as 1.3 per cent. Things will get more difficult, but some of that will depend on whether there is a Labour or Conservative Government at Westminster in 2010.

We clearly need an honest and clear view of the various options that confront the Parliament. We will probably have to think some thoughts that we have never had to think over the past 10 years; and we must take another look at the council tax freeze, certain universal benefits such as free prescription charges and many other aspects. I realise that, every time such an example is brought up, it produces great antibodies both in us and in the general population, but the fact is that we will have to look at options that have not been on the table before. That is the challenge to which we must rise in the next year.

Let us remember that, next year, there will still be a real-terms increase in the budget. If the SNP will remember that, I am prepared to accept that of course there is less money than was originally announced.

September 10th 2009, (Column 19552-54)