Malcolm debates the Scottish Government's Budget proposals
The Scottish Budget Process 2010-11 Malcolm Chisholm (Edinburgh North and Leith) (Lab):
I am interested in the cabinet secretary's argument about social housing. In effect, he said that there is no cut in the social housing budget, because it is the same over three years. Surely if he uses that argument for social housing he must use exactly the same argument for the totality of the budget. He cannot then get away with talking about a real-terms cut.

John Swinney (The Cabinet Secretary for Finance and Sustainable Growth):
There are other decisions that have restricted expenditure, some of which relate to issues that concern members of the Labour Party. I will set out exactly where we have constrained expenditure to meet the constraints of the real-terms cut in public spending that we have described. The argument that I have made on social housing is absolutely valid.

Essentially, the committee's report focuses on whether sufficient priority has been given to economic recovery and whether we have done what is necessary to promote front-line services....

Malcolm Chisholm (Edinburgh North and Leith) (Lab):
I have great respect for the Cabinet Secretary for Finance and Sustainable Growth, but he was talking illogical nonsense in his speech. He said that there had been no real-terms cut in the housing budget because the amount of money was the same over two years, only it was accelerated. However, he went on to stand that argument on its head by saying that there had been a real-terms cut in the overall budget because of that same capital acceleration. The fact is that without reprofiling, there is a 1.3 per cent real-terms increase in the budget for next year. That is not as much as we have been used to, but it is still significant and—unfortunately—better than what we will get in subsequent years.

There are two additional factors that make the budget slightly better, other than that 1.3 per cent increase. First, as the Finance Committee points out on page 8 of its report, end-year flexibility to cover the £128 million reduction in the health capital budget will be added to the budget later on. Secondly, the inflation level is, at 1.5 per cent, less than was anticipated at the start of the spending review, when it was predicted that it would be 2.7 per cent. I accept that that 1.5 per cent does not cover all areas, but it is still better and—as the Finance Committee's convener reminded members—the committee has asked for the Scottish Government to analyse the inflationary pressures that are anticipated in different areas of the budget.

Additional capital acceleration also featured in the cabinet secretary's speech. I will not repeat all the arguments that I and others used in yesterday's debate, although I remind members that I pointed out the rather large list of projects that the anticipated £300 million is going to pay for. I also pointed out that Alex Salmond had a rather different list from John Swinney's.

The more important point in relation to today's debate, however, is that a great deal can be done to support the economy within the budget over which the cabinet secretary has control. At the Finance Committee on Tuesday, the cabinet secretary said that the £300 million that he wanted from capital acceleration would make the difference between growth and recession. If he really believes that, it is quite astonishing that he has not done more in his own budget to support areas that would boost economic recovery. The cabinet secretary says that that is one of the two main objectives of his budget, but it does not seem to be borne out by the evidence in the budget document.

The Finance Committee, on page 12 of its report, states:

"the Centre for Public Policy for Regions stated that the main areas cut in this budget are the capital and revenue areas most usually linked to economic development. While many budget lines contribute to economic activity, none of the budget lines directly related to economic development initiatives have risen compared to the 2010-11 plans set out in Draft Budget 2009-10."

I will make two points about that. First, it is amazing that after this year of economic turmoil, there have been no changes to the economic budget lines. Secondly, the point is made that the cuts are significant. The Finance Committee goes on to point out that, even after accelerated capital is stripped out, there is a real-terms reduction of £16.7 million in the enterprise agencies' budget line. The Scottish Council for Development and Industry's useful submission to the Economy, Energy and Tourism Committee states:

"Every £1 million invested by Scottish Enterprise generates £5 million for the Scottish economy".

The Skills Development Scotland budget is being cut by 4 per cent in real terms, which is a real concern. Labour emphasised modern apprenticeships in the budget last year, and we will do so again this year. There is no budget line for the 7,800 apprenticeship places that we secured last year, and that issue must be addressed before the budget bill reaches its final stages.

I will not talk about GARL, as my colleagues have already done so. I will, however, mention in passing that the tourism budget has been cut by 11.5 per cent. I also remind members of the section that David Whitton quoted from page 44 of the Economy, Energy and Tourism Committee's report, which is in volume 2 of the Finance Committee's report. The EETC says that, based on universal evidence, it does not believe that the proposed budget is the right one for the economic challenges ahead.

The other main objective of the cabinet secretary's budget is protection of front-line services. When the cabinet secretary was asked about that at the Finance Committee's meeting in Glasgow, he said that

"a front-line service is a service that has an impact on the lives of individuals". - [Official Report, Finance Committee, Monday 9 November; c 1661.]

That is a very broad definition, and, even more significantly, it is difficult to ensure that that happens, because of the massive budgets that are handed out to health and education authorities. Such an objective is very difficult to track: the Education, Lifelong Learning and Culture Committee was particularly concerned about that in relation to schools - a good example of an area in which the Scottish Government has no mechanism for protecting budgets. As I said to the Cabinet Secretary for Education and Lifelong Learning, it needs to try to develop such a mechanism very quickly.

Of course, schools are part of local government budgets, and the committee makes several observations about that, mainly pointing out that the headline 3.1 per cent real-terms increase in revenue for local authorities is not all that it seems because of budget transfers. It would be good if that was made more explicit in the budget documents.

I am running out of time, but I want to comment on two other sections. On strategic budget issues, the committee makes many recommendations, including that the Government should prioritise its capital budgets. I support that. Finally, in the section on development of budgetary information, the committee says, among other things, that there should be a greater connection between outcomes and budgetary choices. That is true across a range of areas, but I highlight my particular concern about the 2012 homelessness target. The budget must be focused on delivering that outcome. Let us look at the housing budget and its distribution, particularly because Edinburgh has the greatest shortage of social rented housing.
December 17th 2009, (Column 22261-2, 22275-7)