Malcolm argues for prioritising, fairness, health and education when making cuts
Debate on the Independent Budget Review Malcolm Chisholm (Edinburgh North and Leith) (Lab):
I apologise for being unable to be present for the start of the debate this morning. I welcome the report for spelling out the scale of the problem that we face and for presenting some of the options that are before us.

I will not spend too long on the background to the report.

I hope that members of other parties will note the analysis on page 22, which reminds us of the worldwide recession that began in the US and points out that the deficits that were built up in a range of countries were due to fiscal stimulus, higher social payments and falling tax revenues. It also reminds us that the UK entered the recession with a low level of public debt, and I hope that the Conservatives in particular will take note of that comment.

The report does not express a view on the actions of the UK Government, but it would be right to do so briefly, as they are relevant to the underlying situation. The cuts from the Westminster Government are coming far too fast and they go far too far. The International Monetary Fund has joined many economists in criticising the self-defeating nature of the cuts, which are already leading to lower levels of growth.

I will not concentrate on the cuts that have already taken place under the present Scottish Government during the good times - although I am sure that we will hear a lot about those in the weeks to come. Instead, I will focus on the future, in particular on the alarming table on page 27 of the report, which encapsulates the particular problem that we face, as the cash cuts going into next year are 1.2 billion. That figure is bigger, in cash terms, than the total cash cut over the next four years. We have a particular problem there, and it is regrettable that the Scottish Government has failed to bring forward any proposals to deal with it. It is disappointing that the report does not include costed options to deal with that immediate problem. Where there are costings, in table 5.2 on page 101, for example, there is a lack of clarity and transparency in what is being presented. There are options, for example, for concessionary travel - a matter that I raised at the Finance Committee - but they are not very helpful.

There is a further serious problem with the report, as it does not analyse the budget in terms of fairness and equality - that was another point that I raised with the budget advisers at the Finance Committee on Tuesday.

We know what a serious problem we have at UK level, not just with the level of cuts but with how they are being dealt with, with particular discrimination against the low paid and women. As for the Scottish budget, we have no analysis that would allow us to take those matters into account. There are some further equality dimensions concerning younger people, older people and the other equality groups. We urgently need the Government to do some work on that.

Pay is central to all this. We have to make decisions on pay, taking account of the fairness principle. I hope we all agree that the low paid have to get some preferential treatment. It is quite mistaken, however, to think that pay in itself can deal with our problems. Option 3 on pay, as it is presented in the report, is to me the most drastic and unpalatable option. It basically suggests that everybody should get paid the same next year as this year, and it would result in no cash savings whatever. Even if the draconian pay option was taken, we would still have to find 1.2 billion of cash cuts for next year. The fact is that we have to make unpalatable choices, and I suggest that the ending of the council tax freeze has to be one of them. I do not make that suggestion with any pleasure, but it seems unavoidable, although nobody, at this time of increasing taxes, would want the council tax to go up by an excessive amount.

In this situation, we need to decide what our priorities are and ensure that we have mechanisms for delivering them. I would make school budgets a priority, but the Cabinet Secretary for Education and Lifelong Learning, who is sitting not far from me, has abolished all the mechanisms for ensuring that school budgets are priorities. That is now left entirely to local authorities.

It is possible to protect health. Having always championed health, I will not stop doing so now. It is self-evident that health does not equal the NHS, as Jackie Baillie and other members have reminded us.

There are particularly steep drops next year in capital budgets - in fact, about half of the cash cut is in capital budgets. There, too, we have to choose. I would make housing my number 1 priority, particularly given the imminence of the 2012 homelessness commitment. That is the kind of choice that we have to make - we have to decide what we have to prioritise, and we have to make unpalatable choices. That is what people find particularly difficult.

There is an urgent need for the Government to produce costed options to deal with the 1.2 billion cash cut that we face next year. It would be ideal if it made its own proposals, but even providing a menu of costed options would help the debate because, at the moment, much of it takes place in the dark.

We urgently need to start a real discussion about next year's budget that transcends political positioning and knee-jerk responses to any proposal that is made. In that context I was disappointed that Nicola Sturgeon latched on to something that Iain Gray said on "Newsnight". He used, I think, exactly the same words as the Cabinet Secretary for Finance and Sustainable Growth, but she immediately tried to make a party-political point about it. We really must try to suspend such activity for a week or two, although I realise that that is unlikely to happen.....

.....Malcolm Chisholm (Edinburgh North and Leith) (Lab):
I raised the issue in my speech, too, but the cabinet secretary was not in the chamber when I spoke. Given that the biggest cash cut will take place next year, will he tell us any of the costed options that will help next year's budget? I said in my speech that even if the Government goes with the draconian option 3 for pay, which involves paying everybody the same next year as they are paid this year, no cash will be saved. Where are the options to save cash for 2011-12?

John Swinney (The Cabinet Secretary for Finance and Sustainable Growth)
: A range of options is in the independent budget review. One option, which Wendy Alexander just mentioned, is efficiency savings. The review said that we should go for a 2 per cent target as a minimum. Achieving a 2 per cent target would generate in the order of 500 million in efficiency savings. That is a costed option and I produced that while standing here, without thinking terribly much about it. That type of choice exists. It does not need me to do such a sum for the Opposition - the calculation is elementary. Loads of more sophisticated calculations are in the independent budget review document.
September 9th 2010, (Column 28464-66, 28482)