The Scottish Government

2004 Budget statement

Full text of statement to Parliament by Finance Minister Andy Kerr.

News summary

Today I will set out our budget plans for this and future generations.

Plans to reignite Scotland's enterprise culture and to increase our competitiveness.

To provide new and better opportunities for our young people, to achieve their ambitions.

Building a Better Scotland
Spending Proposals 2005-2008
Enterprise, Opportunity, Fairness

A Budget to promote good health and tackle ill health.

A Budget that by 2008, will see additional growth of more than 5% a year in frontline services.

This is a budget for enterprise, opportunity and fairness.

A Budget that locks in sound financial management for the longer term.

In our 2002 Budget we set out, step by step, what we wanted to achieve and how we would tackle the barriers that stood in our way. Barriers to economic progress, to educational achievement, to involving everyone in realising their ambitions.

We have made a difference.

· 150,000 Scottish children lifted out of child poverty since 1999;

· We have reduced mortality rates for cancer by 4%, stroke by 14% and coronary heart disease by 21%;

· The highest clear-up rates for crime since World War Two;

· Educational attainment rising with 10% more pupils now gaining at least 5 good Standard Grade equivalents;

· Over 50,000 older people benefiting from the introduction of free personal and nursing care;

· And nearly 100,000 more people in work than in 1999

Devolution, working for Scotland.

But we need to do more. We need to make better use of our resources. We need to drive harder and faster for economic growth, for achievement in education and science, for faster and better health care and for safer communities.

The level of extra investment I am announcing today is made possible by the sound economic management of the the UK economy by the UK government.

Our partnership with the United Kingdom guarantees Scotland a fair share of this success and the resources it generates.

In total, this budget will see our spending rise from £25 billion this year to £30 billion in 2007-08. This is an annual average increase of 3.6%, after adjusting for inflation.

Presiding Officer, in every speech I have made as Finance Minister in this Parliament, I have said that the money we spend is the people's money. Money raised from hard working families and from business. And just as they do every day, we too make sure that we get a pound's worth of value from every pound we spend. And because it is their money, we need to be fully accountable for the spending choices we make.

PRODUCTIVITY AND EFFICIENCY

In June, I said that we would set out a three year plan to increase productivity and attack waste and bureaucracy in Scotland's public sector. I promised these plans would deliver savings of £500 million from the financial year 2007-8 rising to £1 billion by 2010.

Some mocked our intention. Called it bluff and spin. Said we would never deliver.

Presiding Officer, I have to tell the Chamber today that we have not found £500 million of savings.

In the plan I will publish shortly, we have in fact secured annual efficiency savings rising to at least £650 million by 2007/08 - nearly a third higher than the target I set in June. Efficiency savings made from doing the job better, quicker and smarter. Savings made for a purpose. To channel directly into the frontline - to the people, the places and the services that matter.

And we have set ourselves, as a Government, the challenge of leading the way. So today I can announce that the amount we spend on running the Scottish Executive will be held flat in real terms over the period to 2008. Spending less on administration and more on delivering the services people want.

Building a Better Scotland
Spending Proposals 2005-2008
Enterprise, Opportunity, Fairness

And in this Budget I can confirm that we will continue to support the achievements of the past 5 years.

But we have gone further, building on achievement and investing for the future.

HIGHER AND FURTHER EDUCATION

We know that economic growth is central to achieving the ambitions for Scotland.

Scotland's universities and colleges are world renowned. In science and research. New technologies and innovation.

But we compete in a fast changing and competitive global marketplace. And that marketplace dictates that to succeed, you have to keep investing in the future, keep innovating and keep growing.

So investing in our higher and further education sectors is the foundation on which we build for the next generation. In this Budget, we have prioritised their needs. And we will deliver a four-fold increase in capital investment in our colleges and universities. Investing in better facilities, new equipment, and the benefits brought by new technology.

And we will also invest to retain, attract and reward the best university staff, improve the transfer of new knowledge between academia and business, and to invest in research excellence.

This step change will take our support to over £1 billion, for the first time ever.

This is not just money for staff or bricks and mortar. This is investment in the talents and the abilities of our young people. Investment to produce the next generation of Scottish entrepreneurs, scientists, engineers and inventors.

We will invest in knowledge and ideas. In research and development. But our businesses need to do this too.

So we will ask business for their views on the options to use business rates to further incentivise company driven growth and productivity.

TOURISM

Tourism is vital to our economy, and marketing is central to making Scotland an attractive tourist destination.

We announced record investment in Scottish tourism earlier this year and today I can announce that we will extend that commitment by maintaining our increased investment in tourism marketing. Taking our investment in marketing Scotland to twice that spent promoting England.

We need to have investment to compete successfully for visitors, but we also need investment in the tourism product too. So we will support the 2007 Year of Highland Culture and bring benefits to the Highlands and to Scottish tourism for years to come.

Our support through the Air Route Development Fund has increased the number of direct flights to Europe, the Middle East and North America .

Today I can announce that we will capitalise on that success. In this Budget we will double our investment in Air Route Development - bringing the world closer to Scotland and strengthening Scotland as a key player in tourism and business location.

TRANSPORT AND RATES

The Government's job is to set the right climate for business. Part of that is keeping the costs on businesses to a minimum. So I am pleased to confirm today that we will continue to meet our commitment to increase non-domestic rates by no more than the rate of inflation.

Since devolution, business has consistently told us that the most important challenge for Scotland in encouraging economic growth is improving our transport infrastructure. We have delivered over 500 separate public transport measures - new trains, new stations, new rail links and new ferries.

Next year for the first time we will be spending over £1 billion on transport. But now is the time to go further.

In this Spending Review, we will increase our investment to £1.4 billion by 2007-8. Taking the next significant step in delivering our 10 year transport plan. New Rail Links for Glasgow and Edinburgh Airports, new rail lines for Larkhall/Milngavie and Stirling, Alloa and Kincardine, and much more. Implementing the biggest transport investment programme for a generation.

Devolution making a difference.

Over the five years since Devolution we have, step by step, started to put right the damage left by decades of underinvestment. Building new schools, hospitals, health centres and homes.

But there is much more to do. Our horizons are longer than the electoral cycle. Our commitment to building Scotland's future is for the long term. That is why in June I announced a new net investment rule - a golden rule - to increase net capital investment by at least 5% per annum.

Presiding Officer, I am pleased to say that as a result of our decisions, net investment will increase from £2.3 billion now to £3.2 billion in 2007-08. Going beyond the requirements of the net investment rule in each and every year. An increase of almost 40% over the life of this budget. Investing in schools, homes and hospitals for the next generation.

SCOTLAND'S CHILDREN

We will not build a more prosperous and more productive Scotland unless everyone can take full advantage of the opportunities available and play a full part.

So, this is a Budget for Scotland's children too - investing in the potential of each and every child. Investing in our nation's future.

Today Scotland's 3 and 4 year olds enjoy universal access to early years' education - getting the foundations of their learning right.

Today, Scotland's children have access to vastly expanded childcare and parents have opportunities to work knowing that their child is well looked after.

Today, Scotland's children have more support for their learning - extra teachers and classroom assistants making the difference for individual children.

Today, Scotland's children are achieving more at school and attainment across the board is rising.

Today, those Scottish children most in need are getting help through the family centres and the services we fund.

But, Presiding Officer, although we have done a great deal, our ambitions for Scotland's children demand that we do even more.

As a result of this budget, we will ensure they are even better supported next year and each year thereafter.

Scotland's children of tomorrow will benefit from even lower class sizes, better-rewarded and better trained teachers. 53,000 teachers - one for every 18 Scots between the ages of 3 and 18. Teachers for physical education, for music and drama and to support those with additional needs - teachers to enrich school life and remove barriers to learning.

Over the next 3 years, 150,000 more Scottish pupils will learn in brand new or substantially refurbished schools. Making a real difference to their learning.

Now it's time for new resources to reach further down the age range and provide extra support for those who need it most.

Presiding Officer, there are many people in Scotland who, day after day, give their time and their energy to caring for others. And amongst them there is one special group of people who care for our young people as forster parents. Many of them caring for young people in their teens - a time which can be difficult for any young person. They deserve our support too. We will increase the allowances for these foster carers. Recognising their hard work and increasing the number who care for those who are too often, the most vulnerable of our young people.

Taken together, all of this represents a major investment in our children and the Minister for Education will announce his plans, and the targets he will meet, in the coming weeks.

SAFER COMMUNITIES

Presiding Officer, we are succeeding in the fight against crime. Since 1999, the crime rate has fallen by 5%, but we need to drive it down further.

So, we will maintain record numbers of police officers, returning more of them to the front line and step up our focus on serious and organised crime.

But, detecting, catching and prosecuting criminals is not enough if we don't stop them offending time after time. So, this budget will provide the resources to tackle Scotland's unacceptably high level of re-offending.

A stronger safer Scotland for all.

LOCAL GOVERNMENT

Local Authorities are vital partners in Scotland's public sector. Partners in delivering public services. Partners in increasing productivity. They asked us to ensure that we fully funded any new commitments we want them to deliver in this budget. I can confirm that we have done so.

They asked us to make an allowance in their budgets for pay and price inflation. And I can confirm that we have made such an allowance. They asked us to confirm that all our existing initiatives are fully funded in their baseline budget. And I can again confirm that we have done so.

In total, we will be increasing total revenue support to local authorities by 9.7% to 2008.

And in addition, we will continue to fund the Quality of Life initiative which has made a difference in communities across Scotland, and the Cities Growth Fund which is contributing to the transformation of our cities.

Presiding Officer

This Government is ambitious for Scotland.

Across the world, Scotland is viewed with warmth and with respect. But too much of that is respect for our past. It is time for us to lead the way in promoting Scotland as she is today - a modern, vibrant country with world class universities, exciting cities and a quality of life second to none.

A country to visit, to work in, to do business with - and a great place to live.

So we will welcome fresh talent to our shores. But our Fresh Talent initiative is about much more than population.

It is about our ambitions for our future - and our pride in our country.

So we will invest £4 million each year to work alongside the public and private sector in promoting Scotland internationally We will open our new relocation advisory service to give practical help to those who want to come and live here.

And to capitalise on the reputation for excellence in Scottish education, we will set up a prestigious new scholarship scheme - attracting the brightest and the best to our shores.

Presiding Officer, the third pillar of this budget is fairness.

In housing, fairness means that everyone has access to a proper home. Over the next three years, we will invest over £1 billion in providing more and better affordable housing.

And we will invest more in the regeneration of our communities. Improving Scotland's most deprived areas and helping individuals and families escape poverty. Renewing our communities, and unlocking their economic potential.

Over 1 million older people and those with disabilities have already enjoyed the benefits of our current concessionary fares scheme. Now is the time to do more.

Today I can announce that we will make the investment required to turn the current local concessionary travel scheme into a nationwide one. A nationwide scheme for older people, for those with disabilities and - for this first time in Scotland - for our young people.

I have said already that our investment is for the long term. Sustainability runs through every decision we are making. Record levels of investment in the water industry to meet European standards. 70 per cent of our transport spending on public transport. More waste composted or recycled by local authorities by 2008. And over 4,200 more homes protected from flood risk.

HEALTH

Presiding Officer, Health spending already accounts for more than a third of our total spending. We have increased that proportion at every single Budget.

There are who claim that this investment is not working - that there has been no return for our money.

But tell that to the 80% of our people who use primary care services each year. Who have benefited from 67 new or modernised hospitals and 104 local health centres since 1999. Who have been helped by the 8.5% increase in the number or qualified nurses or the 15% increase in the number of ambulance staff.

Tell that to the families whose loved ones are still with them today because of the improvements made in health treatment and care.

But we need to do more.

So by 2008, spending on the NHS in Scotland will be over 10 billion pounds a year.

But our challenge is not just to improve health care. Our real challenge is to promote good health in Scotland.

Promoting good health is the step we must take. There can be no better legacy for the next generation than to grow up healthier and fitter than this one or the generations before. Tackling poor diet and smoking, and increasing exercise. Offering practical help to everyone to make the right choices to prolong their own life.

So in this Budget, we will take two additional steps to help our children grow up making the right choices. We will invest to ensure that in every school in Scotland, pupils have access to fresh chilled water. And we will invest to make healthy eating choices in school meals even more attractive.

Access to healthcare for everyone in Scotland has always been important to us. And the investment I announce today will support a further 7 major hospital developments. New equipment and technology across the NHS in Scotland. Increased action to tackle infection control and hospital cleanliness. And in the Golden Jubilee Hospital, the hospital we brought into our National Health Service, I can today announce investment to allow it to reach full capacity. Saving lives and improving lives.

In the coming weeks, the Health Minister will announce full details of the new plans, targets and health care that this reinvestment will bring. Improving waiting times, speeding up diagnostic services and bringing quality healthcare to all those who need it.

But Presiding Officer, today I can announce one significant additional step.

By the end of 2007 no one will wait more than 16 weeks from specialist referral to treatment for cardiac intervention of any kind - bringing down the current target by 2 and a half months . More lives saved, more families kept together for longer.

CONCLUSION

Presiding Officer, this is a budget that takes the next steps towards building a better Scotland.

A budget for:

· A more enterprising Scotland

· A Scotland of opportunity

· A fairer Scotland - where no-one is left behind and no-one is held back.

And it is a Budget for the long term. A budget for the next generation and for the future of Scotland.

I commend it to the Chamber.

Building a Better Scotland
Spending Proposals 2005-2008
Enterprise, Opportunity, Fairness