Finance Secretary John Swinney
Budget Bill - Stage 3 debate
February 8, 2012
Presiding Officer, the Budget Bill confirms the spending plans set out in the Draft Budget and underpins the approach this government is taking to accelerate recovery, support economic growth and improve public services in Scotland.
In doing so, we are tackling head-on the challenges presented by the global economic climate, particularly in the Eurozone, and by the course the UK Government is taking on public spending.
In the light of the challenging global economic conditions, we are taking forward a range of actions, with a particular focus on:
- boosting public sector capital investment
- improving access to finance and encouraging new private investment
- enhancing economic security to support confidence across the Scottish economy; and
- taking direct action to tackle unemployment, in particular youth unemployment
I am committed to building consensus for the measures in this budget. I have listened carefully to the representations made by Members, and others, since September and will set out today how I propose to respond.
I remind the Chamber that, in taking forward our approach, we must deal with a landscape that has seen the UK Government make cumulative cuts in Scotland’s budget of £10.4 billion in real terms over four years, £6.7 billion to revenue budgets and £3.7 billion to capital budgets.
Since I announced the Scottish Budget in September, the Chancellor has set out movements in UK Government spending that generate Barnett consequentials for Scotland.
These amount to around £137 million in 2011-12, allocated in the Spring Budget Revision, and around £450 million for the period 2012-13 to 2014-15.
These are welcome additional resources, although they are of course small in comparison to the scale of cuts we face this year and in the years ahead.
I will confirm today how I intend to provide additional resources in the Government’s Budget.
Firstly, I am pleased to announce substantial additional funding across our infrastructure investment programme, including in the key areas of housing, digital infrastructure and transport.
The Spending Review set out plans for completing 30,000 affordable homes in the life of the Parliament, through a mix of conventional capital investment and other funding models.
We are on track to meet our target, but I confirm today that, in total, we will provide additional support to the housing sector valued at £97 million over four years. Most of this will go directly into our programme for subsidising new supply, increasing the number of homes we can deliver and ensuring that we can meet needs right across the country.
This additional support is made up of:
- the additional £10 million funding we have already confirmed for this financial year, which will accelerate expenditure on Council House building
- an additional £45 million for the affordable housing budget over the period 2012-13 to 2014-15, which will support affordable housing supply across Scotland; and
- £42 million to fund loans and equity investment over the spending review period, including the expansion of shared equity schemes and the Housing Infrastructure Loan Fund
We have agreed an enhanced role for councils in determining the strategic priorities for affordable housing in their areas; and a strong and continuing role for housing associations in delivering new homes, levering in investment and promoting innovation.
Presiding Officer, the availability of next generation broadband connectivity is critical to Scotland’s economic future.
I confirm today additional support worth around £68 million over three years, which will support our commitment to delivering world class, future proofed infrastructure that will deliver digital connectivity across the whole of Scotland by 2020.
We aim to deliver next generation broadband to between 85 and 90% of premises by 2015, and put in place measures to ensure an uplift in service can be delivered to the remainder.
Whilst our broadband targets apply to all of Scotland, the greatest impact will be felt in those areas with significant rural populations, as our investment will focus on places where it is uneconomic for the market to deliver without subsidy.
A strong partnership approach with Local Authorities is essential. I have therefore agreed additional funding for digital infrastructure amounting to £28 million to the Rural Affairs portfolio and £40 million for Local Government funding over three years, which will be used to primarily support the roll-out of rural broadband.
Roads and Transport
A third key driver of growth is the quality of our road network.
I confirm today additional funding of £72 million over three years for a number of key roads projects, improving the reliability and safety of the network. These include the A75 Dunragit Bypass, the A737 Dalry Bypass and design works for the dualling of the A9.
The Cabinet Secretary for Infrastructure will announce further details in due course.
I also confirm today additional funding for sustainable and active travel, worth £13 million over three years. This will focus on cycling and walking infrastructure, and the contribution it can make in supporting modal shift.
Mr Neil and Mr Brown will set out these plans in more detail, as well as confirming the allocations we will make through the third year of the Future Transport Fund, worth £18.75 million in 2014-15. These will also be directed towards supporting modal shift.
Maintenance and social infrastructure
Presiding Officer, the Infrastructure Investment Plan highlights the importance of maintaining our social infrastructure. Such action supports employment and strengthens the quality of services.
I confirm today that £60 million in Capital spending will be applied to increase capital allocations to NHS Boards, to help meet this demand.
The benefits of this investment will be felt by staff and patients and it will create additional opportunities for SMEs across Scotland.
I am also allocating an additional £54 million in Capital funding for Local Government over three years, above and beyond the £40 million allocated for digital infrastructure in rural areas, recognising the vital role local authorities play in supporting our economy.
And I am pleased to announce additional Capital funding of £20 million for the Scottish Prison Service, targeted towards the needs of Scotland’s female prison population.
Presiding Officer, few can have missed the positive impacts of recent developments at the National Museum of Scotland and the National Portrait Gallery.
I therefore confirm today additional Capital funding of £5 million over three years for the culture portfolio. Fiona Hyslop will announce further details shortly.
Finally, I announce today an Asset Management Fund worth £3 million over three years, to be administered by the Scottish Futures Trust and aimed at maximising the value of assets disposals and property rationalisation across the public sector.
Together, these announcements represent additional Capital investment of around £380 million over three years – supporting infrastructure development and jobs the length and breadth of Scotland.
I will focus the remainder of my speech on revenue spending and two issues of fundamental importance – our approach to business rates, including the public health supplement, and employability.
As a Government, we are committed to matching the rates poundage in England. In December, I said we would match the 45 pence poundage rate in England and confirm today that the 2012-13 Large Business Supplement rate will also match the English rate of 0.8 pence.
I would also like to confirm the details of the Public Health Supplement, which will come into force on April 2012 for only the largest retail properties that sell both alcohol and tobacco.
Increased preventative spending is key to the sustainability of our public services and the improvement of outcomes. On this point, I believe that Parliament is agreed.
As part of this approach, I think it is reasonable to boost preventative spending with additional resources, where we can. We therefore proposed the introduction of the Public Health Supplement.
It is important to put this measure into wider context. 240 retail premises – 0.1% of all business premises in Scotland - will pay more, while some 63% of Scottish retail premises, well over 30,000 shops, currently pay zero or reduced business rates as part of the most generous relief package in the United Kingdom.
Since we published our proposals, I have held constructive discussions with retailers.
I have reflected on the points they have raised and, within the constraints of delivering a balanced budget, I confirm today that I will reduce the amount paid by individual retailers and limit the length of time that the supplement will apply in the next three years.
This will have the overall effect that estimated income generated by the Public Health Supplement will reduce by £15 million, to £95 million, over the 3 year period to 2015.
This reduction will be offset in full by the income generated through our matching the English Large Business Supplement.
Employability and colleges
Turning finally to employability, the Spending Review contains a range of measures that support people into employment, including through the skills and training opportunities we provide and through higher and further education.
I have reflected carefully on the position of Scotland’s colleges.
We are already working with the sector to make necessary reforms, including through the new £15 million College Transformation Fund.
We allocated an additional £5 million last week to support employability initiatives through the college sector.
In recent weeks, therefore, we have announced £20 million new investment in the college sector.
We are continuing the Education Maintenance Allowance, unlike the UK Government, to help those who need our support the most.
And we have increased baseline funding for student support by 25% since 2006-07, a record that substantially outweighs anything provided by our predecessors and which was protected in the Spending Review.
However, I wish to send a strong additional message of support to Scotland’s students today.
The Government is leading an ambitious programme of reform, but I recognise both that reform takes time and that the economic climate continues to pose challenges for our students.
I have considered the options for allocating the additional resources that have become available since September – and I have listened carefully to the compelling case put to me by Scotland’s student community.
I can confirm today that, on top of the £20 million additional funding already announced for the sector, we will repeat for 2012-13 the top-up funding for student support provided in 2011-12, totalling an additional £11.4 million.
And, we will provide an additional £8 million in 2012-13 to the Funding Council to help colleges play their part in delivering our Opportunities for All commitments.
That is £40 million of additional investment which should leave no one in a shadow of doubt about the strength of this administration’s commitment to our colleges and to Scotland’s students.
Presiding Officer, that concludes the announcements I wish to make today.
In deploying the additional resources available to me, I must also take account of the risks posed by the current economic climate and some of the dangerous policies being advanced by the UK Government, not least on Welfare Reform.
I will therefore hold in reserve some revenue consequentials – around £20 million in 2012-13 – until the picture becomes clearer.
As I have confirmed today, the Scottish Government has delivered a budget for growth and I have outlined today how we will build on our original spending plans with the additional resources at our disposal.
Capital investment is central to our approach. It is estimated that every additional £100 million of capital spending supports around 1,400 jobs in the Scottish economy.
We are expanding our infrastructure programme through the £2.5 billion NPD pipeline, by switching resource to capital spending and through a range of innovative financial mechanisms.
As a result, by 2014/15 our overall capital investment in Scotland’s economy will be 25% higher than in this year – despite our falling Capital DEL settlement.
In order to attract investment we have announced the creation of four new enterprise areas, which will provide further business incentives across key industries.
We are supporting our development agencies in attracting major new international investment to Scotland and we are providing the most generous package of rates reliefs available anywhere in UK.
We are also acting to build economic confidence by protecting public sector employment and delivering on our commitment to a ‘social wage’, including by freezing the council tax for a fourth year in a row.
We are tackling unemployment, particularly youth unemployment, including through the Opportunities for All initiative; a record 25,000 Modern Apprenticeships; and by maintaining college places.
And we are making a decisive shift towards preventative spending, including through the three change funds worth over £500 million.
In announcing additional funding today, we have listened to views from across this Chamber and beyond, and we have acted decisively in response, in the interests of our economy, our public services and the people of Scotland.
I move the motion in my name.