20/09/2012 Newsnight Scotland

the south of California, and people in Egypt, I am sorry, it is not

credible. I am afraid we have to On Newsnight Scotland tonight, the

Scottish Government presents its spending plans for the coming year.

No huge surprises, but has Mr Swinney succeeded in persuading the

voters that he is doing better with the resources available than anyone

else could do? In the run-up to today's Scottish Government budget,

we were warned by the Finance Secretary that he faced the

toughest financial settlement since the Scottish Parliament was

reconvened more than a decade ago. MSPs may have expected a brutal

budget, but Mr Swinney turned up not with an axe but with a shield,

portraying himself as the protector of public services, protecting

Scotland from the vicious blows inflicted by Europe and by London.

This report from Catriona Renton. This was never going to be a

radical budget. It is the third year of a four-year plan. The

Finance Secretary appeared to have three main themes - driving growth,

countering cuts from the UK Government, and that an independent

Scotland would have greater flexibility.

The draft budget maintains that the course which was set out in 2011,

and continues our track record of effective stewardship of Scotland's

public finances. There may not have been much to play with, but John

Swinney did manage to conjure up some money. He is cutting the

amount he is lending to Scottish water by �45 million. This will

free up some cash. And amongst the goodies on offer, �80 million for

new schools, �40 million going into affordable housing, and �30 million

into insulation. But his opponents did not think it was any great

shakes - a pass the buck budget, says Labour. The decisions taken by

this end he Minister, and by this administration, have cost 30,000

public sector jobs over the last year alone. And yet the Finance

Minister stands before us today with no hint of humility, and no

hint of apology. The truth is that this Finance Minister seems content

to pass the buck. An on a full budget, said the Tories. Total

Scottish Government budget, just over �34 billion. The budget that

Mr Swinney inherited, �31.9 billion. More than �2 billion more at his

disposable than he had when he arrived in office, yet he complains

about savage cuts. At best, this could be described as an Bhatt full

budget. And the verdict of the Liberal Democrats? This is a timid

budget, proposed by a government which is more focused on

independence than economic growth. The Green Party said it was a

budget that the Tories would be proud of. And then there is the

apparent thaw in freezing public sector pay. Last year I said I

would seek to ease pay restraint. I am now able to announce a modest

increase for most employees. This policy will cap increases, but with

priority for people earning less than �21,000. The only people

actually covered by this Arsenal servants, some NHS staff and

employees of quangos, about 28,000 people. Their union says he has

missed an opportunity. It is the same policy that George Osborne has

passed in the UK Civil Service. Under devolution, Mr Swinney has

the opportunity to do something different, to actually show

Scottish public sector workers that this government actually want to do

more for them than the Tories down south. In the wider public sector,

the outlook would appear to be bleak, too. Glasgow City council is

Scotland's largest local authority. The union that represents many of

its workers told us that they were concerned about the announcement on

public sector pay. They say, unless local government is funded even to

pay this limited increase, there is no guarantee that the largest group

of public sector workers in local government will receive the

increase. Other items which caught our at eye today, building on the

momentum following the Olympics in the run-up to the Commonwealth

Games in Glasgow in 2014, there is �1 million for elite athletes and

�6 million for cycling infrastructure, and �1 million to

maintain historic buildings. Like in every budget, there are winners

and losers, and you cannot please all of the people all of the time.

But the Finance Secretary must be hoping there is enough in there to

boost the economy. A while ago, John Swinney came into

our Dundee studio. I put it to him, where are all the cuts? In 2011-12,

I set out a budget which essentially reduced public

expenditure in Scotland by �1.3 billion, the largest reduction in

public expenditure which has had to be faced. The point I made in

Parliament today was that over the Spending Review period, we are

facing the toughest settlement since devolution. In this financial

year, the Scottish Government's budget is falling both in cash and

in real terms. I have had to find an approach which is necessary to

make so far raised -- maximise the effectiveness of public expenditure.

I have taken some resources out of the Forth Bridge contingency fund.

So, there are no cuts? Of course there have been reductions in

public spending should, which we have had to deal with. -- in public

expenditure. For example, we have had to have a period of significant

pay restraint for public sector workers over the last two years. I

do not underestimate the scale of the pressure which this has put on

household incomes. I have been able to offer some modest respite from

that today. But salaries account for more than 60% of our

expenditure. That has been putting real pressure on the budget. That

1% pay increase which was announced today, the unions or accusing you

of dancing to the tune of George Osborne, is that not what you're

doing? I have got to live within the resources that I have at my

disposal. I do not have the ability to decide what the total number on

spent by the Scottish Government will be. That is decided by George

Osborne. That is the inevitability of devolution. But you decide how

your �28 billion it should be spent, that's why the public pays you a

decent salary. So, you take political decisions, and the unions

say the decision you have taken on pay is to follow George Osborne.

have taken decisions which or about protecting public sector employment.

The unions in Scotland and workers in Scotland in the public sector

get a guarantee of no compulsory redundancies. Down south, people

have been made compulsorily redundant left, right and centre,

within the public sector. We have set out our commitment to a living

wage in Scotland, providing a decent income for public sector

workers at the lower end of the spectrum. You do not get that in

England. So we have taken a different course of action in many

areas. But ultimately, the budget that I have to operate within it is

upset by the UK Government, and the sooner the Scottish Parliament has

full control over all aspects of taxation, the more control we will

be able to exercise on behalf of the people of Scotland. UK-funded a

1% increase for local government workers, did you not? I have given

a settlement to local government which makes sure that this air of

public expenditure which is allocated to local government is

higher now than it was in 2008. -- the share. That does not answer my

question. It is up to local government to decide how to use

their resources. Just to be clear, you have not specifically given the

more money, in order to fund a 1% increase in wages in local

authorities? But what I did in 2007-eight, was, I reduced the

ring-fencing effect, at the request of local government. I give local

government a substantial sum of money, about a third of the public

expenditure within Scotland, and local government is free to take

its own decisions. It is perfectly proper for local government to do

that. Sorry to interrupt you, but people will want clarity on this,

because it is about people's wages - to be absolutely clear, you will

not be sending local authorities a specific amount of money, in order

to fund a 1% pay increase? To be absolutely clear, I do not ring-

fence money which goes to local government. What I do is, I give

local government a substantial sum of resources to determine their own

priorities, as democratically elected bodies. They are

responsible for wage negotiations with their staff. Why have you put

There is no change to the proposal we put in place. Coming on the back

of a four year freeze on water charges, a �9 increase per annum

this year, doesn't strike me as a significant amount. If you can put

water charges up, why can't you always put the council tax up?

council tax went up under my predecessors, under both the Labour

Party and the Conservatives. The council tax increased by a huge

amount. We told the people of Scotland that the council tax would

be frozen in the last Parliament and froodsen in this Parliament.

That is the commitment we will maintain with the people of

Scotland. It helps to contribute towards the economic confidence

within households and it boosts their ability to contribute to

local economies the length and breadth of Scotland. We will help

you out where we can, we will cut council tax, you are putting up

water charges, as you have just suggested at the moment. Actually,

your quality assessment on this budget say that is your council tax

freeze favours pensioner households. These hard-working families that

you claim to be supporting, they are not getting that much of a

proportionate benefit from your council tax freeze. Wouldn't they

like a small council tax increase to fund better wages? People have

complained to me in the past about the level of council tax increase

that is the Labour Party and Conservatives presided over. They

appreciate that a Scottish Government, SNP Government has been

elected. It has stuck true and firm to its commitment to freeze the

council tax. We have done that. What the assessments suggests that

those on lowest incomes see the biggest proportionate impact on the

council tax freeze on their incomes. That gives them the most benefit

from any group in our society. Trying to do things while we are in

office to help those on low incomes are the right things we should be

doing to support those who don't have significant amounts of

resources at their disposal. The Government is putting a commitment

into a new initiative to create employment for young people in

Scotland. Matching it with additional resources from European

structural funds and creating a partnership with employers which

make it is easier for small and medium sized companies in Scotland

to take people on. There are a lots of small businesses who want to

take on employees, they are nervous about it because of the economic

conditions. How will this work? are putting in place a initiative

that will make it easier by supporting the cost that is people

incur to recruit staff, to take them on board and to try to

encourage growth within the economy as a result. It will create good

and positive destinations for young people in Scotland. That is the

right thing for the government to be doing. How much are you offering

small businesses, �1,000 per employee, �5,000, how will it work?

It will be discussed and negotiated at local level by the different

employability partnerships and different organisations that deproi

ploy the schemes at local level. We are providing support to companies

to assist their employment to get young people back into jobs and for

the government to be a partner in supporting small businesses in

doing so. There is something else that intrigued me today. For your

portfolio, for the finance portfolio, the key issue in

relation to quality impact is the increase in capital funding for

renewable energy projects? How will your investment in renewable energy

particularly help women? We have a new industry being created. We have

the opportunity to tackle the occupational segregation that

affects a large proportion of the workforce in Scotland. Where you

have a new sector, with new skills required, new training

opportunities, this is a perfect opportunity to encourage women to

become involved in an area of the economy where they have been under

represented. Is this positive discrimination? That is the right

and progressive thing for a progressive government to do.

that involve positive discrimination? I don't think there

will be a formal mechanism, if that is what you are asking me. There

will be steps taken to make it as practical and possible for women to

enter the skills and training environment and to enter the labour

market in the renewables industry, one of the great economic

opportunities for many years to come within Scotland. Thank you

very much. I'm joined now by finance people

from the four biggest parties. Derek Mackay is a local government

minster for the SNP Government, and Ken Macintosh is Finance Spokesman

for Labour. In Edinburgh, Willie Rennie is

leader of the Liberal Democrats and Gavin Brown speaks on finance for

the Conservatives. Thank you all very much for joining us this

evening. Ken Macintosh, you have to agree with an awful lot of what

John Swinney did today. You too opposed the austerity programme of

the UK government. He is doing his best to protect public services?

Well, this is his best, then goodness know what is will happen

to Scotland over the next few days. -- years. Does anyone think the

economy will pick up from these announcements? This Government is

"content" to hide behind the excuse that Westminster's austerity

budgets are to blame for everything. I do actually oppose Westminster's

austerity cuts. That doesn't excuse John Swinney from not making the

right choices. What are the right choices then? He found some money

for housing and found money for colleges but neither went as far as

reversing the cuts he made in the Budget last year. Last year he cut

�6 million from the housing budget. Today he found �40 million to put

back into it. Where would you have found the money? We lost 12,000

construction workers over the last year because of that decision. We

are not getting jobs or growth. know as well as everybody else it

is a fixed budget. If he does what you suggest, trying to find another

�45 million, where does he take it from? We have a number of

suggestions. On housing alone. Take that one. In Wales, here is a

devolved Assembly with less powers and less money than Scotland, we

are going - in Wales they are using central government revenue, the

Welsh Government revenue to pay off trt on local authority debts and on

Housing Association debt. That frees up both organisations to

borrow substantial sums of capital. You can get �10 million of revenue

and turn it into �100 million of capital - That is constructive

opposition. Will you listen to him We will listen to any suggestion.

What the Scottish Government has shown an innovate package. We can

fund �0 million accelerated funding for schools, which will support the

construction sector. �40 million for housing. A further �30 million

for energy efficiency measures and �17 million for colleges. That is

new resources to help and stimulate private sector growth as well as

job opportunities for young people. 10,000, up to 10,000 new job

opportunities created for young people. This budget is being

welcomed right across the private sector because they see it as

stimulating recovery within the private sector. That is very

welcomed. George Osborne has been speaking recently about the need to

stimulate infrastructure, spending and things that the UK Government

can do. That is what John Swinney is attempting to do in this Budget.

That must be something you approve of? I'm not sure he is genuinelying

attempting to do it. Housing, he put money back, it's nowhere near

the amount ripped out of it last year, as you heard a few moments

ago, in relation to things like colleges, he took �50 million out

last year, he is giving them back �17 million. This was trailed as a

budget that was going to be a game- changer. It was going to be an

unrelenting pursuit for economic growth. He was going to put every

single penny he could into the economy. As it stands, he has

retained the business tax, as he put in last year, he hasn't

reversed the cuts to the important areas that do help the economy.

would like to see tax cuts and more money spent, how will you pay for

that? In relation to Scottish Water for example, we estimate, if you

take it out of ministerial control, could you save about �100 million a

year, which you could then divert into housing, for example, or

colleges. We think it's time to look at the travel scheme which

costs �200 million a year. Our manifesto position was it should be

raised for those aged 65 and above. We think it would save �30 million

to �40 million a year. Wee would not have scrapped prescription

charges, that would save �48 million. We have put forward a

number of ideas this year and last year that would save money and that

we think could be redeployed to areas that would actually help.

are in coalition with Gavin Brown's party in Westminster, you would

sign up to that manifesto he just outlined? No. The missed

opportunity today was in Scottish Water. If John Swinney was to

reform Scottish Water he could release �1.5 billion. That would be

a real impetuous for creating jobs and growth. John Swinney turned his

face against it today. It was a big opportunity that he missed.

Wouldn't that involve, as your critics say, privatising Scottish

Water? No. The SNP have been sympathetic towards it in the past.

The unions oppose it. It's not privatisation. The Scottish Futures

Trust supported it. The Scottish Executive suggested it was possible

too without privatising. It would release money for broadband,

housing and for science. It is a big investment. �1.5 billion?

is the key point. It wouldn't release �1.5. The Treasury has made

it clear they will be clawing back some of that if we were to go down

that road. If we were to privatise... How much would it

release? They haven't said. They have not quaranteed if we go down

that road, if we choose to, that they wouldn't claw back resources

to London. It would seem like an own goal to Scotland to privatise

Scottish Water and let... John Swinney hasn't even asked the

question. Why doesn't he go to the treasury. I will help him. Ask

Danny Alexander. He will tell him the truth. He is very sympathetic.

There is an offer. Why not take up the offer? He has already said that

he cannot guarantee that the �1.5 billion, it's in black-and-white,

wouldn't be clawed back by the UK government. The Tories are saying,

tackle, charge the poor, the elderly, the Lib Dems saying

privatise Scottish Water. No ideas from the Labour Party. It's a good

budget for jobs and growth and also supporting public sector staff as

well as all the commitments around - On that issue. John Swinney isn't

specifically funding an increase for council workers, is he? He is

directly funding an increase for civil servants. Civil servants will

get more money next April the binmen outside won't, is that fair?

They might. It will be matter for local government to determine.

There will be �30 million extra resources in the local government

budget going forward into the next financial year. It will be a matter

for local government... Can I say around local government finance,

the share of spending to local government is still more generous

than that which we inherited from the previous administration.

are in the position where you are in opposition in Holyrood and

Westminster. You can criticise all you want. Essentially, the blame

for lots of the difficult decision that is are being made lie with

your Labour colleagues in their 13 years of power and the economy they

left Mr Swinney to inherit, Gavin Brown and Willie Rennie's parties

to inherit? I don't think that is true never mind a tricks

contribution to year's budget. The problems in our economy are many

fold including the international recession and the problems with the

banks. The problems caused by private debt, not public debt,

private debt. So Labour Party had nothing to do with the size of the

deficit? The biggest problem with the deficit is the private debt,

not the public debt. This country has coped with levels of debt

greater than we are seeing now. The size of the private debt. All these

package that is were sold in America and elsewhere by banks

created the difficulties we are in at the moment. I will not excuse

Labour politicians, we were in power. Now, we have a minister here,

John Swinney, not yourself, a minister here who does not sound to

me like a man with a plan. Last year he said we would have jobs and

growth, unemployment is higher than the UK average and we are in

double-dip recession. We made a manifesto commitment we would have

the referendum in the second-half of the election. Scotland generates

more than is spend by UK Government Scotland. We look forward to the

day we can spend the revenues raised in Scotland on Scotland

priorities. You used to support the SNP during budget time. Have you

seen enough in the draft Budget to think you are likely to support it?

We will vote at Stage 3 based on what the shape of the Budget is at

Stage 3, in February next year. On the strength of what I have seen so

far, it's not any better, I have to say, than the Budget we voted

against some nine months ago. For us to shift from that, it would

have to be pretty different, Mr Swinney would have to actually

deliver on the economy. What would be your red line issue on that. The

Obviously, the budget is several hours old, and there are several

stages to go through. But the idea of slashing housing, as he did, I

think is not a good one at all. I think the idea of penalising

colleges, when youth unemployment is so high, is clearly not a good

idea. The idea of basically giving reductions to pretty much every

department which affect the economy is equally not a good idea. Willie

Rennie, anything in this budget which makes you think you will

support it? We voted with the budget last year because we got

some extra bonuses for colleges and housing. We want to protect those

gains. But I am deeply concerned about the big cut to colleges. In

fact, it is a �50 million cut. It is a significant cut, and we are

deeply concerned about it. In the past, Derek Mackay, the SNP have

had to do deals, but you do not have to do that anymore - are you

open to persuasion? We have made it clear that we will listen to other

parties. But in relation to housing, the SNP government is building more

houses than our predecessor, with less resources. And we are also

spending more in cash terms in colleges than our predecessor

administration as well. Macintosh, are you going to back

this budget? I doubt it. This budget is a sort of revisiting of

last year's, trying to put right some of the wrongs of that time.

But it is not actually going to reinvigorate the economy. We

actually need something which is going to get the economy working

again. This is actually going to lead to more public sector job

losses. We will be losing binmen, care workers, nursery assistants at

schools. Are you going to give us some plans, or are you just going

to criticise? I have suggested that they reinstate the Edinburgh-

Glasgow real improvement programme. I have said we should have a

procurement programme. In Wales, they are protecting Welsh jobs, not

giving them to China. Gentlemen, thank you very much for joining us.