16/12/2015 Scotland 2015

Is this really an anti-austerity budget?

No tax rises may be popular with voters but I'll be asking

the Finance Secretary whether his budget proposals

We'll look at the winners and losers and hear what the other parties

It was a chance to do things differently.

An opportunity to use new powers to raise more money through taxation

if he wanted to offset spending cuts handed down

So did John Swinney rise to the challenge?

Scotland can accept these Tory cuts are we can rise to the challenge and

choose a Scottish alternative to austerity.

So what was John Swinney's alternative offering to Westminster?

But first our business and economy editor Douglas Fraser has the top

The first time an income tax rate has been set for Scotland.

And to mark the occasion, nothing happened.

The Scottish rate was set at the same level we'd have had

if the power had not come to the Scottish Parliament.

Council tax was set at the same level as eight years ago.

It stays in the deep freeze for a ninth year,

saving the average family more than ?1,200, and costing

the government ?630 million next year.

Big business is going to have to find ?130 million more,

And for those buying a second home, a holiday home or an investment flat

to rent out, there will be an added charge on top of the transaction tax

already put in place last April - that's 3% of value, taking the tax

rate on the most expensive house purchases up to 15%.

That's an idea borrowed from George Osborne last month.

On the spending side of the ledger, there were more losers than winners.

We knew that the health budget would be protected in real terms,

up nearly ?700 million to almost ?13 billion -

though it still faces big challenges.

To provide our ageing population with hip replacements and the like,

six new non-emergency hospitals are to be built over five years,

relieving pressure on acute and emergency services.

And a lot of money is being switched to councils for social care,

to try to get services better joined up.

Other spending choices give priority to housing,

childcare, the digital economy and better broadband,

while providing a response to the charge that police

Those who lose out are right across government activities.

A 3% efficiency squeeze is expected of publicly-funded bodies.

It's councils that take the biggest hit - with ?320 million

less in revenue budget, and a lot less to

The prison service has been a soft target for cuts before,

Arts and culture will have to get by on less government

funding, and legal aid gets a further squeeze.

Huw Williams has tuned into the political reaction,

as well as the country beyond Holyrood.

Mr Swinney sat down commending his Budget to Parliament but surprise

surprise, opposition politicians were not convinced. After nine years

in power, a majority in this Parliament and more powers than ever

before, isn't it the case that in substantial areas of this Budget,

John Swinney is simply copying George Osborne. For years she has

betrayed himself as the prisoner of Westminster austerity but now he has

been given the key to the door of his cell he has chosen not to use

that! How can the Deputy First Minister tell this chamber hears

rejecting austerity when he has not risen as single penny more even

though he has the tax powers to do something about it? But business

pressure groups welcomed the decision not to raise income tax

rates or council tax rates. The spending is welcome for bridges and

other things that we need in the development of the canine. Back

continues which is good. We could do more on the wealth creation side.

Innovation and research is welcome. Let us do more, focus on creating

the wealth before we spend it. The body that represents most local

authorities said the council tax freeze was unacceptable. The

Scottish Government are making choices which means a 3.5% cut in

Scottish local government, that equates to about 15,000 jobs, if you

compare that to what happened at the Tata steel works, it is the

equivalent of 50 of those closing. A welcome for promises on

house-building hinted at earlier today with a photo opportunity. The

Budget today has brought good news for affordable homes in Scotland,

the significant increase going into meeting that target of 50,000. We

want to make sure that a high percentage of that is socially

rented homes available to those who are most in need of a home. We also

welcome the news about the proposed increase in the land and building

transaction tax and the 3% increase on second home mortgages and we

think that will help level the playing field for first-time buyers

and stabilise the market. There is a warning that challenges are ahead on

reforming the tax system which simply cannot be docked. We think in

new tax system has to be fairer and more progressive and we would like

to see income tax reformed and see a good deal more introduced into the

system but in local tax, we have seen a good report published from

the commission on local tax reform and it is incumbent for him to pick

one of these options. This could have been the Budget when the

Scottish Government raised income tax rates to boost the cash it has

to spend. Was it ever really going to do that? If you're John Swinney

coming up to an election and you have the chance to raise taxes on

everyone or cut taxes on everyone, which you was never going to do or

keep them where they are and try and push the money around, you will

always choose the latter option. It was the politically safe option.

This is John Swinney who got his fingers burned with the penny for

Scotland 15 years ago when he tried to get the electorate to back a rise

in income tax and he failed electorally as a result. All in all

profoundly political Budget, no surprise with Holyrood elections

coming in May. So Douglas, the opposition

parties were making much there of his decision not

to change income tax? Indeed the argument as you heard

from the opposition leaders was its austerity was so bad, as bad as the

SNP has been saying, here are the powers we have been talking about,

why not use them if this is such a serious austerity. To explain, this

is their two stages, the first one enacted three years ago comes into

effect in April next year, it means that people who are designated,

taxpayers, and you code,. The Treasury is taking 10p of each of

the bands of income tax that is paid at the moment. It is up to MSP is to

decide if they want to put that 10p back in place which is what John

Swinney wants to do or they could raise or lower that and deal with

the consequences that there are for the Budget. As a consequence of

that, the block grant is being cut which is a complex calculation as to

how much it will be and then what happens in subsequent years. But

then there is more legislation which is before the House of Lords at the

moment, still controversial staff, this is about giving the possibility

to vary the rates between different tax bands and different thresholds

we have had. The powers we get next April is we have to raise everything

by the same level or lower everything by the same threshold.

That flexibility will be bitten -- Michael Boateng and John Swinney is

talking about how he wants to use the powers to protect powers, the

consequence is that you will hit higher earners harder. This all

depends on getting to an agreement on the fiscal framework, very

difficult ago she Asians about how much the block grant gets cut and

not just in year one, but then what happens in the subsequent years

depending on how policies change. They hope to get to an agreement on

that in February. Was this simply a budget

with one eye on the election or is there a big idea

underpinning it all? Clearly the election is very much in

the mind of John Swinney as it is in his political opponents. It is less

than five months away before we get to the next Holyrood election and

when he was talking about police and colleges and housing and child care

these are clearly going to be significant priorities in that

campaign from the SNP point of view. There is I think in this although in

many ways it was a cautious Budget, not doing anything to frighten

voters, there is a big idea, one we have heard before but there has not

been much progress, public service reform which goes back before the

SNP government. They want to see more digital access to public

services so they can be provided more efficiently, that means job

losses, they want to see smarter procurement. This money can then be

saved through that as well. In the health service in particular, his

Budget speech was talking about how much smarter working between

councils and the NHS, as I was mentioning for social care can

improve the outcomes that you get, get rid of the readmission and bed

blocking problem is that there are in the health service and what John

Swinney was telling his own backbenchers was that reform of the

NHS is at least as important as putting more money on. That is a big

challenge for Hollywood to get its head around because it has not

really moved on to how you make services delivered differently and

as a result of that you may find that there is much more of a

challenge to the professional interests in medicine, education and

taking on the vested interests of councils and that will be a

challenge that we have not really seen from Holyrood as it shifts from

distributing money in a block grant to raising money as well, seeing the

consequences that flow through from that in terms of the economy perhaps

growing faster, growing more slowly. For the first time we have heard

from the Scottish Fiscal Commission about problems with taxes that are

introduced last April. While it is reasonable what they are estimating

at the moment, they are not really strong enough and they want to see

an improvement in the forecasting as we have already seen in Westminster.

Thank you. Well, John Swinney,

the Finance Minister and Deputy First Minister came

into our Dundee studio In what way was this a Scottish

alternative to austerity. It is a Scottish alternative because we have

taken decisions to invest in key public services and to take a set of

decisions that mitigate against some of the worst cuts that have been

made by the UK Government that affect individuals particularly as a

consequence of welfare reform. Support in this Budget for people to

avoid having to pay the bedroom tax, we have established the Scottish

welfare fund to provide support for vulnerable in the -- individuals and

in the face of cuts to some of the support for individuals in council

tax payments, there is a scheme to provide assistance. Essentially we

take a set of decisions to try and mitigate the effect of the UK

Government's austerity programme and investing key services to support

vulnerable people. You have had to make cuts and you have had the

chance today to use new income tax powers to increase the size of your

Budget, why do due use them? My judgment about the Scottish rate of

income tax was that the power as it is currently constituted is pretty

inflexible. If you want to exercise that power to increase the rate of

taxation you have to increase it across all taxation bands. It is

unavoidable to place a burden of increased taxation on people on low

income households. It is a blunt instrument but still, just an extra

penny on income tax could have raised an extra ?500 million and I

am sure you could have found progress of ways to spend that

money. What that would have done was put at disproportionate impact on

the incomes of people in low income households and would have been about

double the effect on the taxable income of individuals at the low

pressure rolls rather than people on higher thresholds. I do not judge

that to be the right way to deploy any tax changes because what that

would do would be to further put pressure on the incomes of low

income households which we know are under significant pressure as a

consequence of the sturdy agenda. The Scottish alternative to

austerity was to avoid doing that and instead find ways of supporting

people who are vulnerable as a consequence of the welfare reforms

of the UK Government. You commit now when you are able to vary individual

bands to raise tax to make the wealthiest pay more? We have adopted

and set out clearly our adherence to the aggressive principle and I

deployed that aggressive taxation principle when I reformed the

transaction tax. When you can raise income tax for the highest earners,

will you do that? I am coming on to that point. What I said to

Parliament today was that we would return to Parliament before the

election in May and set out our longer term thinking on income tax

once we have agreement around the financial rules that will underpin

the new Scotland Bill and it is important that we have that

financial agreement because it could significantly vary the amount of

resources we have at our disposal. I need to have that information to

enable me to inform the public about our long term intentions. I will

come back to Parliament to make sure that people understand exactly where

the SNP stance on that important question.

You could say that you are committed to those with the broader shoulders

paying more? I am committed to the progressive tax principle, which

means that people should pay in proportion to their ability to.

That's why I decided not to increase the Scottish rate of income tax, but

to set it at 10p in the pound, because I could not provide a

progressive principle to that. I am interested in exploring the

opportunities there are to deploy regressive taxation when it comes to

exercising avoiding tax powers. What about the council tax freeze? Is

this the final year, because some are saying this will cause

considerable pain? We have a commitment in our manifesto to

freeze the council tax in this Parliament, and we have honoured

that. People are under severe financial pressure and we need to

try to assist them. The council tax has helped people considerably to

benefit from a bill that hasn't increased at a time when many other

costs have increased for households. At a time when you have had to cut

what local government is going to be able to spend, and restrict their

ability to raise more finance, they are saying is you cannot say now you

are going to protect schools, home helps and childcare, because these

are services they deliver. These services will be supported by other

decisions I took today, such as the new investment we intend to make in

the adult care -- social care services. That is an injection of

new resources which is central to making that reform for services work

best in Scotland. The national attainment framework that we have

set out is about investing in new resources in some of our most

deprived areas to work with young people to improve educational

attainment, and to narrow the attainment gap that has the devil

does for years. These are investments that the government is

making in care and education, to make sure we support the delivery of

these services. You have said you will raise an extra 130 inch pounds

in taxing big businesses. How will that help the economy grow? Clearly,

we will have that investment to make in some of the longer term economic

developments that we make as a country. I was anxious to protect

the higher education research project, because out of that will

come some of the interventions, products and processes that will

improve the competitiveness of the Scottish economy. Given the budget

pressures I was under, I had to raise some new revenue. I raised it

from the large business supplement, and other changes to business rates,

to enable me to support longer term investment in the economy, that will

make the Scottish economy more productive and strengthen our tax

base. Will it send the right message to foreign companies who are

considering inward investment here? If you look at the increase in

business rates that will come in the forthcoming years as a consequence

of the changes I will make, it will be an annual increase in business

rates of 3.4% for the affected companies. In 2012, the increase was

higher than that, simply by the application of the rate of

inflation. So this is a modest increase as a consequence of the

changes I have made. Companies will see this is important investment

which will support the long-term investment potential of the Scottish

economy, and enable us to improve productivity and create higher value

employment in Scotland. We must leave it there. Thank you.

And we can go now to three opposition MSPs -

In Edinburgh for Scottish Labour - is Jackie Baillie.

And for the Lib Dems - Willie Rennie.

And in Dundee is the Scottish conservative - Murdo Fraser.

Welcome to you all. Jackie Baillie, would a Labour government have put

up income tax today? What we saw today was indeed a budget simply for

an election, not for the long-term. The interesting thing is that we do

have new powers coming over taxation and welfare that allowed us, if we

were going to look long-term, to think differently about taxation.

With the powers that are here just now, would a Labour government have

put up income tax? We agree it is a blunt instrument just now, and you

would affect basic rate taxpayers in some of the poorest communities as

well as the more affluent. The issue that was missed here was the

opportunity to set a budget over much longer than just one year. It

was a three-year comprehensive spending review. If you look at the

Independent experts at IPPR, they were saying clearly that the budget

cuts to come in 2017-18 are far more severe. John Swinney didn't want to

talk about that today. That is where the new powers would have proven to

be particularly useful, I think. We have said we would increase the top

rate of tax for 50p for those earning over ?150,000. We would put

that directly into education. On this point of the income tax powers

that could have been used today. Willie Rennie, you criticise John

Swinney for not using them. Would the Lib terms have increased income

tax? We wanted to see the Autumn Statement and the budget today

before we make a final conclusion, but one of the benefits of the Lib

Dems in the last administration in Westminster is we raised tax

threshold is well above ?10,000, which meant that people on low and

middle incomes benefited significantly from that. It would be

much easier to increase the tax available to Scotland without

punishing people on low and middle incomes to the degree that John

Swinney claims. Would the Linn Dems have supported, say, an extra penny

on income tax, which would have raised an extra ?500 million? This

is something we are actively considering just now. We will finish

our conclusions in the run-up to the elections, and put what we plan in

our manifesto. The situation in public finances is difficult now.

John Swinney cannot claim this is an anti austerities budget, yet do

absolutely nothing about it. It isn't just income tax. You have to

look at council tax. Council tax levels are lower in Scotland than

they are in England. George Osborne is much more generous. APD - John

Swinney wants to cut that by 15%. And he is matching John -- George

Osborne penny for penny, which is why we have to look at things like

the Scottish Water in investment, and things like APD, as well as the

other taxes that John Swinney has within his gift. This is about

balancing disciplined public spending and social justice. Murdo

Fraser, you have said you wouldn't have raised income tax. Would you

have cut income tax? I don't think so. It is worth remembering that in

terms of the total available to John Swinney this year, for all his talk

about austerity and cuts from Westminster, he has nearly ?400

million more in cash terms for the coming year than he had in the

current year. By 2020, the Scottish Budget will be 12.5% lower in real

terms than when the Conservatives came to power. That is a political

choice by the Chancellor. Do you agree that he should have used... It

is a bit rich for you to say that he should have used these tax powers

when it was a Conservative government that was imposing the

first place. The Conservative government in Westminster is trying

to balance the books. This talk of austerity is simply saying that we

should live within our means as a country. If the Scottish Government

decide they don't want to do it that way, if they decide they want to

have a larger budget, the important thing is they now have that choice.

They had the tools handed to them with the Scotland Act, which gave

John Swinney the opportunity, if he wanted, to increase the amount of

tax coming in by levying them out of income tax. These things coming out

today about that not being progressive absolute nonsense. There

are economists lined him up -- lining up to tell him that. He could

have done it, but he knows it isn't politically popular. I think that's

the right decision, but I hope it means we will hear no more bleating

about austerity and Tory cuts from Westminster from John Swinney and

his colleagues, even that they had the opportunity to do something

different and chose not to. Jackie Baillie, what would you have done

differently? Should the council tax freeze have been lifted? Council tax

freeze is very marginal when you consider the overall level of

funding for local government. John Swinney has cut local and by 7%. You

cannot say that you want to protect schools and social care if you are

squeezing the very people responsible for delivering it. He

points to ?250 million shifted to social care. That is a consequential

from the UK budget. We reckon it should be shifting ?340 million,

that would enable them to pay social care workers a living wage that

would have driven up standards in social care. Even there, he has cut

the amount short. You cannot claim to be anti-austerity, yet your every

action is simply about managing austerity. There was a missed

opportunity here. We could have looked at a three-year budget, at

the new powers coming, and we could have taken some decisions about the

direction of travel for taxes. You cannot claim to be progressive and

anti-austerity and then deliver a budget that copies so much of what

George or is born -- George Osborne is doing. Do you think it is time to

think about scrapping some of the more popular policies of this

government, like free prescriptions? I have been quite frank about the

Lib Dems position. We want to prioritise investment in mental

health services. There was a ?600 million investment in what was often

regarded as the poor relation within the NHS. What would you cut? These

spending cuts will need to keep coming? I have been quite open about

our considerations on taxing, and we would therefore also prioritise

things like mental health services and child care, which, despite the

government's rhetoric, has failed to get the right number of children

into schools. These are the two costed repose all is that we put

forward into the budget process. We have a track record of living within

our means. We do not make big commitments like the SNP do, we have

them costed. Our constructed way of approaching the budget is the right

one. Mr Swinney suggested that the former public services and the NHS

is going to be a priority over the coming years. Would you support

that, Andy you think it is necessary? We want to see all the

Barnett consequential is for NHS funding, which comes from the

protected budget at Westminster being fed into the NHS. We don't

believe that it's right to take money out of the NHS to give free

prescriptions to people like MSPs, who can well afford to pay for them.

If money is tight in the NHS, that is an area that could be used to pay

for more nurses and hospital 's. So you would scrap free prescriptions?

We have been clear about that. We would have exemptions for those who

couldn't afford to pay, the retired, young people, and those with

long-term conditions. But for people like MSPs who can afford to pay for

prescriptions, it is a complete waste of precious resources to say

that we should get that for free. These are the sort of hard choices

we will need to make. That is all we have time for. Thank you all for

coming in. I'm back tomorrow night, same time,

so do join me if you can.