15/12/2016 Politics Scotland

Good afternoon and welcome to a special programme

with live coverage of the Scottish draft budget.

With me to dissect, digest and ruminate

on Finance Secretary Derek Mackay's fiscal offering are the politics

Professor Nicola McEwan and the economics commentator Alf

What are we expecting? It is going to be interesting to see if we have

surprises, most of the things that have been talked about tax have

already been flagged but we have had the political shock about the

European Union referendum so we are going to see if the finance

secretary can come up with anything to counteract that for the Scottish

economy. The complication, the fact that we have just had the election.

It is not unreasonable for the Scottish Government to say we've

just fought a campaign, with promises tax about so we are going

to do what we promised in the manifesto. It is not unreasonable

but it is a minority government, not as much as 2007 but still going to

have to agree with one political party between and February. Are you

expecting anything radical? You would have thought that the context

of the Brexit decision and ongoing debate about the impact it is good

to have on the economy and the Scottish economy, with and that they

would be doing something to counteract the downward shift. But I

do not think he has got an awful lot of wriggle room to do anything

significant. Politicians in Scotland have been reluctant to do dramatic

things about tax. In the past we have had powers and not use them.

Some constraints that make it difficult to do anything

significant. You can understand why politicians are reluctant to either

put tax up, cut tax, lose revenue. But it is extraordinary that we have

had and been through the devolution referendum, creation of the Scottish

Parliament, independence referendum the changes political parties

running, and the Scottish Parliament has had powers to change the basic

rate? And also, the vote from the people. We have not done anything

with that. It is true for all of the parties. They tended to play games

around have movement here, concession there. And some of which,

delivering little. And playing around, this time, they'll say that

they are not going to change bands for the upper rate? It is

politically easier not to implement the cuts made by the UK Government

than impose the additional tax rise. The added complexity for the

Scottish Government and the finance secretary...

It's time now to cross to the Parliament, where

the Finance Secretary is making his pre-budget speech.

Challenging economic, political circumstances. The tax and spending

proposals that I am going to set out today are going to improve public

services, support the economy and provide foundations for future

sustainable growth and prosperity. Over the coming weeks I am going to

work with all the parties and stakeholders. The Scottish economy

has grown over the past year despite weak global growth, low oil prices,

an unemployment although it has been varying from month to month, it is

higher employment than the 2008 financial crisis. The UK's

government plans for hard Brexit represent risk to the Scottish

Government. Pressure on household budgets and companies reevaluating

plans. These risks are compounded by the UK Government's continued

austerity programme and over the coming years we agree to these cuts

to funding, public services and Social Security. Between 2010, 2011,

and 19/20, conservative austerity are going to see the budget, will

see capital investment fall by 9%. 2.9 billion in real terms. 3.5

billion cuts by 2019/20. That is still to come. As a result of these

pressures, the economic forecasts that I am publishing today are going

to underpin the tax projections. It assumes that Scottish GDP is going

to rise by 1% at 16/17, 1.3% 17/18. Two could this into context,

Scotland's GDP has historically grown by 2% a year. And these lower

forecast rate for -- represent the uncertainty following Brexit. But we

want to provide support for the economy, household incomes through

the fair and balanced tax spendings and proposals. This government is

not going to follow the damaging approach of Westminster. The

devolved powers mean that more of the money that we spend will be

funded from taxes, from this Parliament. In addition to currently

devolved taxes, we are going to introduce a bill to devolve air

passenger duty, the air departure tax. VAT taxes going to be

operational from 2018, reduce the burden by 15% by the end of this

Parliament. Improving international connectivity, boosting to resign.

The tax proposals for 17/18, I am grateful to the fiscal commission

for scrutinising the forecasts and endorsing them. This government is

committed to the principle -based approach, to the tax commission,

that it should be proportionate to the ability to pay. The land and

building transaction tax has already lifted 15,000 households out of tax

compared to stamp duty, supporting people to home ownership. Following

the successful introduction of the tax, this budget proposes to keep

residential and nonresidential bands the same as this year, tax freeze

maintaining the progressive approach. I also propose that the

Scottish landfill tax, contributing to environmental objectives is only

going to rise in line with inflation. The Scotland act income

tax powers, being used for the first time, we have to have a balanced

approach. I am not going to pass the costs of United Kingdom austerity to

the household budgets of the lowest income taxpayers. I can confirm that

we will protect low and middle income taxpayers at a time of rising

inflation, freezing the basic rate of income tax. But we cannot accept

top earners benefiting, I am going to limit the entries at the higher

rate threshold to inflation and not give the substantial real term tax

cut to the top 10% of earners. ?43,430. And while I sympathise with

those who have campaigned for an increase to the additional rate, I

have had to balance that with the rest to the economy and this

government's approach, endorsed by the electorate, it is the correct

thing to do for the economy, jobs and public services. For the first

time, there is now a direct link between Scotland's economic

performance and public spending. This government has consistently

deliver a competitive environment for business, and reviewed tax

powers to support growth. Not only have we ensure that small businesses

pay zero on low rates, large businesses enjoy a lower rate than

the rest of the United Kingdom. I am pleased to set out today that

measures confirm a highly competitive business regime for

Scotland, for 17/18, particularly for the thousands of small

businesses in Scotland. First, I will reduce business rate poundage

by 3.7% to 46.6p. We will expand the small business bonus scheme by

raising the eligibility, 100% relief, to the rateable value of

?15,000, lifting 100,000 properties out of rates altogether. I have

listened carefully to businesses, just as I cannot cut tax for the

wealthiest individuals, I cannot cut the rate of the large business

supplement. But I will restrict the supplement, to the largest

businesses, by increasing the threshold to 51,000, reducing the

tax burden on 8000 businesses. In addition, I will match the

Chancellor's recently announced raise relief for rural areas. And

fibre infrastructure. Finally, the question of transitional relief,

following evaluation. If we were to introduce that, Edward implement a

significant burden on small businesses. That is not the way

forward, so given that all businesses will benefit from the

lower poundage, I do not propose to add notes are traditional scheme.

The small business bonus extended, and a large supplement focused only

on the biggest businesses. That is a good deal for Scottish businesses,

and a great deal for Scottish jobs. But we will not stop. To help small

businesses grow, we were once the ?500 million scheme in 2017.

Offering financial support for business investment. Three year

scheme, improved by the Treasury, will guarantee small to medium-sized

businesses, who would otherwise struggled to grow because of the

lack of trainers. Innovation hubs at Brussels, Berlin, building on the

success of Dublin and we will double the number of people working for

Scottish exports. We will support the rural economy through the food

Drink industry, and ?100 million investment in digital connectivity,

driving forward superfast broadband to 100% having access by 2021.

Today's budget reaffirms this government's commitment to

reinvestment. Over the next year we will complete the complaint M8, M73,

M74 improvements. The iconic Queensferry Crossing. Progress on

the A9, A96. We will also complete the electrification Glasgow to

Edinburgh rail line, introducing longer, faster, greener trains. That

is part of the ?5 billion investment plans on the rail network by 2019.

Following recent performance issues, some people have called for the rail

fare freeze. Big cumulative cost would in reality be 58 million. This

would compromise the investment programme, that is so vital to

improving the performance of the rail network. But we recognise that

investment can mean disruption for passengers. As we upgrade lines and

introduce new statements. I can announce today that in the coming

financial year, we will invest not 2 million, but three million, targeted

fare reductions, to ease costs for passengers, thanking them for

patience. The Minister for transport will sit out more detailed tomorrow.

Investment on the transport network is complemented by funding for the

city deals, Glasgow Aberdeen and Inverness. We will continue to

support city deals for Edinburgh, Dundee, Perth and Stirling. I have

also announced that I have signed today, with Dundee City Council, the

national agreement to allow the Dundee waterfront growth to go

ahead. Supporting 500 jobs. I will be inviting proposals from councils

for two for the tax incremental projects over the coming years.

Leveraging private investment and infrastructure. This budget invests

heavily on housing. We deliver the target of building 30,000 affordable

homes at the last Parliament. We will deliver, looking forward, at

least 50,000 new affordable homes, including 5000 for social rent over

the life of this Parliament. Today's budget confirms capital funding of

around 470,000 for 17/18, coupled with other mechanisms to help

deliver this commitment. Presiding Officer, this budget secures

infrastructure investment of around ?4 billion. That investment is going

to underpin productivity, growth, and support an estimated 40,000

jobs. Investment on housing also helps tackle climate change, through

efficiency of the housing stock and today's budget is going to help meet

climate change targets. I have increased funding for woodland

creation, and the sustainable action fund and I can confirm today of the

funding of more than ?140 million, to support energy-efficient

programmes as part of the commitment to invest at least ?500 million over

the Parliament. Long-term economic growth requires people as well as

business. Closing the attainment gap, reducing child poverty, and

increasing access to quality education is going to have long-term

benefits for the economy and finances. We are prioritising

education, and this budget provides resources. We will invest in skills,

training, building on opportunities for all initiatives and extensive

consultation on the apprenticeship levy. Revenues from the levy means

that Scotland will receive 221 million, from 17/18. Let me be

clear, it has been suggested that this is a new fund of 221 million.

It is not. The UK Government has given with one hand, taken away with

the other. The levy replaces existing funding for

apprenticeships. However, I tend to and from today that 221 million will

be committed to interventions that support skills, training, and

employment in Scotland. 2017-18 will see the next stage in

that expansion to 30,000 modern apprenticeship new starts per year.

We will also respond to these employers by establishing a flexible

workforce development fund. Details of funding have been published

today, and the Minister for employability and training. Help

further information tomorrow. This Budget also fund the expansion of

early learning and childcare to 1140 hours by the end of this Parliament

by providing an initial ?60 million to support the first phase of

workforce and infrastructure development. Future years will see

significant additional investment, as we deliver on our commitment to

transform childcare in our country. The defining mission of this

Government is to raise educational attainment and skills. At the

election we pledged ?750 million over the course of this Parliament

to the attainment fun. And, in a radical departure, we said that ?100

million per year from that fund would be spent at the discretion of

Scotland's schools to help close the attainment gap. The revenue we

identified to this fund, this new stream of direct support, with the

increase in the council tax that will be paid by those in the higher

band homes. I know that many MSPs did not agree with that proposal.

Parliament debated, Parliament voted, and I have listened to

Parliament's use. However, I will not sacrifice the educational

chances of Scotland's purists pupils -- poorest pupils. I will not

abandon plans over significant new resources. Instead, I can announce

today that I will not simply make good on our pledge, I will go

further. Next year, instead of 100 marine pounds going direct to

schools, ?120 million will be spent at the discretion of head teachers.

APPLAUSE This ?120 million will fund a new

pupil equity scheme. Schools across the country will be allocated around

?1200 for each pupil eligible for free school meals. And what is more,

I will not fund this from the council tax, instead, I will use the

Scottish Government's on resources. Councils will keep the full value of

the revenue from the council tax rebranding. Every penny raised

locally will be spent locally, as councils see fit. And we will

deliver a pledge to help schools close by attainment gap from central

funds. We have listened, we have acted, and we will deliver for

Scotland's poorest pupils. APPLAUSE

But we will not stop there. At a national level we will also provide

central funding for closing by attainment gap of ?50 million,

maintain the pupil - teacher ratio following this week's increase in

teacher numbers, provide ?60 million for a flat early learning and

childcare commitment and will invest over ?1.6 billion in higher and

further education, ensuring access for eligible students and

maintaining 160,000 college places. These commitments I'm announcing the

date mean that overall, national investment in education and skills

will increase by ?170 million this coming year. Let nobody be in any

doubt, from birth and the earliest years, through school and beyond,

education is this Goverment's number one priority. However, this

educational attainment will commit a reference to address poverty and

build a more equal society. As part of a social contract with the people

of Scotland, we will provide ?47 million to continue to mitigate the

tax, and we will abolish it at the earliest opportunity -- the bedroom

tax. We will continue our support for the independent living fun. As

part of our new powers, we will begin to build a social security

system built on dignity and respect. I have published a public sector pay

Bolasie, 2017-18, that guarantees the Scottish living wage offers

those earning less than ?22,000 a basic pay award of more than 1%, and

caps are the basic awards at 1%, whilst continuing our no compulsory

redundancy policy. Today's Budget also delivers on our commitment to

protect the resorts Budget for policing in real terms, supporting

front line policing as we seek to maintain record low levels of

recorded crime. We have also made a clear commitment to increase the NHS

revenue Budget by ?500 million above inflation by the end of this

Parliament, going beyond anything offered by any other party in this

Chamber. That will see the sheriff front line NHS Budget invested in

primary care, community care, social care, and mental health all rise. We

will invest ?72 million next year, in an improvement fund for primary

care and GP services, and over ?150 million in mental health over five

years. Overall, next year we will invest an additional ?300 million in

NHS resource budgets. ?120 million more than inflation, a massive step

towards our promise to Scotland's health service.

APPLAUSE As I set out, local government will

receive ?120 million from central government to fund a shared ambition

is to close the attainment gap. In addition, we will maintain council's

share of capital spending with an increase of ?150 million in 2016-17.

If we stopped here, the Scottish Government funding for local

government services would be set to fall by just ?47.4 million next

year. However, I want to do more to protect vital local services. So

I've decided to go further. Last year, we transferred a quarter of ?1

billion from the NHS to support health and social care partnerships,

and I can announce today that on top of that transfer, we will provide

additional funding of ?107 million from the NHS next year. This is

additional funding which will deliver the living wage for social

care workers and protect overall investment in these crucial

services. This will secure a total of ?8 billion for health and social

care services, ensuring that people have access to the right care at the

right time, and in the right place. This additional investment in social

care means that in the coming year, there will be no overall reduction

in the funding provided by the Scottish Government to support local

government services. APPLAUSE

Funding will increase why ?59.6 million. Of course, government

funding is not council's only source of revenue next year. As I've

already said, the ?111 million that will be raised through the council

tax rebranding will be retained locally, and local authorities will

also be free to set an increase in the council tax generally by up to

3% next year. Generating, if they so choose, a further ?70 million.

Residing officer, the measures I have announced today mean that the

total support from the Scottish Government and local taxation

provides an increase in spending power and local government services,

not of 59.6 million, but of 240.6 million, or 2.3%.

APPLAUSE That is a settlement which invests

in education, invests in social care and invests in local services.

Presiding Officer, this is a Budget for growth and public services, for

an environment and our communities. It delivers increased investment in

education, record investment in the NHS, protects low income households

from tax hikes, and supports more and better jobs. Overall, it

delivers ?700 million of additional spending on an economy and public

services. This is a Budget for Scotland, and I commend it to

Parliament. APPLAUSE

STUDIO: That was Derek Mackay outlining his Draft Budget for

2017-18. Quick reaction? I got the sense as it went on, with 50 million

here, 45 million put back there, that there was a lot of shuffling of

small numbers around the edges, but the overall picture is really not

that different. Except that some of the ways in which they had

previously planned to do it, like taking the local government money

and putting it into... We will talk about that shuffling very briefly?

Big increase in local services and local government, that is with a nod

to the local elections next year, which are a massive opportunity for

the SNP to change the representation. We will be back in a

moment. That's Macio what the Conservatives have to say. I think

Murdo Fraser is speaking now. To use these new powers to support economic

growth and tackle our underperforming economy. It is much

to be regretted that he has chosen instead to hike taxes on families

and businesses in Scotland, risking choking of economic recovery and

depriving Scottish public services of vital tax revenue. This will make

Scotland by highest taxed part of the United Kingdom, and as it

stands, this is not a Budget we can support. Despite his complaint about

Westminster cuts, the finance secretary has received an additional

?140 million in real terms from the Treasury compare to the current

year. This package included an extra ?800 million for capital. We said

that we want to see that spent four priority areas, in housing,

energy-efficient sea, digital infrastructure and projects. I look

forward to hearing about more detail about the Goverment's capital plans.

As Ruth Davidson made clear earlier today, we welcome the dramatic

climb-down on using council tax funding for a national policy of

educational attainment fun. An affront to the principle of local

accountability, an assault on local government, just proving the power

of the strong opposition provided from the Scottish Conservatives.

Now, the First Minister said earlier that this Budget would protect local

services. But what the supporting documents tell us is that local

councils face a cut in the revenue grants of ?130 million. Even if they

are allowed to keep all of the council tax increases. How does this

cut protect local services? The finance secretary accuses the UK

Government of giving with one hand and taking away with the other.

Hasn't he just played exactly the same trick and local authorities?

Now, by residing officer, we welcome the signal to cut air passenger duty

to help grow the economy. But why not apply this logic to other taxes?

Scottish businesses have been crying out for relief from business rates.

This Budget retains the punitive level of the large business

supplement at double the UK rate, putting Scottish businesses at a

competitive disadvantage. Not matching the UK increases for the

40% rate of tax, the finance secretary is making Scotland the

most expensive part of the UK in which to live, work and do business.

The First Minister's can picture of her growth commission, the former

macroeconomy spokesman in this Chamber -- the former economic

spokesman. The finance secretary won't listen to us, will he at least

listen to the First Minister's on adviser and think again on tax?

Presiding Officer, yesterday the finance secretary said he would

deliver a Budget that was pro-enterprise, pro-entrepreneur

progrowth. By hitting the Scottish economy with higher taxes, hasn't he

failed on all three counts? Cabinet Secretary? I thank Murdo Fraser has

forgotten a number of things, not least that it is this Tory

government's office that has reduced the Scottish financial support by

around 9%. 9% real terms reductions to Scotland's budgets as they took

office. That put into a value context, ?2.9 billion reduction to

Scotland's Budget over the period of a decade. You see, what we

discovered yesterday in the tax debate, not only did the Tories want

a different position on tax just undercut, but they are actually

anted evolution. Now, you are against devolution, and you are

making different choices on the things that we value, such as the

NHS, free prescriptions, free education, concessionary travel.

Ruth Davidson, the Leader of the Opposition, shaking her head. She

clearly hasn't seen the press releases that Murdo Fraser writes

for the Conservative Party. Her Budget has outlined a range of

measures that are very pro-enterprise and pro-business that

will grow the economy. You see, the Tories want to have it both ways.

They want to reduce tax, but of course only tax for the very richest

in our society. Whilst in this Parliament, the nicer, softer,

Scottish Tories, want to increase expenditure in many areas. You can't

have it both ways. The Tories can't cut tax as they proposed, and spend

more on public services. They haven't even suggested how to do so

in this Budget. In terms of business rates, this is a very strong package

for business rates. A very strong package for business rates that will

continue to grow our economy. And particularly, yes, supporting small

businesses with a range of measures. I would have thought that Murdo

Fraser could at least have welcomed back. And he asked about the capital

investment plan, and there is much detail that has been provided. He

says he was demanding more investment in housing, energy

efficiency, and digital. There is more investment in all these areas,

substantially more investment. And I suspect the Tories will vote against

it, nonetheless. But the key issue here is we are giving more resources

to our vital public services, opposed by the Conservatives. And

whilst we build a very pro-Scottish economic message, it is clear that

the Tories want to talk Scotland down. That's why...

energy-efficient i will keep listening. To the local authorities,

and the parties at the Parliament. That is why we are going to fund the

attainment gap, supporting local government and delivering on the

commitment for educational attainment. For all of these areas,

I think the record of the government is strong and the proposals that we

have set out is going to deliver the programme for government. Kezia

Dugdale. This budget today is going to see the heart ripped out of

public services. School results in decline.

Valued NHS workers overstretched. Real terms cut of ?327 million, to

local services. It is in black and white, on page 91. SNP members would

do well, to read that. Holding councils to ransom, forcing them to

use tax powers, where the SNP refused to use the road. They could

have asked the top 1%, but again, refusing to do the correct thing.

This budget as is an conservative cuts to the people of Scotland. It

makes Derek Mackay no better than the Conservative Chancellor. We have

to power to do things differently, we can stop the cuts, we can protect

local services and grow the economy, getting well paid jobs. Scottish

Labour cannot support this budget with over ?300 million of cuts to

local services. Scotland needs the plan for investment, for jobs and

the economy. The plan to protect public services from SNP cuts.

Cabinet secretary. Presiding Officer, I cannot help but reflect

on the terms of the tax position, Jeremy Corbyn sitting on this issue.

Does Kezia Dugdale think that Jeremy Corbyn is no better than a Tory? But

in relation to overall public spending, Kezia Dugdale said no new

public spending for public services. Not true. 700 million extra for

public services in Scotland. Coming from the Scottish Government

details, at the document. When you look at all the detail, for local

authorities, the ability to raise council tax and the wider package,

it is a good deal fair deal. And no wonder Cosla have not rejected the

package, they note that it is a good package set out by the Scottish

Government. We have listened to the points of difference. Delivering on

the priority areas. And even on that, I would have thought that the

Labour Party would have welcomed more money for education, I remember

Alec Rowley seeing that we should find this centrally. We have not

just delivered on the commitment, we have surpassed the commitment, ?120

million for the attainment fund. The Labour Party should reflect on the

positives of this budget, reconsider other position and welcome this

substantial increase. Bruce Crawford. I am of course delighted

that the Cabinet Secretary of the UK Government has followed the

startling city region deal, -- Stirling. However, with regards to

the bigger picture, with the Cabinet secretary confirmed that this good

news, 300 million uplift for NHS resource funding in Scotland is

above inflation increases? Matching Barnett consequential is and

certainly greater than the promises from any other party in the chamber.

We can leave them, to discuss the ins and outs. Alf... It was

peculiar, watching that, it is the difficulty that the SNP finance

secretary finds himself in. He starts by saying it is terrible,

because of these awful Tory cuts, 9%, and by the end, he says why will

labour not recognise that we are spending 700 million of new money.

As if no cuts? Where are the cuts coming? You cannot get the answer.

That document that most of us have not read it yet, absorbed, numbers

here, there, you can possibly come up with 700 million overall. But the

Parliament, minority government again. They have got to do deals

with each other. Getting this budget through at all. I think the

political rhetoric, and the shaping of that majority, against the fiscal

reality of the marginal budgeting here and there... Not much new

impact anywhere. That is the fiscal reality, but the political reality

is that we have the local elections next May and the battle to try to

get this budget going through before that happens and more council

support for the SNP in the aftermath. What about transparency?

If it is true, and I'm sure that it is, the budget in real terms is

going to be cut. They could say this is what we are not going to be able

to spend money on, and as far as he has transfer budgets... The obvious

one from the NHS budget to local authorities to help with social

care... It was obvious, even listening to that it was not new

money. This proportion of the money is new money, this is just shuffling

budgets... And the other one that remains to be seen, if he is not

using the council tax rises for the attainment fund. The general

resources from the central government, where does that money

come from? That was not clear from the speech today. But you have the

transparency process that is going to kick in. Before the budget is

bordered on. -- voted. We should have answers? We should have

answers. Parliament does not have as much time because we're having the

budget in December, rather than September, because they wanted to

wait on the Chancellor's Autumn Statement. But the chance that some

of this could come out in the wash. If they are having the budget cut by

real terms, they have said that education is the priority and

spending 500 million in addition to inflation on the NHS. I think I

heard, police funding maintained. Just before you answer that, we can

go back to Parliament for one moment. Patrick Harvie speaking.

High earners will get a tax cut. Those could be UK Government

decisions, but the Scottish Government has the power to reverse

those effects and has chosen not to. 1% cap on pay. MSPS enjoy a 1.8%

increase. And the dispute with local government and the tax-free to the

most polluting form of transport. Is it not clear that if the Cabinet

secretary wants to persuade public-sector unions, local

government and parliament, he is going to have to do a lot more

listening over the coming months and make meaningful changes. Of course,

I've listened to all the voices. I think I have shown that I was

willing to do that about how we fund and support the attainment fund, and

for local government. But the most important people that we should be

listening to, the people of Scotland. I can remain Patrick

Harvie, we secured the mandate at the election, and put this to

Parliament. I will continue to engage with all of the parties of

the Parliament to see if we can get some mutual agreement. But it is

said to me not the case that we're going to follow the Conservatives,

passing on tax cut for the richest, an Patrick Harvie on a number of

occasions has pointed to government ministers on our tax position.

Scottish Government ministers have taken the pay freeze since 2008. I

think that is the correct thing to do. Some other members should

reflect that. But it is not about passing on austerity to the other

members of Scotland. That is what we would do if we followed the labour

approach, increasing the basic rate. It is not a choice that we are

willing to make. I will continue to engage with all matters, in relation

to the budget. And just to explain, apart from the fact that Patrick

Harvie is intrinsically interesting, one reason for listening to him is

that the Scottish Government is not a majority government. It needs to

make a deal with another party, to at least abstain. The other person,

Willie Rennie. An urgent need to use the brand-new powers to raise 500

million for education, to get it back to the best. That is the best

way to boost the economy. I cannot see the skill of what is required in

this budget. We need a transformational budget, and this

falls well short. Is the First Minister said today, acres of common

ground between parties but I have to tell the finance secretary that he

has got miles to travel before we get to an agreement. The Liberal

Democrats, pragmatic and reasonable people... But is the finance

secretary prepared to make the necessary changes in this budget, to

meet the urgent need for education and the economy? Of course, I can

say to Willie Rennie, SC is pragmatic and reasonable, if the

talks to me in a positive and constructive spirit he can see the

positivity of this budget. And I willing to engage to listen to what

we can do differently? Yes, I am. I can hear the Conservatives

complaining, to my left and say, but it is going to be easier to engage

with other parties at this chamber, than it would be with the Tory party

who just want tax cuts for the rich, undermining Scotland's message. But

what Willie Rennie has raised about the Highlands and Islands

enterprise, it is a strong package of support for the whole country and

specifically enterprise agencies provide assistance. I can give you

one example of the government stepping in. Look at the dealer was

able to be done at Lochaber, government intervention has secured

hundreds of jobs and potentially hundreds of new jobs. That is the

sort of invention this government has made. Steel, shipyards,

Lochaber. Those are the direct interventions that we can make,

supporting the economy for food and drink, exports, and skills. And the

University budget is increasing as a consequence of this budget. The

Highlands and Islands can also enjoy the business reach reduction that I

have outlined, interventions of support from the Scottish growth

scheme. You look at the totality, and overall it is a strong package

for growth, whale supporting some of the more vulnerable communities.

That was Derek Mackay, replying to Willie Rennie, and as we have

explained, we have got to Patrick Harvie and then Willie Rennie

because the Scottish Government is going to need the support of one of

the party to at least abstain, this is just the draft budget. Some

people have thought the most likely candidates, the Liberal Democrats or

Greens. I need not have explained at about Willie Rennie. It was

blatantly obvious that he was trained to start negotiations. The

last thing that the SNP had them a naughty government, 2007, it was the

Tory party that they were doing deals with! I was involved. With one

of the budget, the way they got round it, giving Annabel Goldie a

town improvement package. And an alcohol treatment centre. It was a

lot of money, 50 million, for that team centre improvement that was

through the carbon generation companies. Basically, spend that by

April. Frankly, as somebody who was involved, it had no impact. But that

is the way that it was done. Who knows how they are going to try to

square the circle. It is unlikely? The Conservatives the main

opposition, and secondly, I remember with Davidson sitting and saying I

am not going to do what my predecessor did.

The SNP don't have any interest in doing deals with the Conservatives,

as the finance secretary was making clear. It is a different context

now, last time they were a minority, now they are only two seats short of

a majority. The Greens are the most likely candidates but they were

making it clear that the support will have to be bought by some

significant commitments. Willie Rennie said, you've got miles to go.

In one way, the Greens are the most natural ally because they are both

pro-independence parties. That issue still dominates politics in the

Scottish Parliament. But it's very difficult to see where they concede

there. Not only a present duty, I wouldn't have thought. Certainly not

on tax proposals. They would halve it on the Parliament. The Greens are

very much against that. Blog what they could potentially do is give a

bit more of the energy efficiency measures. But the Greens wouldn't

have to vote for the Budget, they would simply have too abstain,

wouldn't they? They could potentially get something like that,

you know, something to do with the environment and say, well, we

disagree with the impacts but because we have got this we are not

going to break for it, and we won't vote against it. It's quite hard to

abstain, you know, with local government, it's quite hard to say,

this is critically important, how our country taxes itself. And then

to say, we're not taking a position on either party. By 40% the end of

the Parliament, the Green says, we have forced them to... OK, let's go

back to what we were talking about before. This thing you have to do if

you are an SNP finance secretary. Claim that everything is disastrous

because of Tory cuts, and on the other hand claim you are spending

extra money. How do we square that? If we are going to have NHS Budget

is more than inflation, if we are going to spend all of this extra

money on education, and as Derek Mackay said, something has got to

give somewhere. And also the local authorities' spending is not going

to be cut, as he claims, where rather cuts coming? Some of it is

also revenue. There are assumptions in the about revenues that will be

forthcoming on the growth, the anticipated growth of the Scottish

economy, the tax revenues as well. So we will have to see the detail of

this. One of the things that I find really interesting there is that the

new tax powers might not have had a radical impact in terms of changing

tax structures or tax policy in Scotland just yet, but what it has

done is changed the nature of political debate. That was

old-fashioned left- right politics, and its use the SNP down to the

ground because they can appear radical and progressive -- it seems

the SNP. And then they can appear moderate and centrists in reference

to the Labour Party on the left. And electorally, I think if we assume

that the Scottish electorate is somewhere in between Labour and the

Conservatives, then that is quite useful for them. The SNP could have

hired the Labour Party and Conservative Party just to make the

point a little more! I'm not quite sure I would put it like that, but

it is certainly pragmatic politics. If they are going to the middle

ground... The more underlying issue as we go forward, from a period of

the posterity, as we go forward with the threat of Brexit and the

consequences of all of that, is whether, in the modern environment,

a government, whether it is a devolved government or a fully

independent, in control government, what it does about fiscal matters,

you know, how it taxes and how it spends. It is moving in the

landscape that is much more difficult to navigate than it ever

was before. I mean, I just thought as he went through that speech, a

little bit here and there, it really was coming you know, it lost the

power that budgets used to have two actually shape the landscape ahead.

Because there's really nothing much in the that's going to change a

thing very much. What surprised me, OK, there was talk of what he would

do with business rates. But he said at the beginning, you know, this was

going to be a Budget that was going to shape Scotland's economy. There

was no real economic narrative at all, was the? Imagine the days of

Alex Hammond, he would have been announcing, I would have do this to

set up a new renewables industry, I've been to China to do this deal,

- Alex Salmond. He would also have cut Corporation Tax. There was an

Alex Salmond so sounding narrative of, I will use this position of the

Scottish Government to implement an industrial strategy for Scotland,

but that wasn't even mentioned, was it? There was no big vision. It was

as if Derek Mackay had a Scrabble board and he was moving the ought

letter here and there and hoping the odd letter would pop out and it

would say growth. I didn't get any sense that was happening. It was a

game. Were you surprised? It wouldn't have been that difficult,

even at a level of rhetoric to try and give some overarching narrative

about economic growth and what they're going to do? It's partly in

issue of style, different politicians have different styles,

of course. I think also this administration and at this First

Minister has been keen to emphasise inclusion, back-ups towards

inclusive growth, -- perhaps towards. Worries and Alex Salmond it

was the sustainable economic growth with the central theme -- whereas.

Talking about the economy and economic growth, and also the story

of today's Budget is the tax powers and how they will be used. But also

trying to put an emphasis upon inclusion of public services and

with a nod to the local elections next year. The substance of this, is

that the only thing that is really changed, on tax, that this change to

the 40p rate, the threshold in the rest of the UK, you won't have to be

40p unless you are earning ?50,000. Here it is going to be increased

only by inflation. Realistically, the Tories claim, that will mean

better off people in Scotland might go and live in England, but

realistically? There's not a whole lot of evidence to suggest that that

kind of mobility takes place. There's other issues around whether

that has any impact on people decision to come to Scotland. But I

think what the new tax powers, I hope, do, is allow us to have a

mature debate about the balance between tax and spending. So, yes,

taxpayers in Scotland may be paying a little bit more than taxpayers and

the rest of the UK. But how do they evaluate that in light of the

services that they get, so they are not paying tuition fees or

prescription charges? And people's evaluation of that and the balance

of that will be different of course. But that's a judgment to be made.

Again, it's marginal. The top rate hasn't gone up from 40p to 41 or 45

or 50 or anywhere else, it's still 40p. And where this is going to

really pinch is at the point where somebody is paying 20p and gets to

an earning level where they may move into the band of 40p. So the people

who are really going to be affected are, I hesitate to say middle

earners because they are above the immediate, but it is people like,

you know, senior teachers, who might take on a head ship, or a young

doctor who might want to move to a better specialism somewhere else.

And for them, the choice will then be, you know, do I stay here in

Scotland, or do I come to Scotland, where I'm going to be paying 40p

earlier, or a couple of thousand pounds of income, than I would do if

I were in England. And it will be that kind of choice that will be,

you know, for people who are in a dynamic phase of their career, and

deciding, do I want to stay here or do we not want to stay here, I think

in the first year, the maximum extra you will pay... Compare to England

it is 300 and then it goes up to 800. This has got slightly confused.

This is not extra tax you are paying. You simply don't get the

benefit of a tax cut. It's when you start paying the higher rate. Used

are doing it earlier in Scotland now stop right but the point is you do

it earlier now anyway. You just don't get the advantage go right of

a tax-cut happening in England. The other side of that is that there is

no extra money for the Scottish Government. It simply means they

don't have to find money to make up forgetting tax cut. Both these

things have rather got confused in this time really. Another thing that

is going to cause confusion that we have alluded to is we are going to

have to look very closely to see where budgets have been shuffled

from one to the other. There were some obvious ones there. NHS

spending has been taken out of the NHS Budget and put the local

authorities to pay for this integration of NHS and health and

social care. And at the same time, local authorities get to keep the

extra money they are raising in council tax and that doesn't get

hypothecated, to use the jargon, for educational care. That is going to

be quite complicated and difficult to find out, if you are a local

government Chief Executive, whether you are getting a good or a bad

deal? I think they will clearly be looking at the tables in that Budget

document very closely and all of the debates and evidence sessions that

the finance committee will undertake in the coming weeks and months. So,

yes, what's still to be revealed. Is going to be quite, dated. Local

government Chief Executive is, and also local councils, -- quite

complicated. They have these new council tax demands for the coming

year going out. At exactly the time they don't want them to go out,

because it is going to be saying for a number of the electors that there

is going to be a higher cost in terms of these bands that are likely

to increase. An issue we haven't talked about, there wasn't much in

the Budget, but perhaps I missed a bit there, capital spending. Because

that was the big theme in the Autumn Statement that Philip Hammond made,

?800 million for the Scottish Government over the life of the

Parliament. There is a complication, because and accountancy rules

brought in by the European Union looks like most of that is not all

of that might be eaten up for a couple of years by reclassifying

these PFI or nonprofit distributing measures as they are called, they

will have to come onto the books. You talked about capital funding

being 4 billion overall creating 30,000 jobs. But what he didn't talk

about at all was just what you've talked about, that the new European

standards mean that things that previously looked as if they could

be resident in the SNP version of PFI, which they call nonprofit

distributing, and some of that is, you know, we know of the Aberdeen

bypass is definitely now on the books. It's the one that's been

decided. There is a couple of hospitals, one in Edinburgh and one

in Dumfries and Galloway, and by mashed or blood centre, they are now

going into the books. If they go into the books and not of the books,

even when a rising tide of capital spending, Philip Hammond announced

the extra 820 million over the life of the Parliament, even if it comes

in, it may be just accounted for by all of these items coming onto the

books and having to be covered by that extra funding, so there is then

not a lot of money for big new capital projects, which modern

politicians of all stripes now talk about as, this is the way forward,

you know, we spend more on infrastructure, it's never been

cheaper to borrow. Time is running out. They've got limited borrowing

powers as well. They are not the British Government, they can't just

borrow money. The borrowing powers were extended in the latest

devolution settlement but they are constrained by these new

developments. In effect, I know this is complicated, what this means is

that things were effectively off the balance sheet and paid for by

revenue over very many years, they now get stopped right on the Budget

and account for, you can't spend the money on other things. I have

explained it, it is complicated, these things are now accounted for

on the books, as it were. That's all from me this afternoon -

I'll be back at the weekend for Sunday Politics Scotland

on BBC One from 11.35 You all right there?

Oh, it's a very exciting day A very young MasterChef Gregg

Wallace is paying us a visit. He's probably going to tell everyone

how the nation consumes There he is.

Over here! Oh, finally meeting him! What are you doing?! Oh, the

filling's going all over the place! Tonight, our subject

is the entire universe, which we'll be covering

in one hour. We have dancers representing

elementary particles in the Big Bang.

Noel Fielding and Warwick Davies Brian Cox attempting to give

a semi-serious lecture. Morecambe and Wise-impersonating

quantum mechanics. A star twerking on Brian Cox's

thigh. Tim Peake! Beautiful knees! Plenty of laughing

at Brian Cox's expense.