:00:17. > :00:18.Good afternoon and welcome to Politics Scotland.
:00:19. > :00:23.The Finance Secretary, John Swinney, is preparing to deliver his budget
:00:24. > :00:27.For the first time, he will have to set a Scottish
:00:28. > :00:34.and reaction from the opposition parties,
:00:35. > :00:38.live from the Scottish Parliament chamber
:00:39. > :00:41.And John Swinney will be getting to his feet in about ten minutes
:00:42. > :00:43.to set out those spending plans, which cover 2016 and 2017.
:00:44. > :00:46.My guest for the day is the journalist and political
:00:47. > :00:50.and I'm also joined by our business correspondent David Henderson.
:00:51. > :01:01.David, remind us what these new tax powers are.
:01:02. > :01:14.-- this is not the fowl and the full power that is being exercised today.
:01:15. > :01:18.-- the vow. On income tax, probably in 2018, we can expect full income
:01:19. > :01:22.tax powers to come the way of the Scottish parliament. Those are still
:01:23. > :01:30.being debated by Westminster. They will give complete control over tax
:01:31. > :01:43.rates and tax bands. What we have now our plans which were recommended
:01:44. > :01:48.by the Carmen commission -- Calman commission. Here is how it works if
:01:49. > :01:53.the UK Government cuts 10% from the amount of money that Scotland gets
:01:54. > :01:56.through income tax, it is then left to the Scottish parliament in
:01:57. > :02:01.practice, to John Swinney, to set what rate he wants for income tax.
:02:02. > :02:06.If he sets it at 10%, it raises money back up to where it was
:02:07. > :02:10.before, so we see no change and nobody notices any difference in
:02:11. > :02:20.their income tax bill. He can lower it going he can raise it but if he
:02:21. > :02:25.raises it, of course... ) the difference is he has to set it. They
:02:26. > :02:29.have always had the tartan tax. Even if it is the same commie he has two
:02:30. > :02:34.segment that is my political decision. I have made a political
:02:35. > :02:40.decision not to raise or lower taxes. He cannot just leave it. The
:02:41. > :02:45.decision he makes becomes an easy one because of the limitations of
:02:46. > :02:48.the system. Basically, the power to control income tax requires him to
:02:49. > :02:55.make a decision that applies to income tax right across the piece.
:02:56. > :02:59.So, he cannot raise bands, he cannot raise tax for high earners and
:03:00. > :03:04.reduce it for low earners. It is all or nothing. It is up or down. It
:03:05. > :03:08.affects everyone. As a result, particularly because this measure
:03:09. > :03:13.will not kick in until 6th of April, a month before the Scottish
:03:14. > :03:18.elections, we do not expect him to do anything dramatic or radical
:03:19. > :03:33.today, just leave it. You have a prediction for us. A prediction of
:03:34. > :03:36.sorts. What has amazed me somewhat is, since April, John Swinney has
:03:37. > :03:39.had the ability to borrow money. He has had those powers since last
:03:40. > :03:41.year. He can borrow up to ?380 million. Up until now he has not
:03:42. > :03:45.used those borrowing powers. We have an election in four or five months'
:03:46. > :03:49.time, I would be surprised if we do not see something that John Swinney
:03:50. > :03:53.takes a bit of that money from the borrowing powers just give the
:03:54. > :03:56.economy are bit of the lift, maybe in construction or road building or
:03:57. > :04:03.something as you go towards the May election. He is going to have one
:04:04. > :04:09.heck of a fast construction project if it is going to make a difference
:04:10. > :04:12.next April. If it has been announced and the money is there coming he
:04:13. > :04:21.hopes that will give the feel-good factor to carry him through to the
:04:22. > :04:22.election. Do you think income tax will not change? I would be very
:04:23. > :04:25.surprised if it does. And we'll be bringing
:04:26. > :04:28.you the Finance Secretary's budget But, first, our political editor
:04:29. > :04:38.Brian Taylor is at the Scottish I do not know if you heard what we
:04:39. > :04:42.were saying that possibly a dip in capital spending by using borrowing,
:04:43. > :04:50.leading income tax well alone is that what you are expecting? I think
:04:51. > :04:52.leave income tax well alone. It will take a particularly courageous
:04:53. > :04:56.finance secretary to hike up Scotland prop Mike income tax just
:04:57. > :05:03.weeks before asking the people of Scotland to give an endorsement.
:05:04. > :05:07.John Swinney has suggested he favours the use of progressive
:05:08. > :05:11.taxation powers, by which he means levying a bit more from the
:05:12. > :05:16.relatively well off. The ability to hike the upper rates more than the
:05:17. > :05:22.standard rate, as was mentioned. The Calman plan, which is currently in
:05:23. > :05:25.place, the Scotland act 2012 does not allow that differentiation to be
:05:26. > :05:28.made. The Smith commission proposals, currently going through
:05:29. > :05:43.the new bill, would allow that to be made because it would alter all of
:05:44. > :05:48.the income tax rates and bands. The Treasury says some 14% increase over
:05:49. > :05:52.five years. John Swinney says it is fine and dandy but from his
:05:53. > :05:56.perspective it does not make up from the cuts in capital which happened.
:05:57. > :06:02.The Treasury says you are getting more in the wake of cash on
:06:03. > :06:06.day-to-day spending. He says it is a big cut. You have alternative
:06:07. > :06:12.interpretations of the decisions the Chancellor is about to take. On
:06:13. > :06:17.spending, current spending, the truth is, it is mucking about at the
:06:18. > :06:22.edges, isn't it? So much of the budget is spent on things like
:06:23. > :06:28.schools and hospitals. You will not change that around very much. Any
:06:29. > :06:34.leeway is limited stop These decisions have to be taken by the
:06:35. > :06:37.finance secretary. Will they protect the health service? Yes, they have
:06:38. > :06:41.to go if they want to win support from the people of Scotland, just as
:06:42. > :06:45.the Chancellor does in England. They have already announced they want to
:06:46. > :06:50.double the provision of childcare. Expect to see that funded. Given the
:06:51. > :06:55.current circumstances regarding concerns over terrorism, the
:06:56. > :06:59.determination by the SNP to maintain police numbers, I expect the police
:07:00. > :07:04.budget to be protected. Nicola Sturgeon has said she wants to
:07:05. > :07:14.support schools. Back at sit down very narrowly. What is left the
:07:15. > :07:17.broader local government budget, the budget for local authorities. Would
:07:18. > :07:23.I spec to see that constrained? Yes, I would. I am sure your festive
:07:24. > :07:29.braces have gone viral. Does that sound reasonable to you? On
:07:30. > :07:33.spending, there is not much room for manoeuvre. The room for manoeuvre is
:07:34. > :07:40.getting smaller by the year. If you say, I am going to protect health
:07:41. > :07:46.and do nothing to produce -- reduce health and keep the education budget
:07:47. > :07:51.protected, that is the vast majority of the budget. If you are also
:07:52. > :07:55.saying you're protecting the police, the room for manoeuvre is suckered
:07:56. > :08:00.into areas like council spending. If I were on the council right now, I
:08:01. > :08:05.would be worried. There is not anywhere else you can see where the
:08:06. > :08:10.axe will fall. Something else that will change over the next view
:08:11. > :08:14.years, there will be at least some responsibility the Scottish
:08:15. > :08:19.parliament will have for welfare. That is a whole area of spending
:08:20. > :08:22.which is at least as big as departmental spending. It is
:08:23. > :08:33.excluded from the Scottish budget at the moment. There is quite a limited
:08:34. > :08:38.focus in today's statement, as you say, welfare is left to one side
:08:39. > :08:45.now. There is this commitment already being made to the NHS, to
:08:46. > :08:50.schools. So, you wonder where the knife will fall. John Swinney is
:08:51. > :08:56.boxed in. After the Autumn Statement from the Chancellor, we know the
:08:57. > :09:05.budget will fall. It will fall by just over 5% in terms of day-to-day
:09:06. > :09:10.spending. This is in real terms? There is a squeeze. He has to do
:09:11. > :09:15.something. His focus, if he is to make savings, will have to be not on
:09:16. > :09:21.the NHS and schools, it will be other departments. He may be looking
:09:22. > :09:27.at local authority spending. He may be lurking there. What can he do on
:09:28. > :09:32.that front? He is likely to be committed I would have thought he
:09:33. > :09:36.would be likely to commit to extending the freeze on council tax
:09:37. > :09:41.for another year. He might, for example, say two councils, you can
:09:42. > :09:45.only increase council tax if you spend it on things I want you to
:09:46. > :09:51.spend it on. That is what George Osborne did. We saw council tax as a
:09:52. > :09:57.result of rising in England by 2%. Who knows? John Swinney might do the
:09:58. > :10:03.same. We will hear from you after the main event which is the draft
:10:04. > :10:11.budget for 2016. Let's hear what he has to say. The Deputy First
:10:12. > :10:15.Minister will take questions at the end of his statement. There will
:10:16. > :10:21.therefore be no interventions or interruptions. I called on John
:10:22. > :10:24.Swinney, Deputy First Minister. The Scottish Government's this is to
:10:25. > :10:27.sustain deliverable economic growth and create the opportunity for all
:10:28. > :10:32.of our citizens to flourish. We believe with a relentless focus on
:10:33. > :10:36.tap inequality and boosting productivity, we can create
:10:37. > :10:42.foundations for a stronger and inclusive economy. That team has to
:10:43. > :10:45.be delivered with a significant constrained public spending
:10:46. > :10:51.environment. As a consequence of UK Government austerity, the UK
:10:52. > :10:57.Government will continue -- the Scottish budget will continue to
:10:58. > :11:01.fall. If we want to improve our services, we must be prepared to
:11:02. > :11:05.continually reform the way we deliver them. This budget is driven
:11:06. > :11:10.by two themes were supporting inclusive growth and protecting and
:11:11. > :11:16.reforming public services. We will delivering collusive growth by
:11:17. > :11:19.focusing on investment, innovation, infrastructure and skills and by
:11:20. > :11:26.maintaining a competitive business environment. We will protect and
:11:27. > :11:36.reform public services by delivering on service integration at local
:11:37. > :11:39.level, as a shift in prevention. What I am announcing today will lay
:11:40. > :11:47.the foundations for the reforms which will defined the next
:11:48. > :11:50.Parliament. We will deliver a step change in educational attainment and
:11:51. > :11:58.provide greater focus in the innovation system, greater taxes and
:11:59. > :12:02.use taxes in a way that supports our central purpose. The current
:12:03. > :12:07.financial landscape presents us with a challenge and a choice. Scotland
:12:08. > :12:11.can accept these Tory cuts or we can rise to the challenge and choose the
:12:12. > :12:15.Scottish alternative to austerity. We choose to rise to the challenge,
:12:16. > :12:20.we choose the Scottish alternative, we choose to put reform and growth
:12:21. > :12:25.at the heart of this budget. APPLAUSE
:12:26. > :12:30.Residing officer, we will build on the Scottish Government record of
:12:31. > :12:37.delivering for the people in this country. Over the last period,
:12:38. > :12:41.employment has risen and unemployment has fallen. We have
:12:42. > :12:46.invested heavily in infrastructure, modernising services and boosting
:12:47. > :12:53.construction. We have invested in Scotland's NHS, staff numbers and at
:12:54. > :12:56.record levels. We have delivered curriculum for excellence and a
:12:57. > :13:03.record number of higher and advanced higher passes were achieved in 2015.
:13:04. > :13:06.We have delivered 600 hours of high-quality early learning and
:13:07. > :13:13.childcare. Our country is safer with crime at a 41 year low. We are on
:13:14. > :13:15.track to reach our 2020 interim climate change targets. We are
:13:16. > :13:21.confident of taking that record to the people of this country.
:13:22. > :13:26.APPLAUSE This year's ground for government
:13:27. > :13:30.reinforced our commitment to build on the strong foundations. It is
:13:31. > :13:34.made more difficult to achieve by the continued austerity agenda. By
:13:35. > :13:37.2020, our budget will be 12.5% lower in real terms than when the
:13:38. > :13:44.Conservatives came to power. That is the equivalent of ?1 in every ?8 we
:13:45. > :13:50.spent being cut by Westminster by 2020. Even our capital budget will
:13:51. > :13:56.bestow more -- will be more than half ?1 billion lower in 2021 than
:13:57. > :13:59.it was in 2010/ 11. Whilst you recognise public finances need to be
:14:00. > :14:07.sustainable, the scale of the cuts is unnecessary. We laid out clear
:14:08. > :14:11.and detailed plans to reduce the deficit and debt while allowing
:14:12. > :14:14.public investment in the economy. The Conservatives rejected that
:14:15. > :14:19.plan. Their ideological obsession with austerity is born out of choice
:14:20. > :14:23.rather than the 70. We will not make the same choice. We will not make
:14:24. > :14:26.the poorest in society bear the burden.
:14:27. > :14:30.APPLAUSE This vision and commitment to
:14:31. > :14:34.fairness underpins our approach to taxation. We recognise that to
:14:35. > :14:38.support the public services we all rely on, we must assure tax policies
:14:39. > :14:43.are built on the principle that the tax burden should be proportionate
:14:44. > :14:46.to the ability to pay. The budget marks the first time the Scottish
:14:47. > :14:51.governor will propose a Scottish rate of income tax. From April 2016,
:14:52. > :14:57.the UK Government will reduce the block grant by ?4.9 billion with a
:14:58. > :15:03.partial devolution of income tax powers. At the same time, switch of
:15:04. > :15:07.10p of income tax in Scotland. I am required now to set the rate in
:15:08. > :15:12.Scotland. The current power allows for one single rate to be set here
:15:13. > :15:21.in Scotland and applied equally to all three income tax bands, the
:15:22. > :15:23.basic, higher and additional rates. This means any rate set above 10p
:15:24. > :15:27.would increase the tax paid by all Scottish taxpayers. By its nature,
:15:28. > :15:33.exercising this power would have a distal portion at effect on the
:15:34. > :15:36.amount of tax paid by those on the lowest incomes. -- a
:15:37. > :15:40.disproportionate effect. We would cut the tax bill paid by all
:15:41. > :15:44.taxpayers. Those on the highest incomes would see the greatest
:15:45. > :15:48.benefit. The simple fact is this. The tax power does not enable me to
:15:49. > :15:55.target help to those on the lowest of incomes. I do, however, have the
:15:56. > :16:00.power to insure this tax does not inflict an additional burden on
:16:01. > :16:03.those on low incomes. I can therefore confirm there will be no
:16:04. > :16:08.change in income tax rates next year. I propose that the Scottish
:16:09. > :16:13.rate of income tax will be set at 10p in the pounds. The rate people
:16:14. > :16:20.pay this year will be the same rate they will pay next year. I hope,
:16:21. > :16:23.providing officer, that from 2017/18, this parliament will have
:16:24. > :16:27.more flexibility in setting income tax rates. That will depend on
:16:28. > :16:32.reaching agreement on a new fiscal framework and final passage of the
:16:33. > :16:35.Scotland Billboard I confirm that subject to achieving these outcomes,
:16:36. > :16:38.the Government will set out our longer-term intentions with regard
:16:39. > :16:42.to income tax, head of the dissolution of Parliament at the end
:16:43. > :16:47.of March. Residing officer, the setting of the Scottish rate marks
:16:48. > :16:52.the latest tax power to be transferred to Scotland. Revenue
:16:53. > :16:59.Scotland has been responsible for the collection of landfill tax. We
:17:00. > :17:02.are on track to meet forecast revenues for the year. Scottish
:17:03. > :17:07.landfill tax returns covering the first six months of this financial
:17:08. > :17:14.year amounted to over ?74 million, against a forecast of ?117 million
:17:15. > :17:19.for the year as a whole. Land and buildings transaction tax revenues
:17:20. > :17:23.exceeded ?218 million for the first seven months of this financial year,
:17:24. > :17:29.which also compares favourably with our forecast revenues of ?381
:17:30. > :17:34.million forged 2015/ 16. In setting the rates for 2016/17, we have
:17:35. > :17:45.listened to the views of the property industry and other key
:17:46. > :17:47.stakeholders. For residential, nonresidential and lease
:17:48. > :17:52.transactions, I want to ensure the system remains progressive. This
:17:53. > :17:56.means more than 10,000 additional purchases will be taken out of tax
:17:57. > :18:01.compared to the UK wide stamp duty system it replaced last year. It
:18:02. > :18:09.will result in a reduced tax charge for over 36,000 house purchases at
:18:10. > :18:14.or below ?330,000. Overall, 93% of house buyers pay no tax or less tax
:18:15. > :18:18.than understand duty. I am however conscious of the issue of second
:18:19. > :18:22.homes. We need to ensure the opportunities for first-time buyers
:18:23. > :18:27.to enter the market in Scotland are as strong as they possibly can be.
:18:28. > :18:30.We need to make certain that tax changes elsewhere in the United
:18:31. > :18:36.Kingdom to not make it harder for people to get onto the property
:18:37. > :18:39.ladder. That is why I have announced my intention to implement a
:18:40. > :18:43.supplement to land and buildings transaction tax for those purchasing
:18:44. > :18:50.an additional home for ?40,000 or more. Such properties will be
:18:51. > :18:54.subject to of 3% of the total purchase price, payable in addition
:18:55. > :18:57.to the existing LB TT charge. We will surely bring forward
:18:58. > :19:02.legislation to seek parliament approval to introduce a supplement
:19:03. > :19:06.to ensure it takes effect from 1st of April 20 16. In keeping with the
:19:07. > :19:10.Scottish approach to taxation, we will work closely with stakeholders
:19:11. > :19:13.in developing the specific policy and legislative proposals
:19:14. > :19:21.underpinning this. For Scottish landfill tax, I plan to ensure the
:19:22. > :19:34.lower rate of tax to ?2 65 per tonne. The standard rate of tax to
:19:35. > :19:38.?2.84 per tonne. I said I would set the credit rate for the Scottish
:19:39. > :19:43.landfill communities fund 10% higher than the UK as a whole. The UK
:19:44. > :19:47.Government announced plans to drop its equivalent rate to 4.2%. I
:19:48. > :19:53.believe this is the wrong decision for our environment. Therefore, we
:19:54. > :19:58.will maintain existing credit rate of 5.6%, ensuring landfill site
:19:59. > :20:00.operators contribute more to community and environmental projects
:20:01. > :20:05.and elsewhere in the United Kingdom. Early this week we received the
:20:06. > :20:10.report of the cross-party commission on local taxation. We welcomed the
:20:11. > :20:14.fact that four of the five parties in parliament took part and reached
:20:15. > :20:18.agreement on a set of crucial principles that local tax should be
:20:19. > :20:21.more progressive, broader and more empowering to local government. The
:20:22. > :20:24.Government will now consider this report carefully and in the New
:20:25. > :20:29.Year, we will set out plans to reform the council tax in a way that
:20:30. > :20:33.will deliver sustainable finances and greater fairness for local
:20:34. > :20:36.taxpayers. I can also announce today that I intend to enter into a
:20:37. > :20:42.consultation with local governor about possible future assignation of
:20:43. > :20:47.a proportion of income tax receipts, thereby giving local authorities an
:20:48. > :20:52.incentive to boost economic growth in their areas. Residing officer,
:20:53. > :20:59.taken together, we expect to raise ?671 million from the holy default
:21:00. > :21:05.taxes in 2016/ 17. These forecasts have been assessed as reasonable.
:21:06. > :21:09.The report will be published setting out its own assessment. I'm grateful
:21:10. > :21:15.for the work and for the scrutiny that has been applied over the past
:21:16. > :21:20.12 months. The commission's port challenges us to improve the
:21:21. > :21:25.robustness of forecasting methodology is. For the first time
:21:26. > :21:28.we are publishing five-year forecasts. This will aid
:21:29. > :21:34.transparency around the medium-term assessment of the Scottish finances.
:21:35. > :21:40.Eight strong and sustainable economy lies at the heart of a successful
:21:41. > :21:47.Scotland. Economic strategy set out our approach to deliver the dual
:21:48. > :21:50.uncomplimentary objectives of tackling the economy and boosting
:21:51. > :21:57.competitiveness. This gives us the revenues needed to tackle
:21:58. > :22:01.inequality. We also believe tackling economic inequality boosts growth.
:22:02. > :22:07.It boosts prosperity. The draft budget provides resources to deliver
:22:08. > :22:11.this by supporting innovation, investment, internationalisation and
:22:12. > :22:14.inclusive growth. We will work in partnership with employers,
:22:15. > :22:18.employees and trade unions through the Scottish business Pledge and
:22:19. > :22:20.that fair work convention to deliver their work and inclusive growth. One
:22:21. > :22:26.of our most significant investments in the future of the Scottish
:22:27. > :22:31.economy is the delivery of 600 hours of free high-quality, early learning
:22:32. > :22:33.and childcare for all three and four-year-olds and bone
:22:34. > :22:41.22-year-olds. We are going further. We are committed to the ambitious
:22:42. > :22:45.plan to double free nursery provision. The First Minister set
:22:46. > :22:50.out in the programme for government the priority replays on educational
:22:51. > :22:53.attainment for the yesterday, the OECD report examining curricular
:22:54. > :22:58.mixers provided encouragement that Scotland is on the right track in
:22:59. > :23:03.our schools. Just this morning, new figures were publishing record
:23:04. > :23:06.number of school leavers in positive destinations, work, education or
:23:07. > :23:10.training. We have a good education system that we are committed to
:23:11. > :23:21.making it better. We must raise attainment for all and close the gap
:23:22. > :23:23.that has existed for decades between children in our most and least
:23:24. > :23:25.deprived areas. The budget makes provision for that commitment, with
:23:26. > :23:33.?33 million investment in attainment programmes for 2016/17 which will
:23:34. > :23:36.reach the Scottish attainment challenge. It reaffirms our
:23:37. > :23:39.commitment to improving the wider education system. We will continue
:23:40. > :23:46.to invest in high-quality schools and community health facilities
:23:47. > :23:52.throughout new Hub programme. In this difficult financial context, I
:23:53. > :23:55.have protected college funding, delivering the budget stability the
:23:56. > :23:59.further education system needs. We will deliver on our promise to
:24:00. > :24:04.expand the education maintenance allowance and modern apprenticeship
:24:05. > :24:07.programmes to help more young people fulfil their potential and into
:24:08. > :24:11.positive rewarding employment. The Scottish Government has placed the
:24:12. > :24:17.principle of higher education based on utility to learn not the ability
:24:18. > :24:21.to pay at the heart of what believe. I can confirm we will continue to
:24:22. > :24:26.fund our commitment to free tuition. We have backed up our commitment to
:24:27. > :24:29.keeping universities world class by investing over ?4 billion in the
:24:30. > :24:37.higher education sector over the last four years. Now we will renew
:24:38. > :24:42.this commitment, investing a further ?1 billion in 2016/17 to support the
:24:43. > :24:44.continued success of our world-class universities, delivering high
:24:45. > :24:49.quality learning and research excellence. We want to go further.
:24:50. > :24:54.We want to see a new relationship with higher education, a long-term
:24:55. > :24:56.partnership underpinned by ongoing significant investment to support
:24:57. > :25:01.the delivery of key shared priorities. That is our ambition and
:25:02. > :25:04.we welcome the constructive approach universities have taken as we
:25:05. > :25:10.discuss with them how to make this a reality. Critical to that long-term
:25:11. > :25:14.approaches our investment in higher education research. This budget
:25:15. > :25:17.settlement will enable the core research budget for higher education
:25:18. > :25:23.to be protected as a key investment for the future of Scotland. The
:25:24. > :25:27.Government is always prioritising investment in infrastructure to
:25:28. > :25:30.stimulate the economy. We are on track to build 30,000 affordable
:25:31. > :25:33.homes over the course of this Parliament. We recognise the
:25:34. > :25:37.importance of extending our commitment on housing to create the
:25:38. > :25:42.quality of accommodation people require to provide continued
:25:43. > :25:46.stimulus to the construction industry. We are committed to
:25:47. > :25:50.building 50,000 new homes jarring the next Parliament. I am delighted
:25:51. > :25:55.to announce that as the first step towards this will be increasing the
:25:56. > :26:00.budget for affordable housing next year by ?90 million, enabling us to
:26:01. > :26:09.invest around ?690 million in housing supply. On fuel poverty, we
:26:10. > :26:12.will continue to invest to help people have affordable homes,
:26:13. > :26:18.building on achievements to date through a home energy efficiency
:26:19. > :26:22.plan in Scotland. In total, over ?100 million to tackle fuel poverty
:26:23. > :26:26.and climate change and help improve the condition of Scotland's home.
:26:27. > :26:31.The development of energy efficiency is a national infrastructure
:26:32. > :26:37.priority will create change in improving energy efficiency and the
:26:38. > :26:43.heating of homes, reducing fuel bills and greenhouse gas emissions.
:26:44. > :26:47.Our investment in collectivity is essential in our vision of
:26:48. > :26:51.harnessing the opportunities for growth and improving public services
:26:52. > :26:57.across all aspects of Scottish life. We will invest ?130 million in
:26:58. > :27:03.Scotland's Digital structure to help meet our 2017 target that 95% of
:27:04. > :27:06.premises in Scotland will have access to next-generation broadband,
:27:07. > :27:10.alongside our investment through the emergency services project, which
:27:11. > :27:16.will enhance mobile coverage into the bargain. We will invest almost
:27:17. > :27:24.?1 billion in transport projects, on rail this will include the
:27:25. > :27:29.completion of the electrification of the line. It includes the
:27:30. > :27:34.construction of the first section of another line. I can announce that
:27:35. > :27:39.new projects are also able to succeed. I have authorising the
:27:40. > :27:45.commencement of work in 2016 /17 to the bypass in Ayrshire and on the
:27:46. > :27:51.Aberdeen Western peripheral Route, I confirm work will begin in 2016 to
:27:52. > :28:00.improvements to the roundabout in the city of Aberdeen. -- at a
:28:01. > :28:05.roundabout. The fourth replacement crossing is on track to be
:28:06. > :28:11.completed. Alongside these major projects, we will invest in trunk
:28:12. > :28:15.roads and motorways. Investment will also be made to support ferry
:28:16. > :28:24.services with two new 100 metres vessels. We will also continue to
:28:25. > :28:30.support air travel through the air this can scheme which offers a 50%
:28:31. > :28:36.discount on core airfares. We are committed to a significant programme
:28:37. > :28:42.of investment in the sewage infrastructure for the 2015/21
:28:43. > :28:45.period, worth ?3.5 billion, and including 250 million to upgrade
:28:46. > :28:49.Glasgow's waste water infrastructure and improve the environment of the
:28:50. > :28:52.River Clyde and tackle flooding. On flooding specifically, there have
:28:53. > :28:56.been a number of incidents issue that have caused enormous distress
:28:57. > :29:01.to members of the public. In this financial year, we will provide ?4
:29:02. > :29:10.million to the local authority areas affected most by the flooding. It
:29:11. > :29:14.will help with recovery and help households and businesses access the
:29:15. > :29:18.support they require. Scotland's businesses are key to creating jobs
:29:19. > :29:25.and boosting prosperity. This draft budget maintains the bonus scheme
:29:26. > :29:31.where homes across Scotland will benefit from reduced or zero
:29:32. > :29:35.business rates. This matches the English poundage rate. Mindful of
:29:36. > :29:38.the views and representations of many in the business community that
:29:39. > :29:42.the future business rates in Scotland, I share with Scottish
:29:43. > :29:45.business recognition that our system of business rates must minimise
:29:46. > :29:49.barriers to investment, be responsive to economic conditions
:29:50. > :29:52.and support long-term economic growth and investment. I can
:29:53. > :29:57.therefore announce we will relaunch -- we will launch a review of the
:29:58. > :30:00.rate system in Scotland. Over the last two years the levels of
:30:01. > :30:05.inflation coupled with below inflation increases in poundage have
:30:06. > :30:08.generated lower income than anticipated. Those income
:30:09. > :30:12.projections have not kept pace with benefits to business from the small
:30:13. > :30:16.business bonus scheme. That is why our proposing today to increase the
:30:17. > :30:20.large business supplement to nondomestic rates and make changes
:30:21. > :30:23.to other released. Taken together, this will raise around ?130 million
:30:24. > :30:40.to fund invested in the economy. The budget also in this is the
:30:41. > :30:48.importance of third sector. The busy economy is now in a sustained PDA of
:30:49. > :30:53.course, but the future health relies on improving productivity, from
:30:54. > :31:00.innovation. We are committing funding, about ?345 million, to
:31:01. > :31:07.support research and innovation, from the funding council. They have
:31:08. > :31:11.committed ?124 million, to the network of innovation centres, but
:31:12. > :31:17.we believe that the approach needs greater focus, to achieve economic
:31:18. > :31:23.impact. The Scottish Government is going to work with partners,
:31:24. > :31:26.including agencies, universities, to align the approach to innovation,
:31:27. > :31:34.get funding, and simplify the landscape. This ambitious reform,
:31:35. > :31:39.the next, allows us to create an environment that drives new
:31:40. > :31:48.products, services, through improved collaboration. One of the two key
:31:49. > :31:54.elements of the budget. The other element, the reform of the public
:31:55. > :31:58.services. Public services play a vital part in shaping the economy
:31:59. > :32:03.and society, making a major contribution to the well-being of
:32:04. > :32:08.communities, promoting prosperity and enable people to participate in
:32:09. > :32:12.society. Having removed the ring fencing of local authority budgets,
:32:13. > :32:16.we have encouraged a greater degree of working at local level, with
:32:17. > :32:24.public bodies, meeting the needs of individual citizens. The Christie
:32:25. > :32:30.commission reinforce this, the integration of public services and a
:32:31. > :32:34.shift towards preventative spending. Since then we have reformed the
:32:35. > :32:39.delivery of college education, and the police and Fire Services as a
:32:40. > :32:46.result. This budget underscores the commitment, to continue reforming.
:32:47. > :32:51.We will take steps to extend Digital publications, increase the use of
:32:52. > :32:58.the services, make more effective use of public assets, and reduce
:32:59. > :33:01.overlap between public services. Presiding Officer, the police
:33:02. > :33:06.service qui a vital role protecting communities. In the last few years,
:33:07. > :33:10.they have undergone difficult but necessary reform. A distinctive
:33:11. > :33:17.build on that. We will provide you the protection, to the front line
:33:18. > :33:22.resource in budget, and if we're going to be re-elected, for every
:33:23. > :33:27.year of the next Parliament, a boost of ?100 billion. When this
:33:28. > :33:31.parliament passed legislation, it agreed that the current financial
:33:32. > :33:34.year would effectively marked the end of the time-limited police
:33:35. > :33:40.reform budget. But given the challenges facing the police,
:33:41. > :33:44.arising from the security situation, we are announcing more support
:33:45. > :33:48.today. Instead of removing the reform budget as Parliament
:33:49. > :33:54.intended, in order to consolidate reforms and support the police, I am
:33:55. > :34:02.committing another ?55 million next year, to this important task of
:34:03. > :34:11.Divinity safety. -- community. In all of these reforms, the objective
:34:12. > :34:19.is to provide cohesion public services, the government has
:34:20. > :34:24.invested significant importance. From 2012 to 2016, local funding has
:34:25. > :34:26.been maintained on a like-for-like basis, with extra resources
:34:27. > :34:38.allocated to do with responsibilities. Compare this to
:34:39. > :34:43.England. Facing a cut in funding, of 27.4%, and more reductions in this
:34:44. > :34:46.and the next financial year. Local government has been a founding
:34:47. > :34:50.partner, in the reform of health and Social Care Act services. The
:34:51. > :34:55.government is making a radical reform, to the way that social care
:34:56. > :35:01.is paid for. It intends to allocate 250 million, from the health
:35:02. > :35:12.service, and the social there, in 2016 and 2017. This is going to
:35:13. > :35:16.build the capacity of community services, and have the largest
:35:17. > :35:20.impact, since the creation of the National Health Service in Scotland
:35:21. > :35:24.in the it will mean fewer people have to go to hospital, but when it
:35:25. > :35:34.is necessary people will get home quickly. And it is addresses the
:35:35. > :35:39.underlying thought, the boundary between NHS and local government
:35:40. > :35:51.spending. It has stopped so many attempts, to improve cure, but it
:35:52. > :35:54.ceases to exist. A strong but challenging financial settlement for
:35:55. > :36:03.local government, we have to recognise that it will support the
:36:04. > :36:07.delivery, but essential service, we won't ditch with local government,
:36:08. > :36:13.in terms of the financial settlement, in advance of stage
:36:14. > :36:17.three can settlement. The key to those discussions, the focus on
:36:18. > :36:20.reform. Local government an essential partners, leading to the
:36:21. > :36:31.creation of sustainable public services.
:36:32. > :36:43.This government is absolutely committed, I am going to be
:36:44. > :36:47.allocating more than ?500 million, resulting in total planned spending,
:36:48. > :36:59.of nearly 13 billion, next year, an increase of 6.5% on numbers for
:37:00. > :37:04.2015, 20 16. But let me make this clear. The nature of the challenges
:37:05. > :37:09.facing us, the National Health Service, mean that additional money
:37:10. > :37:15.will not equip that properly, for the future. To be blunt, if all that
:37:16. > :37:21.we do is find the health service, to do more of the scene, it will not
:37:22. > :37:24.cope with the pressure. To protect the National Health Service, we need
:37:25. > :37:28.to do more than death extra money, we need to deliver fundamental
:37:29. > :37:35.reform and change the way that it delivers care. That despite this
:37:36. > :37:41.additional investment is just as important, than the skill of the
:37:42. > :37:46.resources involved. In addition to the fundamental realignment, this
:37:47. > :37:48.investment will support more reforms, shaping the National Health
:37:49. > :37:59.Service and equipping for the future. We intend to transform
:38:00. > :38:01.primary care, an extra ?45 million, multidisciplinary teams working
:38:02. > :38:08.together, to meet the needs of communities. Secondly, an additional
:38:09. > :38:12.elective capacity, to meet the needs of an older population. We will
:38:13. > :38:25.invest ?200 million over the next five years, six new treatment
:38:26. > :38:28.centres, and their ability to carry out these operations. Investment for
:38:29. > :38:34.reform Soviet protect the National Health Service, for the long term,
:38:35. > :38:36.and this budget shows that the precious National Health Service is
:38:37. > :38:48.going to be safe in the hands of this government, now and in the
:38:49. > :38:51.future. We are committed to being term increases, in the National
:38:52. > :38:57.Health Service budget, not just 2016 and 2017, but the generation of the
:38:58. > :39:06.next Parliament if we are going to be re-elected. The Scottish
:39:07. > :39:12.Parliament has been forced to do this, it is not practical to undergo
:39:13. > :39:18.the full spending review, Scottish ministers continue to discuss the
:39:19. > :39:25.framework, as part of the Scotland Bill. That will have an impact on
:39:26. > :39:32.the resources available. It is possible to set out the vision, we
:39:33. > :39:35.will continue to reject austerity, continue to prioritise investment in
:39:36. > :39:40.public services that people value the most. And we will undertake
:39:41. > :39:47.ambitious reforms, to ensure this remains sustainable. We will invest
:39:48. > :39:52.in schools, to ensure children have the opportunity to the full
:39:53. > :39:56.potential, support the attainment challenge, and implement the
:39:57. > :40:01.recommendations of the commission, developing the workforce. We will
:40:02. > :40:05.also create a stronger economy, investing in innovation, and
:40:06. > :40:12.structure. We will support job creation, and employers, living
:40:13. > :40:22.wage, increasing productivity. We will tackle inequalities, making
:40:23. > :40:27.Scotland fairer, but what we will not do, is full in the UK
:40:28. > :40:32.Government's footsteps, targeting the most vulnerable people in
:40:33. > :40:37.society. This brings me to the final part of this budget statement. The
:40:38. > :40:41.welfare reform agenda of the UK Government is presenting
:40:42. > :40:46.difficulties for families in Scotland, impacting on the most
:40:47. > :40:50.wrong. In contrast, the Scottish Government continues to do for the
:40:51. > :40:59.time, to protect and comes. I can't inform the day, we maintain the
:41:00. > :41:08.commitment -- can confirm today, the allocation of 38 million, up to 340
:41:09. > :41:15.million for the council tax reduction, and more for the Beijing
:41:16. > :41:26.tax. We will continue to help family budgets, free prescriptions, eye
:41:27. > :41:29.checks, travel for old, disabled and young people. Free school meals for
:41:30. > :41:39.children. We told its support for those on low incomes, requiring that
:41:40. > :41:45.employers or pay the -- all pay the living wage. Band maintaining the no
:41:46. > :41:58.compulsory redundancy policy. Personal and no sincere, -- nursing
:41:59. > :42:04.care, will also be maintained. I turn to the council tax. This week's
:42:05. > :42:11.report said that the card and it's a tax system is unfair. It also said
:42:12. > :42:17.many people pay too much. Correct. This government is committed to
:42:18. > :42:20.protecting household budgets, and I have already frozen income tax
:42:21. > :42:30.rates. We proposed to freeze the case of tax, -- council tax, we will
:42:31. > :42:35.keep that promise, and do that next year. This means council tax will be
:42:36. > :42:46.frozen for nine consecutive years. Saving the average household, ?1500,
:42:47. > :42:56.on a band D bill. Dual freeze on income and council tax. Helping
:42:57. > :43:01.families, week in, week out, across Scotland. The government is looking
:43:02. > :43:06.to promote the economy, the lover opportunities, and protect public
:43:07. > :43:10.services for the future. It is a budget for reform, a budget for
:43:11. > :43:33.Scotland, and I commend this to Parliament. Thank you. Order. Deputy
:43:34. > :43:45.First Minister will take questions. After that, the next item of
:43:46. > :43:54.business. Thank you. Let me thank the finance secretary. So much,
:43:55. > :44:02.hidden. We're not just talking about the statement. My disappointment, in
:44:03. > :44:12.my memory, first time in this Parliament, it has been redacted.
:44:13. > :44:16.Genuinely disappointing. This is a historic budget. Probably the most
:44:17. > :44:30.significant since the Scottish Parliament opened. Major attacks and
:44:31. > :44:33.will powers, they could have outline plans, to Interstate 80, and close
:44:34. > :44:42.the gap between the richest and the police. He says he has delivered on
:44:43. > :44:47.that. -- poorest. But he has not rejected austerity, simply managing
:44:48. > :44:56.that. Scottish Labour, calling for the genuine budget, but instead,
:44:57. > :45:04.what we have from the SNP... The budget for an election. Short term.
:45:05. > :45:12.All the cuts hidden. But we know they are still to come. The finance
:45:13. > :45:19.minister should have laid out the plans, across the budget, for at
:45:20. > :45:27.least three years. Scottish spending review. He selected the good news,
:45:28. > :45:35.hid the bad. Austerity, hidden, not avoided. People deserve to know the
:45:36. > :45:41.truth. The SNP credibility on the economy has been questioned by
:45:42. > :45:48.experts. Growth is down. We are behind the rest of the United
:45:49. > :45:59.Kingdom. Oil prices low. And employment statistics, double
:46:00. > :46:02.prerecession levels. -- below. After nine years, the finance secretary
:46:03. > :46:12.has only just discovered tea can do something about productivity. A
:46:13. > :46:19.freeze is not progressive. It does not help the poorest people. The
:46:20. > :46:23.Scottish Government have given us recycled announcements. They have
:46:24. > :46:27.told us what budgets they are increasing, but not what is being
:46:28. > :46:36.cut. The finance secretary has said he is protecting schools, he said he
:46:37. > :46:47.is increasing health, social care, but slashing the budgets of
:46:48. > :46:58.councils. The experts have told us that they are more significant,
:46:59. > :47:01.these are the hidden cuts, that the Scottish National Party are not
:47:02. > :47:06.telling us about. The most significant budget, from a party,
:47:07. > :47:13.telling us they were going to stand up against Conservative austerity,
:47:14. > :47:24.deliver a long-term plan, no. Doesn't deliver the anti-austerity
:47:25. > :47:29.alternative? After nine years, a majority in parliament, more power
:47:30. > :47:40.than before, insubstantial parts of this budget, John Swinney is simply
:47:41. > :47:50.copy and George Osborne. -- copying. That is not anti-austerity. Scotland
:47:51. > :47:56.deserves better than that. On the first point... I think this
:47:57. > :48:06.highlights the atrocious lack of communication within the Labour
:48:07. > :48:09.Party. Not the first time a financial statement has been
:48:10. > :48:14.redacted. It was done last year, so I was able to announce the
:48:15. > :48:19.Parliament, the tax rates being put forward. I cannot remember who the
:48:20. > :48:25.Labour finance spokesperson was, I have gone through so many over the
:48:26. > :48:36.years. If Jackie had talked to them... They would have found out
:48:37. > :48:46.that was redacted last year. That as a basic illustration, of how lacking
:48:47. > :48:50.in detail Jackie Baillie is. In those several minutes, the
:48:51. > :49:01.contribution to Parliament, not a single alternative proposition from
:49:02. > :49:07.Jackie Baillie. This is a character trait of Jackie Baillie. All that
:49:08. > :49:11.the Labour Party deliver, abuse, of the people, they do not produce
:49:12. > :49:21.alternatives of what they would do differently. This is now the chance
:49:22. > :49:27.for Jackie Baillie to redeem also. The opportunity, through the
:49:28. > :49:32.process, now that I have published hundreds of pages of financial
:49:33. > :49:35.information. The choices that we have made. Jackie Baillie can look
:49:36. > :49:45.at this, decide what she would do differently. What taxes she would
:49:46. > :49:49.put up. All the regions, changes. What I have put forward, the budget
:49:50. > :49:53.that protects the incomes of the lost income households in Scotland.
:49:54. > :49:59.That is the most effective way that we can use the powers available to
:50:00. > :50:15.us, to help the people we are elected to serve. Mr Fraser. This is
:50:16. > :50:21.a historic budget. For the first time, since devolution, not just
:50:22. > :50:25.concerned about the devolution of resources, he has the powers to
:50:26. > :50:32.visit the budget, amending the rate of income tax. The finance secretary
:50:33. > :50:36.has chosen to sit that at the same rate elsewhere in the United
:50:37. > :50:40.Kingdom. We applaud that decision. We do not believe that hard-pressed
:50:41. > :50:47.families in Scotland should pay more tax than those elsewhere. But it
:50:48. > :50:53.cannot be forgotten the finance secretary had a choice. He chose not
:50:54. > :50:59.to increase the resources, by waving additional taxes. We need to
:51:00. > :51:10.remember, the total budget for the coming year, in cash terms, 400
:51:11. > :51:14.million higher. In the returns, smoggy trees, but that is
:51:15. > :51:25.substantially less than the most recent underspend. In that context,
:51:26. > :51:29.any talk of cuts Wilshere data was. But it is still the position, it is
:51:30. > :51:37.too more, the solution is in the run hands. He could have chosen to raise
:51:38. > :51:42.the rate of income tax. He has portrayed himself as the prisoner of
:51:43. > :51:51.Westminster austerity. But he has been given the key to the door of
:51:52. > :51:56.his cell. I trust we are not going to hear any more about austerity,
:51:57. > :52:02.when they have chosen not to increase the size of the budget.
:52:03. > :52:08.They had the chance, flunked it. The Scottish Conservatives will detail
:52:09. > :52:12.and scrutinise the budget, suggest constructive changes. For the
:52:13. > :52:20.moment, we welcome the extra money for housing, and nondomestic rates.
:52:21. > :52:32.Straight from the Conservative manifesto. Conservatives lead... SNP
:52:33. > :52:38.follow. I am disappointed the finance secretary has not brought
:52:39. > :52:42.forward great changes, to wind and action, it is already having a
:52:43. > :52:57.detrimental impact on the market. -- land. Looking at the significant
:52:58. > :53:03.shortfall, but I do welcome him following George Osborne's lead in
:53:04. > :53:13.increasing by 3%, the supplement for second only homes. Conservatives
:53:14. > :53:21.lead. SNP follow. I know it is early days, the scrutiny of the budget,
:53:22. > :53:25.but the fundamental problem in the argument that Mr Fraser deployed.
:53:26. > :53:33.That they had not taken states to increase the amount of money
:53:34. > :53:40.available. I have. The business rates, ?130 million. That was not
:53:41. > :53:51.sneaked in. I have expressed that the Parliament. ?130 million. All of
:53:52. > :53:59.that pre amble, of total inflated nonsense from Mr Fraser. Punctured
:54:00. > :54:04.by that fact! I have used the opportunity to increase the money
:54:05. > :54:16.available. We can ignore that part of his rant. We will not ignore the
:54:17. > :54:24.last part of his rant, we'll dismantle! Mr Fraser may have wanted
:54:25. > :54:37.me to use the Scottish rate of income tax, to increase the level of
:54:38. > :54:45.tax that could have been lifted, -- levied. I can see why that would
:54:46. > :54:53.have suited Mr Fraser. It would have led to an increase of 2.6%. That was
:54:54. > :54:59.John Swinney. Talking about the budget.
:55:00. > :55:01.Hamish Macdonell is still with me and we're also
:55:02. > :55:03.joined by our Business and Economy Editor, Douglas Fraser.
:55:04. > :55:06.Let's take a look at some of the key points from
:55:07. > :55:14.No change with the income tax? Going into the election, he did not want
:55:15. > :55:31.to increase that. People will say the same -- see the same bills. 10p
:55:32. > :55:34.going to the Chancellor. 10p going to the Scottish tragedy. He could
:55:35. > :55:45.have cut that, but that would have gone against anti-austerity. More
:55:46. > :55:47.tax on second homes? He has forward what George Osborne has done. I
:55:48. > :56:00.think that would include landlords as well. 3% extra on top. Stamp
:56:01. > :56:09.duty. Fully evolved. One of the reasons George Osborne was doing
:56:10. > :56:16.that, a problem of overheating the south east of England, trying to
:56:17. > :56:26.cool it down. That was part of the agenda for Westminster, but he wants
:56:27. > :56:36.to level the playing field. We were talking about how the Chancellor
:56:37. > :56:39.would be brave to put taxes up. Murdo Fraser having a stab. He said
:56:40. > :56:46.we were supposed to vote for independence, countering
:56:47. > :56:57.conservative austerity. They had the chance to put income tax. Where is
:56:58. > :57:00.anti-austerity? He said that he had to get some money from somewhere.
:57:01. > :57:11.Some of the receipts have not been the size that they would have liked.
:57:12. > :57:20.He said that he did not seek it through, -- sneak, but he needed the
:57:21. > :57:24.money from somewhere, it would not be suicide, but it would be
:57:25. > :57:33.difficult to tell the public. I will find it from big business. Spending.
:57:34. > :57:46.Some of that. Police... Echoing George is on. -- George Osborne.
:57:47. > :57:52.Particularly, in Scotland, from several forces down to one. The
:57:53. > :57:59.response on that. On health, they have stuck to what they said. Except
:58:00. > :58:03.for one significant element. 250 million out of the hill service, to
:58:04. > :58:12.give that to councils. And also slashing Tencel budgets. -- council.
:58:13. > :58:17.Social justice, down about 600 million. But getting more
:58:18. > :58:28.responsibility. Tandy force the council 's to spend that? -- can
:58:29. > :58:38.they force. Or could the councils just take that? Legal requirements,
:58:39. > :58:45.to deliver on expectations that central government has for social
:58:46. > :58:51.care. These are added responsibilities. 250 million.
:58:52. > :58:54.Significant message to his own party, backbenchers, that more money
:58:55. > :59:01.is not always the answer. He said that reform would be more important
:59:02. > :59:08.than finance. This is an issue, that not just the Scottish National
:59:09. > :59:13.Party, but also the previous coalition were criticised for. Just
:59:14. > :59:21.wanting to spend more money? He talked about reform, in general, I
:59:22. > :59:25.was not getting specifics. Merging health and social care. But he
:59:26. > :59:27.talked about reform as though that would see the money.
:59:28. > :59:29.That's all we have time for this afternoon.
:59:30. > :59:32.You can see further analysis of the Budget statement
:59:33. > :59:34.on Reporting Scotland at 6:30pm tonight on BBC One Scotland.
:59:35. > :59:37.First Minister's Questions is tomorrow at noon here on BBC Two.
:59:38. > :00:06.'and each object has a story to tell.'
:00:07. > :00:14.'for their favourite outdoor events around the country,
:00:15. > :00:17.'I'll be pitching up with my silver trailer
:00:18. > :00:20.'to meet the locals with their precious antiques and collectables.'
:00:21. > :00:24.I'm feeling inspired myself. Thank you very much.