0:00:19 > 0:00:21Good afternoon and welcome to a special edition
0:00:21 > 0:00:23of Politics Scotland.
0:00:23 > 0:00:27The Chancellor Philip Hammond announces £2 billion
0:00:27 > 0:00:29for Scotland and a VAT rebate for the Scottish police and fire
0:00:29 > 0:00:33services from next April.
0:00:33 > 0:00:38I'm getting used Mr Speaker to the experience of having my ear bent by
0:00:38 > 0:00:4813 Scottish Conservative colleagues. Most recently on the issue of
0:00:48 > 0:00:50Scottish police and fire VAT.
0:00:50 > 0:00:52And we'll ask the Finance Secretary Derek Mackay what he thinks
0:00:52 > 0:00:57of today's announcements.
0:00:57 > 0:01:00In Westminster, the Chancellor has had his say. We'll be getting
0:01:00 > 0:01:13Scottish political reaction.
0:01:15 > 0:01:17The Chancellor, Philip Hammond, has delivered his budget -
0:01:17 > 0:01:18promising £3bn to prepare for Brexit.
0:01:18 > 0:01:21At the same time he predicted slower than expected economic growth over
0:01:21 > 0:01:22the next five years.
0:01:22 > 0:01:25And Mr Hammond also said increased funding in England would result
0:01:25 > 0:01:27in an extra £2 billions coming to Scotland.
0:01:27 > 0:01:29Now to make sense of the detail, throughout the programme our
0:01:29 > 0:01:31Political Editor Brian Taylor and Financial journalist Erikka
0:01:31 > 0:01:32Askleldn will be here.
0:01:32 > 0:01:34But first lets get the reaction from Westminster.
0:01:34 > 0:01:36Our correspondent David Porter is there.
0:01:36 > 0:01:42What is the initial reaction to this?I think the initial reaction
0:01:42 > 0:01:45is that Philip Hammond was walking an economic and political bride rape
0:01:45 > 0:01:52and he managed not to fall off. One of the big issues he had personally
0:01:52 > 0:01:57was not to make a foul up of the budget. That may change in the hours
0:01:57 > 0:02:01and days to come but the initial reaction seems to be that he did
0:02:01 > 0:02:06relatively OK on it. There will be people who may disagree with what he
0:02:06 > 0:02:10was saying, essentially that he wanted a balanced budget which would
0:02:10 > 0:02:16allow the economy to grow and would mean in future Britain was best
0:02:16 > 0:02:19placed to cope with Brexit and other challenges. Politically he was
0:02:19 > 0:02:23trying to show that it wasn't all about Brexit. That is the dominant
0:02:23 > 0:02:29factor. But also that they are looking to the challenges facing the
0:02:29 > 0:02:34UK economy as a whole, hence the emphasis on stamp duty and housing
0:02:34 > 0:02:40in England and other parts of the UK. The extra money for health and
0:02:40 > 0:02:45the NHS which of course will have knock-on effects for Scotland. He
0:02:45 > 0:02:48made great play of the fact an extra £2 billion will be coming to
0:02:48 > 0:02:52Scotland. First Minister Nicola Sturgeon has taken issue with that.
0:02:52 > 0:02:58He made great play of the abuses that Scottish Tory MPs have been
0:02:58 > 0:03:03lobbying him, and the influence that they have. In the claims and
0:03:03 > 0:03:06counterclaims that will come over the next hours and days it's going
0:03:06 > 0:03:11to be very interesting to see who wins that war of the treatments for
0:03:11 > 0:03:18Scotland.There was also pressure from some in his own party to do
0:03:18 > 0:03:22something bold, to outline this marvellous wonderful new Britain
0:03:22 > 0:03:25that will happen as a result of Brexit. It's not clear that he
0:03:25 > 0:03:32attempted to do that.No, I think he was going to play safety first. They
0:03:32 > 0:03:36basically said we were embarking on the fourth Industrial Revolution and
0:03:36 > 0:03:43changes would happen, hence the emphasis on technology. We heard a
0:03:43 > 0:03:48lot about driverless cars. He wasn't giving himself a hostage about where
0:03:48 > 0:03:52the government is going on that kind of thing but he very much wanted to
0:03:52 > 0:03:57emphasise that we on the of new technologies coming forward and he
0:03:57 > 0:04:00wants Britain not only to invent them, but to benefit from them in
0:04:00 > 0:04:07the future. He knows that his whole government will be defined by how it
0:04:07 > 0:04:11looks on Brexit and how it deals with Brexit. Hence the passage where
0:04:11 > 0:04:14he talked about extra money being available if necessary because of
0:04:14 > 0:04:23Brexit.Thanks, we'll be back with you later. Brian, as usual there's a
0:04:23 > 0:04:27row between the Scottish and British governments already.There's a
0:04:27 > 0:04:34serious of areas -- series of areas, for instance income tax, you have
0:04:34 > 0:04:39the announcement on income tax being reserved by the Treasury which
0:04:39 > 0:04:43affects people in Scotland right away. The Treasury calculate 2.4
0:04:43 > 0:04:50million people because the personal allowance is being pushed up. The
0:04:50 > 0:04:57higher rate threshold, Scotland sets the rates and Derek Mackay will have
0:04:57 > 0:05:02three or four weeks to put the details together. We've reported on
0:05:02 > 0:05:05BBC Scotland that it's likely that they will bring in different bands
0:05:05 > 0:05:11for Scotland. Potentially bringing down the point, lowering the level
0:05:11 > 0:05:18at which you start to pay higher rate tax. This is going to be a huge
0:05:18 > 0:05:24row in Scotland, firstly over the impact on individuals and secondly
0:05:24 > 0:05:29between the SNP and Tories.David suggested they are also arguing
0:05:29 > 0:05:33about how much extra money Scotland will get.Very much arguing about
0:05:33 > 0:05:38that. The figure from the Chancellor is £2 billion, over four years we
0:05:38 > 0:05:43believe including the current year. The Scottish government want the
0:05:43 > 0:05:48details and they say that 1.1 billion of the 2 billion is
0:05:48 > 0:05:51accounted by what is called financial transactions, money that
0:05:51 > 0:05:57can be spent on capital but only private projects, house-building,
0:05:57 > 0:06:03developing areas of the built environment. They say it is a great
0:06:03 > 0:06:08idea but the money isn't going to go health spending education and
0:06:08 > 0:06:13justice, they say it is restricted and must be repaid ultimately.To be
0:06:13 > 0:06:18repaid? Because presumably the consequential is from the first bit
0:06:18 > 0:06:22of the budget where he announced this love for infrastructure.Huge
0:06:22 > 0:06:28increase in capital spending so it comes from that dot might we've had
0:06:28 > 0:06:34this row in the past, the Scottish government says that a lot of it is
0:06:34 > 0:06:38money that they don't have discretion to alter. It depends how
0:06:38 > 0:06:43you interpret the figures. They say it is relatively little on
0:06:43 > 0:06:48day-to-day spending and a real terms cut on that. An area of contention
0:06:48 > 0:06:55between the governments. The cut in stamp duty on property. Already it
0:06:55 > 0:06:59is devolved we have Land and Buildings Transaction Tax which is
0:06:59 > 0:07:05already controversial in Scotland. Again the Conservatives claiming it
0:07:05 > 0:07:07is affecting the housing market. Scottish ministers don't accept
0:07:07 > 0:07:12that, they don't accept the premise on which the Chancellor made his cut
0:07:12 > 0:07:15in stamp duty today but they'll need to look at it again because they
0:07:15 > 0:07:19will face a political challenge. They will say that if the Chancellor
0:07:19 > 0:07:24is bringing in the cuts, you say that they are ill-advised, you are
0:07:24 > 0:07:27already helping the first time buyers, you'll have to prove that
0:07:27 > 0:07:32and show your working. On tax and spending and property tax, three big
0:07:32 > 0:07:38rows in the making.Oil and Gas UK Erikka. I'm imagining they will be
0:07:38 > 0:07:42welcomed by the industry, something I've found incomprehensible and
0:07:42 > 0:07:48you're going to explain.The transferable tax history is going to
0:07:48 > 0:07:54enable companies that own assets in the North Sea, particularly ones
0:07:54 > 0:07:59that have been going on for a long time, that are older and nearing the
0:07:59 > 0:08:03end of their life, this means they will be able to sell those assets to
0:08:03 > 0:08:07a new buyer and the tax credits that go along to support the
0:08:07 > 0:08:10decommissioning of it will be able to be transferred to a new buyer
0:08:10 > 0:08:14which should free up the buying and selling of North Sea Trent and
0:08:14 > 0:08:20assets.Does that mean, as has happened over the last few days,
0:08:20 > 0:08:25there was an oil company bought, some of BP's assets in the North
0:08:25 > 0:08:28Sea. That means the company will get the tax credits for decommissioning
0:08:28 > 0:08:35that BP would have had.Yes, exactly. It has been coming from the
0:08:35 > 0:08:40industry for a long time and I don't know why it is the tax wouldn't have
0:08:40 > 0:08:44been transferable in the first place. Currently what we've seen in
0:08:44 > 0:08:49the North Sea is the idea that North Sea assets are being moved into the
0:08:49 > 0:08:56right hands, the companies and people looking to manage them in
0:08:56 > 0:09:00terms of their late life. They are looking at getting high production
0:09:00 > 0:09:08values from them, they are trying to extend them as long as they can.
0:09:08 > 0:09:20Companies like which has done a lot of transactions in the North Sea. It
0:09:20 > 0:09:24is about allowing the transactions to take place.On the big picture
0:09:24 > 0:09:27stuff, we've talked about the effects in Scotland but this effect
0:09:27 > 0:09:33Scotland as much as anybody else. Economic growth forecasts, it looks
0:09:33 > 0:09:39like pretty much in they bumped it up to 2% at a forecast level but for
0:09:39 > 0:09:43the foreseeable future it looks like they are assuming that, the OBR is
0:09:43 > 0:09:49assuming that the British economy grows at 1.5% rather than the 2%
0:09:49 > 0:09:57level before the financial crash. In the long-term the of that is huge.
0:09:57 > 0:10:01Already we've seen, the OBR tends to actually be optimistic so who knows
0:10:01 > 0:10:10what exactly they are downgrading and what it means. It indicates they
0:10:10 > 0:10:16are finally taking on board the impact that Brexit is going to belay
0:10:16 > 0:10:21Chedjou have on the economy, its growth aspects. Interestingly Europe
0:10:21 > 0:10:25is predicting that its growth is going to be above that and will
0:10:25 > 0:10:34outpace the UK.Eliminating the budget deficit, is it balancing the
0:10:34 > 0:10:36budget or creating a surplus? The phrase that has dominated
0:10:36 > 0:10:41Conservative budget in 2010, the most important thing to worry about.
0:10:41 > 0:10:53It has done off the plate, there was a little X by the OBR next to the
0:10:53 > 0:10:56report saying that they didn't mean it but there's no sense of when it
0:10:56 > 0:11:03will be achieved even. What we do have, there is a narrowing of the
0:11:03 > 0:11:07deficit and they can pat themselves on the back over that but what you
0:11:07 > 0:11:12have is the problem of the growing net debt. It is growing, because the
0:11:12 > 0:11:17pound has tanked and it costs more to service the debt. Corporate tax
0:11:17 > 0:11:20receipts are lower, people aren't paying as much on VAT because they
0:11:20 > 0:11:21aren't spending and are worried.
0:11:21 > 0:11:21paying as much in VAT because they are not spending so much because
0:11:21 > 0:11:23they are worried.
0:11:23 > 0:11:24are not spending so much because theyLeave that for the moment
0:11:24 > 0:11:28because appearing in college green behind me, I can see, the Scottish
0:11:28 > 0:11:34Secretary. Is that a Labour Party badge you are wearing? -- College
0:11:34 > 0:11:39Green.I am supporting Paisley's bids to be the city of culture in
0:11:39 > 0:11:432021, it is a great bed, I am supporting it as I hope everyone is,
0:11:43 > 0:11:48we will see in the beginning of December whether it has succeeded!
0:11:48 > 0:11:50-- bid.LAUGHTER This extra money for the Scottish
0:11:50 > 0:11:54Government, seems to be some suggestions that half of that may
0:11:54 > 0:12:03have today repaid at some point. Is that true?Some of the money comes
0:12:03 > 0:12:10from the consequential for the arrangements in
0:12:10 > 0:12:14England, for funding of housing, so it is a particular kind of funding,
0:12:14 > 0:12:16but the Scottish Government, if they have the initiative, if they have
0:12:16 > 0:12:21the wherewithal, they can use that money in innovative ways. The
0:12:21 > 0:12:26Scottish Government has a track record of innovative use of funding,
0:12:26 > 0:12:31Scottish investment banks, Scottish futures trust. The money is
0:12:31 > 0:12:33definitely available, it is for the Scottish Government to come forward
0:12:33 > 0:12:39with mechanisms that will allow it to be used.Just to be clear, of
0:12:39 > 0:12:42this £2 billion, how much is available to the Scottish Government
0:12:42 > 0:12:49for data Rhys Bend.Over that period, about half of it, it is a
0:12:49 > 0:12:57mixture between capital and revenue spending, 1.6 of it is capital
0:12:57 > 0:13:04spending in total, and so that is 400 million in revenue terms.
0:13:04 > 0:13:09Obviously it is spread over the four years, it is an additional 2
0:13:09 > 0:13:15billion, it is an additional amount of money over and in real terms. And
0:13:15 > 0:13:19so it is a significant increase in Scottish Government spending. I have
0:13:19 > 0:13:23been around the houses so many times, I don't expect the Scottish
0:13:23 > 0:13:26Government to come out in gratitude for the fact they have extra money.
0:13:26 > 0:13:31They are never going to do that. But they do have the money, if they are
0:13:31 > 0:13:34innovative with that money they will be able to benefit people right
0:13:34 > 0:13:40across Scotland.By the end of this period, this four year period, will
0:13:40 > 0:13:46the Scottish Government's current budget, day-to-day budget, have
0:13:46 > 0:13:52increased, stayed the same or will it have decreased in real terms?The
0:13:52 > 0:13:56overall budget of the Scottish Government will have gone up 1% in
0:13:56 > 0:14:02real terms, it is additional money. Including capital spending?Yes.
0:14:02 > 0:14:09What about in revenue spending?In revenue spending terms, broadly the
0:14:09 > 0:14:11same position they would have anticipated being.They anticipated
0:14:11 > 0:14:19having a real cut.Yes, what I am saying is, they have budgeted...
0:14:19 > 0:14:24They have budgeted on a basis of spending, the money that has come
0:14:24 > 0:14:30today, particularly the capital money, is an increase in real terms.
0:14:30 > 0:14:35So there is no suggestion that today's budget has led to a cut in
0:14:35 > 0:14:37the Royal spending that the Scottish Government would have anticipated
0:14:37 > 0:14:43they would have had.That is not the question I ask you but I am sure
0:14:43 > 0:14:47viewers will have noted that. The NHS, Philip Hammond announced extra
0:14:47 > 0:14:53money for the NHS but then he said, I cannot remember the phrase, but it
0:14:53 > 0:15:00would come to some special mechanism... That money will not be
0:15:00 > 0:15:07Barnettised.Money spent through the Barnett rules is subject to the
0:15:07 > 0:15:14Barnett Formula, our third...This money will not be.Other money is
0:15:14 > 0:15:17not subject to that formula, we have announced the total, we have
0:15:17 > 0:15:21announced the total amount of money, which will be available to the
0:15:21 > 0:15:25Scottish Government as a result of Barnett consequential is from
0:15:25 > 0:15:31today's budget.I think what you have just done is confirmed what I
0:15:31 > 0:15:35suggested in my question, which is that the money which was announced,
0:15:35 > 0:15:39the extra money announced for the NHS will be done through a
0:15:39 > 0:15:42mechanism, as for example, the extra money for Northern Ireland was done,
0:15:42 > 0:15:48which will not be Barnettised.We have been fully transparent with
0:15:48 > 0:15:54what is being Barnettised in terms of the money that is coming to
0:15:54 > 0:15:58Scotland. We have been clear exactly what the money is that is coming to
0:15:58 > 0:16:01Scotland, which is fully in accordance with the Barnett Formula,
0:16:01 > 0:16:06but additional money is coming to Scotland, and directly will benefit
0:16:06 > 0:16:14Scotland. We have announced the end of the police VAT, that is £40
0:16:14 > 0:16:17million, coming to police and fire, hopefully, across Scotland,
0:16:17 > 0:16:25unless...OK, OK...There is significant direct investments into
0:16:25 > 0:16:30Scotland, city deals in sterling, Perth, Dundee, the growth deal that
0:16:30 > 0:16:34will encompass the borders and the North of England. This is direct
0:16:34 > 0:16:38funding into Scotland. -- Stirling. That money will be Barnettised but
0:16:38 > 0:16:43what about another tranche of money, negotiations that would in effect
0:16:43 > 0:16:50lift the pay cap for nurses, but he also said the money would be made
0:16:50 > 0:16:55available separately should pay be broken. Will that money be
0:16:55 > 0:17:00Barnettised?The Scottish Government are responsible for the pay of those
0:17:00 > 0:17:04who work in the NHS and other devolved areas.I understand that,
0:17:04 > 0:17:09that is not the question I am asking.The point I have made
0:17:09 > 0:17:14throughout the interview, there are rules in relation to funding which
0:17:14 > 0:17:19is Barnettised and they will apply if the funding is within the Barnett
0:17:19 > 0:17:23Formula envelope then it will come to Scotland on that mechanism as
0:17:23 > 0:17:30Barnett consequential is.All right, Yankee very much for joining us,
0:17:30 > 0:17:32Scottish Secretary, David
0:17:32 > 0:17:37Mundell. Pretty clear that that money is not going to be
0:17:37 > 0:17:41Barnettised.It is certain it is not going to be, the Chancellor made a
0:17:41 > 0:17:45point of that. It'll be off balance sheet, that will not have a
0:17:45 > 0:17:51consequential for Scotland. David Mundell also confirming that more
0:17:51 > 0:17:55than half of the 2 billion is capital. He is right in saying that
0:17:55 > 0:17:59in the past it has a potential benefit to Scotland. The quibble is,
0:17:59 > 0:18:04they cannot spend it as they will. On day-to-day spending, on improving
0:18:04 > 0:18:08the health service and education. They cannot spend it on public
0:18:08 > 0:18:13sector projects.He seems to be suggesting, something like £1
0:18:13 > 0:18:17billion of that could be spent, because, you can have some capital
0:18:17 > 0:18:25spending, seem to be suggesting half of the money is...1.6 billion...Of
0:18:25 > 0:18:29the whole amount was capital... And some of that they might be able to
0:18:29 > 0:18:34spend...The Scottish Government say the figure, that is 1.1 billion,
0:18:34 > 0:18:39that money that is in control. This is this is this is quibbling, it is
0:18:39 > 0:18:43important, it is whether it is in control of this money, justice,
0:18:43 > 0:18:53ferrets taming Tom NHS...LAUGHTER. A source of ignorance, sadly
0:18:53 > 0:18:59neglected, or whether they can spend it on private sector projects(!) --
0:18:59 > 0:19:09ferret taming, NHS... This is not just straight up, spend the dosh, it
0:19:09 > 0:19:16is money but it has strings attached.Trying desperately not to
0:19:16 > 0:19:19say the words, I think he did confirm that in real terms over the
0:19:19 > 0:19:25next four years, the current budget, day-to-day spending budget of the
0:19:25 > 0:19:32Scottish Government will be cut in real terms.I agree, definitely.
0:19:32 > 0:19:35Presumably, capital spending is going towards the projects that they
0:19:35 > 0:19:39have set out, showing the borderlands growth deal, involving
0:19:39 > 0:19:45some sort of capital spending in order to grow that.Not investment,
0:19:45 > 0:19:49real money. But it is money with strings, it is money not pictured in
0:19:49 > 0:19:54that way, to be fair to David Mundell, he was open about it, he
0:19:54 > 0:19:57said he was being transparent...The other side of this, to be fair to
0:19:57 > 0:20:01David Mundell and the Conservatives, both Labour and the SNP tends to
0:20:01 > 0:20:06say, we agree that we should balance the budget, the current budget, we
0:20:06 > 0:20:11just think that if we are going to run up extra public debt, it should
0:20:11 > 0:20:16be for capital projects. The Conservatives could say, that is
0:20:16 > 0:20:20precisely what we are doing.On the other one, public sector pay, what
0:20:20 > 0:20:27the Scottish Government wanted was a budget line that said we expect it
0:20:27 > 0:20:31to go upwards, this is a new budget line that covers it and covers it
0:20:31 > 0:20:34for England and has a consequential for Scotland and that's deal is
0:20:34 > 0:20:39done. The Chancellor did not say that, he hinted at finding ways to
0:20:39 > 0:20:44pay for nurses but did not talk about other sectors. And that
0:20:44 > 0:20:48explains, we already knew, that there is caution among the Scottish
0:20:48 > 0:20:51Government, Nicola Sturgeon says people are entitled to a fair pay
0:20:51 > 0:20:56deal, in return for hard work, but she always adds, it must be
0:20:56 > 0:21:03affordable.David Mundell was saying that it is up to the scottish
0:21:03 > 0:21:07government what it pays in assets, but what the Scottish Government
0:21:07 > 0:21:10would like is a consequential, so they knew what a baseline was and if
0:21:10 > 0:21:13they choose to spend more than that, at least they would be getting
0:21:13 > 0:21:20something.How the nurses are paid or anyone in the public sector,
0:21:20 > 0:21:25there is a difference now, in Scotland, there is the prospect of
0:21:25 > 0:21:29lifting public sector pay cap, in England, it is not.We will be back
0:21:29 > 0:21:32with more, later on.
0:21:32 > 0:21:39Now let's speak to someone who gets to mark the chancellor's homework
0:21:39 > 0:21:41after an event like this, it'sCarl Emmerson,the director of
0:21:41 > 0:21:43the Institute for Fiscal Studies.
0:21:43 > 0:21:47Very striking figure in the pre-budget document you produced,
0:21:47 > 0:21:52you said if you compare the course the British economy had actually
0:21:52 > 0:21:56taken, compared to its trend growth before the financial crash, we were
0:21:56 > 0:22:01on schedule to be on one fifth smaller as an economy than we would
0:22:01 > 0:22:08have been. How is that affected by the growth forecast being cut today?
0:22:08 > 0:22:12That number has got bigger, what the forecast is now saying is that
0:22:12 > 0:22:16unfortunately going forward, the experience of the last seven years,
0:22:16 > 0:22:22growth has been abysmal, it is likely to continue. Rather than the
0:22:22 > 0:22:25experience of the seven decade up to the financial crisis, where
0:22:25 > 0:22:28productivity and growth was much better. Compare to what we could
0:22:28 > 0:22:34have expected, back in 2008, before the crisis hit, looks like in five
0:22:34 > 0:22:39years' time, we will be around one fifth poorer on average than what we
0:22:39 > 0:22:43could reasonably afford, that affects living standards, wages will
0:22:43 > 0:22:48not grow as much as we hope, today's forecast shows no average wage
0:22:48 > 0:22:54growth. After inflation. And also government finances are a mess, it
0:22:54 > 0:22:58means less income tax, less national Insurance, less VAT, people are
0:22:58 > 0:23:04poorer and spending less on items. Dwelling on this one fifth thing, we
0:23:04 > 0:23:09often see rows of columns in government documents, all fractions
0:23:09 > 0:23:13of 1%, but the point is, over years, these make huge differences, the
0:23:13 > 0:23:19difference seems tiny, between 1.5 and 2%, but it could mean the
0:23:19 > 0:23:22economy is one fifth smaller than where it would have been had the
0:23:22 > 0:23:26financial crash not happen.We had the great recession, living
0:23:26 > 0:23:30standards declined, unfortunately, recessions happen much you have a
0:23:30 > 0:23:35drop in living standards, but the remarkable thing is, normally you
0:23:35 > 0:23:39expect a strong recovery, a period of very weak growth and then you
0:23:39 > 0:23:44bounceback more strongly thereafter. We have not had that bounceback,
0:23:44 > 0:23:47only recently that living standards got back to the level they were at.
0:23:47 > 0:23:52We still seem to be growing at a relatively mundane rate, and that
0:23:52 > 0:23:56gap between where we are at and where we would have reasonably
0:23:56 > 0:24:00expected ten years ago keeps growing and growing. We really have too hope
0:24:00 > 0:24:03that the forecasts turn out to be a and we get some bounceback.
0:24:03 > 0:24:09Increasingly we think that is over optimism, and better to cut cloth
0:24:09 > 0:24:13according to a more pessimistic outlook for living standards.The
0:24:13 > 0:24:19thing is, from the forecast, the revised forecast, they put growth up
0:24:19 > 0:24:23to 2%, way out so far in advance that nobody can make a reasonable
0:24:23 > 0:24:27forecast. For the timescale you can make a reasonable forecast, should
0:24:27 > 0:24:32the Obie be right, and they may be wrong, but should they be right,
0:24:32 > 0:24:35then it looks like we can look forward to lower growth than we were
0:24:35 > 0:24:41expecting pretty much indefinitely. -- the OBR.That is certainly the
0:24:41 > 0:24:46risk, and if it continues for a very long run, it will mean that the debt
0:24:46 > 0:24:49accrued over the last four years will be more of a burden, we have
0:24:49 > 0:24:56not had as much income, people will enjoy less spending, and government
0:24:56 > 0:25:05finances will be hard pushed and pushed back. So it is clearly a very
0:25:05 > 0:25:07difficult environment, and shows ultimately, productivity growth is
0:25:07 > 0:25:12so important, if you can delivered greater productivity growth, you
0:25:12 > 0:25:18deliver greater prosperity.The other thing that struck us,
0:25:18 > 0:25:19balancing the budget, budget surplus, eliminating the deficit,
0:25:19 > 0:25:24choose whichever phrase you like, it was the only thing we were supposed
0:25:24 > 0:25:30to worry about throughout George Osborne's reign as Chancellor. It
0:25:30 > 0:25:33featured in Philip Hammond's last budget and now it is not even
0:25:33 > 0:25:39mentioned.Not mentioned at all, if you went back to the last budget,
0:25:39 > 0:25:44March, 2016, not that long ago, he was forecasting a surplus on the
0:25:44 > 0:25:47government budget in 2019/20, of £10 billion.
0:25:52 > 0:26:00The latest forecast suggests will be in debt by 35mm is -- 30 £5 billion,
0:26:00 > 0:26:07which is a remarkable turnaround. Joining us Brian, let's come down,
0:26:07 > 0:26:11one of the things Philip Hammond had to do was to make us all feel
0:26:11 > 0:26:15better. It's been an extraordinary economic recovery. Quite a strong
0:26:15 > 0:26:21recovery but no one has noticed.He tried two approaches, firstly to
0:26:21 > 0:26:26make us feel better and then to make the Conservative benches feel better
0:26:26 > 0:26:31and third, he must protect himself because he's in a tight spot. They
0:26:31 > 0:26:36march budget of 2017, he had to cancel the National Insurance change
0:26:36 > 0:26:45for the self-employed after a matter of days.It wasn't a good thing!A
0:26:45 > 0:26:48mess, a situation that is disquieting. Then you have a
0:26:48 > 0:26:54situation where he is regarded by Brexiteers as being something of a
0:26:54 > 0:26:58traitor. One of his predecessors said that his actions, seeking to
0:26:58 > 0:27:03ameliorate Brexit were tantamount to appetite. When you are accused of
0:27:03 > 0:27:09that you know you are in a tight spot. He tried two tactics,
0:27:09 > 0:27:11sometimes deploying apocalyptic language about the sunny uplands
0:27:11 > 0:27:18ahead for the UK. He deployed them and then said, get on with the
0:27:18 > 0:27:24detailed.The other thing, when spreadsheets Philip does the
0:27:24 > 0:27:29apocalypse it doesn't sound like the Apocalypse.The other was disarming
0:27:29 > 0:27:38soft abating humour, inference is too deep -- references to TV, Kezia
0:27:38 > 0:27:46Dugdale and Jeremy Clarkson.The me and Hammond one was good.It was
0:27:46 > 0:27:50first class but it strikes me that he's doing these things to say
0:27:50 > 0:27:57honestly, I'm a decent guy, please give me a break, pal. It worked to
0:27:57 > 0:28:05some extent, but you hear that, there's no growth in the economy.He
0:28:05 > 0:28:10must make us feel better, has he done anything to do that?He has
0:28:10 > 0:28:21meant that our wee dram in the pub next year isn't going to be as
0:28:21 > 0:28:26strong although if you like a bit of cider you won't be in luck.Everyone
0:28:26 > 0:28:33has been talking about real living, Carl Emmerson saying there is no
0:28:33 > 0:28:35prospect for real living standards going up for the next couple of
0:28:35 > 0:28:41years.There is the estimate for 2.4 million Scots presumably on low or
0:28:41 > 0:28:45minimum wage who are going to have a bit more in their pocket but how
0:28:45 > 0:28:53much they feel it, I'm not sure. There is the idea that there is
0:28:53 > 0:29:00more, the minimum wage is going up. There isn't much else.We'll be back
0:29:00 > 0:29:09with you in a moment. David Porter is an increasingly darkening London
0:29:09 > 0:29:12and has reappeared.It is increasingly dark. We will press on
0:29:12 > 0:29:16before the rain comes. We have sirens as well but that's par for
0:29:16 > 0:29:26the course on College Green. My two guests, Leslie, I'll begin with you
0:29:26 > 0:29:34first and then I will move to you, Christine Johnny. Firstly, Leslie,
0:29:34 > 0:29:38the headline, £2 billion extra for Scotland, that's not a bad headline
0:29:38 > 0:29:44for the government.We need to see the small print of what it looks
0:29:44 > 0:29:49like and how the money will be used. There are plenty of homes for that 2
0:29:49 > 0:29:54billion to go to and we have plenty we could be doing with that level of
0:29:54 > 0:29:57investment but we must see the detail and how much translates into
0:29:57 > 0:30:01cash that the Scottish government will have at their disposal but on
0:30:01 > 0:30:08the surface, good news.Christine Jardine, the UK government is
0:30:08 > 0:30:11pointing out the positive as you'd expect. They say that there will be
0:30:11 > 0:30:16attacked Scott for nearly two and a half million people in Scotland -- a
0:30:16 > 0:30:19tax cut. It seems that Philip Hammond has got the best out of what
0:30:19 > 0:30:24was not a great economic situation. You'd expect the government to talk
0:30:24 > 0:30:30it up but if you look at it in stark figures, 3.7 billion is being set
0:30:30 > 0:30:39aside for the effects of Brexit. The OBR says we will be £45 billion
0:30:39 > 0:30:44worse off than it thought in March this year. The economy won't be
0:30:44 > 0:30:47growing, it will be shrinking, so the overall picture for households
0:30:47 > 0:30:53in the UK who will be £700 a year worse off isn't good. He has
0:30:53 > 0:30:59tinkered at the edges, Universal Credit, not pausing it. We welcome
0:30:59 > 0:31:02the fact that Police Scotland is going to be exempt from VAT but this
0:31:02 > 0:31:06problem could have been avoided in the first place. We have a £200
0:31:06 > 0:31:11billion black hole. We're looking at a situation where Universal Credit
0:31:11 > 0:31:14isn't being halted, there is no lift in the pay for public sector
0:31:14 > 0:31:24workers. It needed more medical treatment.Use a more radical but --
0:31:24 > 0:31:29you said more radical but did he have the money to do it?The
0:31:29 > 0:31:32government have put themselves in this position because of a lack of
0:31:32 > 0:31:36Brexit strategy. There are things he could have done, he could have
0:31:36 > 0:31:42halted Universal Credit, we need to look at a root and branch review but
0:31:42 > 0:31:46instead he has tinkered around the edges. Not good enough. We need to
0:31:46 > 0:31:50find a way of making sure that people who are on Universal Credit
0:31:50 > 0:31:54are getting a better deal.As far as Universal Credit was concerned we
0:31:54 > 0:31:58were led to believe that there would be changes. The fact that Christine
0:31:58 > 0:32:05Jardine is saying he isn't reducing the time limits and things like that
0:32:05 > 0:32:09as significantly as the Lib Dems would want, from the Scottish
0:32:09 > 0:32:18perspective, how much of a potential own goal is this?Everyone
0:32:18 > 0:32:21recognises it is fundamentally flawed and their own backbenchers
0:32:21 > 0:32:28recognise it. Pausing it is sensible. The errors we can see, the
0:32:28 > 0:32:31suffering it is causing should be fixed and the measures could have
0:32:31 > 0:32:35been addressed here and they weren't all stop more widely we must think
0:32:35 > 0:32:40of some of the courses under pinning the economy, investment is down,
0:32:40 > 0:32:45wages are down, productivity is down. These aren't good indicators
0:32:45 > 0:32:51that this economy is performing well. We must look at the level of
0:32:51 > 0:32:55poverty that were mentioned in Jeremy Corbyn's speech. These things
0:32:55 > 0:33:01don't point to a good outcome for working people. The roll-out of
0:33:01 > 0:33:04Universal Credit is just another thorn in people's flash at a time
0:33:04 > 0:33:09and they don't need it.We are in a new political situation, for the
0:33:09 > 0:33:14first time in a generation, since 1992 we have a significant block of
0:33:14 > 0:33:19Tory MPs down here in Westminster. It seems from their point of view
0:33:19 > 0:33:23that they've been able to twist the Chancellor's arm.Not to the extent
0:33:23 > 0:33:27that you would hope they would. At the end of the day they are doing
0:33:27 > 0:33:31what Theresa May wants, following the Conservative party off a Brexit
0:33:31 > 0:33:36Cliff. They aren't pursuing the things that people in Scotland would
0:33:36 > 0:33:42like to see pursued. Well done for getting the VAT lifted on the police
0:33:42 > 0:33:46but they could have helped avoid it in the first place in Scotland. We
0:33:46 > 0:33:50are getting a lot of political manoeuvring from them but we are
0:33:50 > 0:33:54actually getting the substantial changes, substantial concessions in
0:33:54 > 0:34:00policy that we are looking for, on Universal Credit, on house-building.
0:34:00 > 0:34:05Not enough houses will be built in Scotland over the next five years.
0:34:05 > 0:34:08Christine talked about tinkering around the edges but if you are an
0:34:08 > 0:34:13MP from the north-east of Scotland or if you are involved in the Oil
0:34:13 > 0:34:16and Gas UK you are going to be quite pleased by what the government has
0:34:16 > 0:34:19done with this technical change. It could have real benefits, couldn't
0:34:19 > 0:34:28it?A number of points to be made. The VAT issue was wrong and we still
0:34:28 > 0:34:34haven't got it right. The SNP messed up, ignoring advice. The Tories have
0:34:34 > 0:34:38allegedly twisted the Chancellor's arm, but I don't think they twisted
0:34:38 > 0:34:42it hard enough because why wouldn't you reset back to where it was in
0:34:42 > 0:34:492013? That would be the thing to do. In terms of oil and, 75 million is
0:34:49 > 0:34:52the figure being quoted but that is a drop in the bucket. Looking at the
0:34:52 > 0:35:00industrial strategy or lack of it there is more thinking required. To
0:35:00 > 0:35:04my earlier point about investment and wages, none of these things are
0:35:04 > 0:35:08adding up to anything that's going to kick-start the economy.Will have
0:35:08 > 0:35:14to leave it there. Somehow I think in the hours and days ahead we'll
0:35:14 > 0:35:21come back to the budget and what you see as some of the flaws. For the
0:35:21 > 0:35:28time being, back to you.Lets recap what the Chancellor's statement
0:35:28 > 0:35:35means. On December 14, what choices on spending does the Scottish
0:35:35 > 0:35:43government have now?
0:35:43 > 0:35:45To give us some insight - joininng us from the Fraser
0:35:45 > 0:35:47of Allander Institute is economist David Eiser.
0:35:47 > 0:35:52The Scottish government getting an extra £2 billion from it but almost
0:35:52 > 0:35:57half of that isn't money they can spend. Just explained that.This is
0:35:57 > 0:36:02all about the consequential is coming from UK government spending
0:36:02 > 0:36:08and how they flowed to the Scottish government. It's important to
0:36:08 > 0:36:17distinguish I think three types of consequential. There are
0:36:17 > 0:36:20consequentials resulting from day-to-day spending on public
0:36:20 > 0:36:23services, consequentials relating to capital spending, investment in
0:36:23 > 0:36:27hospitals and roads and there is a third kind, called financial
0:36:27 > 0:36:33transactions. This is a consequential coming to the Scottish
0:36:33 > 0:36:38government as a result of the UK government providing loans to
0:36:38 > 0:36:46first-time buyers to support them buying properties. Now the
0:36:46 > 0:36:48constraint is the Scottish government has in terms of those
0:36:48 > 0:36:54types of consequentials is that it has to use them to provide similar
0:36:54 > 0:36:59types of loans in Scotland. That doesn't necessarily mean that those
0:36:59 > 0:37:07loans have to be associated with loans to house buyers but it has to
0:37:07 > 0:37:10be associated with loans that are ultimately paid back. This can't be
0:37:10 > 0:37:18used to support general public spending increases on either the
0:37:18 > 0:37:22resource side or the capital side. They could use them to lend to
0:37:22 > 0:37:26businesses rather than house-buyers? As far as I understand that is a
0:37:26 > 0:37:33notch and, yes.Erikka thinks that the changes to the oil and is
0:37:33 > 0:37:41industry will be welcomed. They will be welcomed, won't they?The changes
0:37:41 > 0:37:44to the boil and the industry in terms of the offsetting
0:37:44 > 0:37:52arrangements? Certainly yes, the investment in the offshore sector is
0:37:52 > 0:38:00down 50% is 2014. -- since 2014. The announcement today allows companies
0:38:00 > 0:38:08to transfer their historic tax liabilities to companies who are
0:38:08 > 0:38:20buying access to those older oilfields. This means that new
0:38:20 > 0:38:25companies can capitalise on this tax break, effectively, and offset the
0:38:25 > 0:38:33costs of decommissioning on the past tax liabilities of companies that
0:38:33 > 0:38:38they've bought the field from. I think this is a positive development
0:38:38 > 0:38:44but of course it doesn't change the fact that the outlook for the
0:38:44 > 0:38:50offshore sector is particularly weak.Overall, David, do you think
0:38:50 > 0:38:56Philip Hammond has done anything bold? Were you expecting something
0:38:56 > 0:39:03more imaginative?He was really boxed in, boxed in by effectively be
0:39:03 > 0:39:08fiscal target he set himself this time last year, and the commitments
0:39:08 > 0:39:18that his party has made to freeze most of the main taxes. So in some
0:39:18 > 0:39:22ways we weren't expecting anything big or bald within that context. He
0:39:22 > 0:39:31was boxed in. Within that context he's found some additional money for
0:39:31 > 0:39:37spending on public services, meaning there are some additional
0:39:37 > 0:39:39consequentials for the Scottish government but it doesn't change the
0:39:39 > 0:39:43fact that next year and the year after that, the outlook for the
0:39:43 > 0:39:49Scottish grant is that it will fall in real terms. Still it is a
0:39:49 > 0:39:51constraining picture in terms of public finances over the next couple
0:39:51 > 0:39:57of years.What about welfare? Iannone moves to make it easy for
0:39:57 > 0:40:00people to get Universal Credit more quickly. Will that have a big
0:40:00 > 0:40:07effect?I think that's a fairly marginal change in the context of...
0:40:07 > 0:40:14The big things here are the freeze in the upgrading of the benefits
0:40:14 > 0:40:20that we've seen since 2013 and 2014. Those things make a really big
0:40:20 > 0:40:25difference. Things like freezing the work allowance and on. In the
0:40:25 > 0:40:30context of those more major things, the change to the timing is fairly
0:40:30 > 0:40:32small-scale.Thank you for joining us.
0:40:32 > 0:40:35Thank you very much indeed for joining us. We should maybe take
0:40:35 > 0:40:38that up.
0:40:38 > 0:40:42That was one of the pressures on him, do something about Universal
0:40:42 > 0:40:48Credit, the two big issues are, were people feeling that they had to wait
0:40:48 > 0:40:51up to six weeks to get Universal Credit, and the other thing was,
0:40:51 > 0:40:58this freeze, that was not even mentioned.A four year continuing
0:40:58 > 0:41:04freeze on benefits, basically for those in work. We are halfway
0:41:04 > 0:41:06through that and the freeze continues, those benefits will
0:41:06 > 0:41:12continue. With regard to Universal Credit, new Universal Credit coming
0:41:12 > 0:41:18in to replace a handful of others. He's not withdrawing the benefit or
0:41:18 > 0:41:22altering the approach, he thinks it is good, still thinks it is an
0:41:22 > 0:41:26incentive to stay in employment, what he is trying to do is alter the
0:41:26 > 0:41:33way it is paid. Announcing changes to an early remuneration of the
0:41:33 > 0:41:36situation, he announced loans, the loan is in advance, the loans in
0:41:36 > 0:41:42advance will be paid more readily. Sorting out a situation which has
0:41:42 > 0:41:44been described as heartbreaking and heart-rending by individual
0:41:44 > 0:41:49constituency MPs and not just on the opposition benches, the
0:41:49 > 0:41:52Conservatives have been saying this as well, sagacious nods from the
0:41:52 > 0:41:57Tory benches as well as the opposition benches. Seeking to
0:41:57 > 0:42:02address this with substantial money, the cost is more than 1 million.He
0:42:02 > 0:42:05did not mention anything to do with social care, given the problems
0:42:05 > 0:42:10Theresa May had, in the run-up to the election campaign, the whole
0:42:10 > 0:42:16issue appears to have been shelved. A massive problem with people who
0:42:16 > 0:42:20cannot find the right level of care, which boosts the cost to the NHS,
0:42:20 > 0:42:25where people have to stay in hospital, that is a problem across
0:42:25 > 0:42:30the UK, Scotland, and it will only get worse.Also did not mention...
0:42:30 > 0:42:33Let's go through a list of what he did not mention, nothing about
0:42:33 > 0:42:40pensions!There was the expectation that he might try to tackle
0:42:40 > 0:42:45rebalancing between the millennium generation and the older generation,
0:42:45 > 0:42:48nothing about pensions or anything that he was going to be doing about
0:42:48 > 0:42:53that. Also, I noticed, for people who are self-employed or their taxes
0:42:53 > 0:42:58are structured in such a way that they may make around 85,000 a year,
0:42:58 > 0:43:04not making the same mistake that he did last time.Not revisiting it in
0:43:04 > 0:43:08a more moderate way.He's saying, you are all on your own.This party
0:43:08 > 0:43:13depends, not entirely, not even massively, but to a large degree, on
0:43:13 > 0:43:18the support of the elderly middle classes. At the start of the most
0:43:18 > 0:43:21recent UK general election, they announced a policy out of the blue
0:43:21 > 0:43:24which would have impacted upon the elderly middle classes. That really
0:43:24 > 0:43:29worked well, in electoral terms(!) that is why he is conscious and
0:43:29 > 0:43:33steering clear.
0:43:33 > 0:43:35Well lets speak to the man who'll have to make those
0:43:35 > 0:43:39decisions in December.
0:43:39 > 0:43:41The Finance SecretaryDerek Mackay has been paying close
0:43:41 > 0:43:46attention to today's announcements.
0:43:46 > 0:43:55Give a short interpretation of these extra £2 billion, there seem to be
0:43:55 > 0:44:00an understanding that half of it would be financial transactions, and
0:44:00 > 0:44:04acceptance from David Mundell, is that your understanding?Over half
0:44:04 > 0:44:09of that for that four year period is financial transactions, money with
0:44:09 > 0:44:15strings attached, you cannot invest in new schools or hospitals or roads
0:44:15 > 0:44:20or traditional capital investment, loans and equity on those type of
0:44:20 > 0:44:24payments, it has to be paid back to the Treasury, so in a sense, it is
0:44:24 > 0:44:31not a £2 billion boost to Scotland, it is a con, it is disappointing, it
0:44:31 > 0:44:35is not accurate to portray it as new money to the Scottish budget when it
0:44:35 > 0:44:38is in essence money with strings attached, over half of that £2
0:44:38 > 0:44:45billion figure.But, it which is being suggested to us, the Scottish
0:44:45 > 0:44:48Government would not necessarily have to use that money for loans for
0:44:48 > 0:44:51people to buy houses, could be used for business loans and whatever,
0:44:51 > 0:44:56what range of things can it be used for?It can be used for different
0:44:56 > 0:45:01things, such as farmers say loans, those kind of schemes, Help to Buy
0:45:01 > 0:45:06schemes, the really important thing here, we require investment in the
0:45:06 > 0:45:09public sector, in the infrastructure of the country, as a government, the
0:45:09 > 0:45:12Scottish Government has been doing that. What these figures represent
0:45:12 > 0:45:18is a disappointing outcome from the UK budget, and equally important,
0:45:18 > 0:45:22maybe arguably more important, the reduction in resource, a real terms
0:45:22 > 0:45:28cut much in the resource budget of over £200 million. Going into the
0:45:28 > 0:45:35next financial year. That figure of £350 million, to the NHS in England,
0:45:35 > 0:45:41that translates to just £8 million for the NHS in Scotland. Because of
0:45:41 > 0:45:44the cuts elsewhere. This is a smoke and mirrors budget at the hands of
0:45:44 > 0:45:49the UK Tory Chancellor, very disappointing for Scotland, even
0:45:49 > 0:45:53things I would like to welcome like police, fire, VAT, should have been
0:45:53 > 0:46:00Daniel to go to address the issue. I am looking for the £140 million that
0:46:00 > 0:46:02Scotland's emergency services have been paying out back from the UK
0:46:02 > 0:46:07Government.What is your response to their argument, that this is a
0:46:07 > 0:46:10problem of your own making, that he knew perfectly well that by
0:46:10 > 0:46:14centralising police and fire, they would be subject to VAT and went
0:46:14 > 0:46:18ahead and did it anyway.Many reasons to go ahead with the single
0:46:18 > 0:46:23police and single Fire Service in Scotland, incidentally, the Tories
0:46:23 > 0:46:26supported a single police force as well, they could have addressed
0:46:26 > 0:46:31this. They have been in government, they could have addressed this at
0:46:31 > 0:46:34the stroke of a pen, on principle, why have they changed their mind now
0:46:34 > 0:46:41on principle, what has made them change their mind. They knew this
0:46:41 > 0:46:45was coming, there were many reasons to create a single police service,
0:46:45 > 0:46:49it has been far more resilient, we have made efficiency savings, it is
0:46:49 > 0:46:54a stronger service, I would intend and argue, and this regulatory
0:46:54 > 0:46:58change could have been made by the UK Government at any time, as they
0:46:58 > 0:47:03have done for many agencies that the UK Government is responsible for.I
0:47:03 > 0:47:08am curious to get your reaction to the increase in NHS spending, the
0:47:08 > 0:47:11bit that Philip Hammond said would be done in a special deal, which it
0:47:11 > 0:47:16would appear would not be Barnettised, it would be extra money
0:47:16 > 0:47:19going to -- like the way that extra money went to Northern Ireland as a
0:47:19 > 0:47:24result of the deal with the DUP, David Mundell has confirmed that it
0:47:24 > 0:47:28will be the case to us, is that your understanding, what do you think?We
0:47:28 > 0:47:34need to look into the detail, incredibly comply, even if there is
0:47:34 > 0:47:38Barnett consequential is coming from the NHS in terms of expenditure in
0:47:38 > 0:47:41England to Scotland, we still have to look at the other relationship
0:47:41 > 0:47:44elsewhere, so it looks as if we may have had some of the consequential
0:47:44 > 0:47:48is on the NHS but taken from us through cuts elsewhere and other UK
0:47:48 > 0:47:53departments. It is complex but I would argue that the UK Government
0:47:53 > 0:47:57has not spent enough on public services, of course that will filter
0:47:57 > 0:48:01through to Scotland's budget. Over the 10-year period we have had £2.6
0:48:01 > 0:48:07billion real term reduction in the budget over that 10-year period. Any
0:48:07 > 0:48:12further reduction in real terms for the next financial year. This is a
0:48:12 > 0:48:16disappointing settlement to Scotland, if they had used the same
0:48:16 > 0:48:19magic formula that seems to work for the DUP in Northern Ireland, we
0:48:19 > 0:48:24would be in a different position. The other issue, Philip Hammond,
0:48:24 > 0:48:27again seems to suggest that there could be pay increases beyond the
0:48:27 > 0:48:32pay cap for nurses but again, the money would be found separately. Is
0:48:32 > 0:48:35it your understanding, have you been given any information about whether
0:48:35 > 0:48:39any extra money made available by the Treasury to fund the nurses pay
0:48:39 > 0:48:46increase would be Barnettised?Along with the trade unions in Scotland we
0:48:46 > 0:48:50have been campaigning and working together to lift the pay cap and
0:48:50 > 0:48:54support public sector workers. It is clear the Chancellor has not done
0:48:54 > 0:48:58that today, looks as though there might be something for the NHS but
0:48:58 > 0:49:02there is a like clarity around that for nurses, could have presented a
0:49:02 > 0:49:07paper policy today that gave clarity and certainty and lifting the pay
0:49:07 > 0:49:09cap and properly rewarding public servants but he has not done that.
0:49:09 > 0:49:14In terms of Scotland, we have said we will lift the pay cap but how far
0:49:14 > 0:49:19I can go was partly determined by what the Chancellor did today and it
0:49:19 > 0:49:22appears, he is not funding it largely any pay increase within the
0:49:22 > 0:49:28public sector with the exception of the remarks he made around the NHS.
0:49:28 > 0:49:32From what you are saying, you are not clear whether the remarks he
0:49:32 > 0:49:35made about nurses will involve extra money for Scotland or not, that is
0:49:35 > 0:49:40not clear.Nothing clear in today's numbers and budget, that is the
0:49:40 > 0:49:44point I am making more generally about pay, and specifically about
0:49:44 > 0:49:48the NHS but if as a consequence of pay review body findings UK
0:49:48 > 0:49:52Government will move on that, and again it is not clear if the UK
0:49:52 > 0:49:56Government will fund that, looks as if he might but my point is that we
0:49:56 > 0:49:59should have had a public sector pay policy today that was clear, that
0:49:59 > 0:50:03lifted the pay cap and would be funded by the UK Government. They
0:50:03 > 0:50:07have failed to do that totally, that is why I will have to look at what
0:50:07 > 0:50:11we can do within the Scottish Government to support public sector
0:50:11 > 0:50:18workers.Thank you very much indeed for joining us.
0:50:18 > 0:50:23A quick final word, I'm not sure if what he just said is what David
0:50:23 > 0:50:26Mundell said, have they got different information?No, I think
0:50:26 > 0:50:30it is the same, that point is strong, there might be money on
0:50:30 > 0:50:34health, not April budget line on lifting the pay cap, the Chancellor
0:50:34 > 0:50:39did not talk about that, needles about finding ways of assisting
0:50:39 > 0:50:43nurses, Derek McKay is saying, he challenged the Treasury to find the
0:50:43 > 0:50:47money for lifting the pay cap in England and in Scotland, he is
0:50:47 > 0:50:51saying it is not happening and he has two revises position on that.
0:50:51 > 0:50:53Still in the situation with the Nicola Sturgeon position, she wants
0:50:53 > 0:51:00to provide a fair pay deal but she was always looking at it has to be
0:51:00 > 0:51:04affordable. Derek Mackay says that the affordability question is now up
0:51:04 > 0:51:08for grabs once more.Which is a warning to us that it may not be
0:51:08 > 0:51:14quite...It may be more difficult, if they have to find the money, they
0:51:14 > 0:51:21have defined it on resources.I keep saying Barnettised, what it means
0:51:21 > 0:51:24is, extra spending normally, a proportion of it, it becomes ever
0:51:24 > 0:51:27more complicated, the more control Scotland has overtaxed affairs, but
0:51:27 > 0:51:32a proportion is given to Scotland, and what we have been talking about
0:51:32 > 0:51:37here is whether they are actually taking lumps of money out of that.
0:51:37 > 0:51:43Hugely compensated, remember when the magic money tree emerged with 1
0:51:43 > 0:51:46billion for Northern Ireland, people were a little bit surprised and
0:51:46 > 0:51:49expected Barnett consequential is when there were not, it looks like
0:51:49 > 0:51:56the same kind of... Jiggery-pokery? Too strong a word? Preventing those
0:51:56 > 0:52:00funds from going into the Barnett Formula, which is a little bit
0:52:00 > 0:52:06interesting...Jiggery-pokery, surely you mean sophisticated
0:52:06 > 0:52:13financial instruments... 360 degrees accounting logistics... LAUGHTER
0:52:13 > 0:52:17I think it means what we will see, there will not be a lot of movement
0:52:17 > 0:52:20on wage growth for the public sector, it will not be happening for
0:52:20 > 0:52:25the private sector, and as we were discussing earlier, about the
0:52:25 > 0:52:34outlook for economic growth in the UK, most widely, productivity, have
0:52:34 > 0:52:38you heard a more gloomy outlook for how that is going to be affected,
0:52:38 > 0:52:42what we are actually facing is, remember the Chancellor prefaced the
0:52:42 > 0:52:46beginning of the speech by indicating that the UK was the sixth
0:52:46 > 0:52:50largest economy in the world. At this rate, I think, actually, that
0:52:50 > 0:52:55might be one of the last years is able to say that as inevitably the
0:52:55 > 0:53:00UK economy goes down that ranking.I don't want to be unfair, I know the
0:53:00 > 0:53:06Treasury have produced papers on productivity, but as Erica says, the
0:53:06 > 0:53:09figures are dire, what Philip Hammond had to say about it was
0:53:09 > 0:53:14dire, what the ISS has to say is even more dire... Philip Hammond did
0:53:14 > 0:53:18not outline, apart from general ideas of spending more on education,
0:53:18 > 0:53:22what he intended to do, if any thing?To be fair to the Chancellor,
0:53:22 > 0:53:27he gave an upbeat assessment in the oratory, followed it with figures
0:53:27 > 0:53:31that were decidedly... Well, did not try to disguise them. There was
0:53:31 > 0:53:35almost a constant internal contradiction within this speech. We
0:53:35 > 0:53:40have productivity figures, how much we produced per head of the
0:53:40 > 0:53:45unemployment. Behind the G-7, the Eurozone, America, that is something
0:53:45 > 0:53:50that has happened over the past year or so, can be traced back to Brexit
0:53:50 > 0:53:53uncertainty? Perhaps one can but the Chancellor was arguing that that
0:53:53 > 0:54:00could be turned around by addressing technological challenged by seizing
0:54:00 > 0:54:03the opportunities of new investment and new initiative but he was not
0:54:03 > 0:54:07saying it was happening right now, he was not attempting, in my view,
0:54:07 > 0:54:12in any way, to disguise the extent of the concern and anxiety that he
0:54:12 > 0:54:15has for the underlying economy.
0:54:15 > 0:54:17That's all we have time for this afternoon.
0:54:17 > 0:54:20You can join Brian Taylor for First Minister's Questions
0:54:20 > 0:54:23tomorrow on BBC2 Scotland at 12 noon.
0:54:23 > 0:54:25And I'll be back on Sunday, join me then.
0:54:25 > 0:54:32Bye for now.