22/11/2017 Politics Scotland

Good afternoon and welcome

to a special edition

of Politics Scotland.

The Chancellor Philip Hammond

announces £2 billion

for Scotland and a VAT rebate

for the Scottish police and fire

services from next April.

I'm getting used Mr Speaker to the

experience of having my ear bent by

13 Scottish Conservative colleagues.

Most recently on the issue of

Scottish police and fire VAT.

And we'll ask the Finance Secretary

Derek Mackay what he thinks

of today's announcements.

In Westminster, the Chancellor has

had his say. We'll be getting

Scottish political reaction.

The Chancellor, Philip Hammond,

has delivered his budget -

promising £3bn to prepare for

Brexit.

At the same time he predicted slower

than expected economic growth over

the next five years.

And Mr Hammond also said increased

funding in England would result

in an extra £2 billions

coming to Scotland.

Now to make sense of the detail,

throughout the programme our

Political Editor Brian Taylor

and Financial journalist Erikka

Askleldn will be here.

But first lets get

the reaction from Westminster.

Our correspondent

David Porter is there.

What is the initial reaction to

this?

I think the initial reaction

is that Philip Hammond was walking

an economic and political bride rape

and he managed not to fall off. One

of the big issues he had personally

was not to make a foul up of the

budget. That may change in the hours

and days to come but the initial

reaction seems to be that he did

relatively OK on it. There will be

people who may disagree with what he

was saying, essentially that he

wanted a balanced budget which would

allow the economy to grow and would

mean in future Britain was best

placed to cope with Brexit and other

challenges. Politically he was

trying to show that it wasn't all

about Brexit. That is the dominant

factor. But also that they are

looking to the challenges facing the

UK economy as a whole, hence the

emphasis on stamp duty and housing

in England and other parts of the

UK. The extra money for health and

the NHS which of course will have

knock-on effects for Scotland. He

made great play of the fact an extra

£2 billion will be coming to

Scotland. First Minister Nicola

Sturgeon has taken issue with that.

He made great play of the abuses

that Scottish Tory MPs have been

lobbying him, and the influence that

they have. In the claims and

counterclaims that will come over

the next hours and days it's going

to be very interesting to see who

wins that war of the treatments for

Scotland.

There was also pressure

from some in his own party to do

something bold, to outline this

marvellous wonderful new Britain

that will happen as a result of

Brexit. It's not clear that he

attempted to do that.

No, I think he

was going to play safety first. They

basically said we were embarking on

the fourth Industrial Revolution and

changes would happen, hence the

emphasis on technology. We heard a

lot about driverless cars. He wasn't

giving himself a hostage about where

the government is going on that kind

of thing but he very much wanted to

emphasise that we on the of new

technologies coming forward and he

wants Britain not only to invent

them, but to benefit from them in

the future. He knows that his whole

government will be defined by how it

looks on Brexit and how it deals

with Brexit. Hence the passage where

he talked about extra money being

available if necessary because of

Brexit.

Thanks, we'll be back with

you later. Brian, as usual there's a

row between the Scottish and British

governments already.

There's a

serious of areas -- series of areas,

for instance income tax, you have

the announcement on income tax being

reserved by the Treasury which

affects people in Scotland right

away. The Treasury calculate 2.4

million people because the personal

allowance is being pushed up. The

higher rate threshold, Scotland sets

the rates and Derek Mackay will have

three or four weeks to put the

details together. We've reported on

BBC Scotland that it's likely that

they will bring in different bands

for Scotland. Potentially bringing

down the point, lowering the level

at which you start to pay higher

rate tax. This is going to be a huge

row in Scotland, firstly over the

impact on individuals and secondly

between the SNP and Tories.

David

suggested they are also arguing

about how much extra money Scotland

will get.

Very much arguing about

that. The figure from the Chancellor

is £2 billion, over four years we

believe including the current year.

The Scottish government want the

details and they say that 1.1

billion of the 2 billion is

accounted by what is called

financial transactions, money that

can be spent on capital but only

private projects, house-building,

developing areas of the built

environment. They say it is a great

idea but the money isn't going to go

health spending education and

justice, they say it is restricted

and must be repaid ultimately.

To be

repaid? Because presumably the

consequential is from the first bit

of the budget where he announced

this love for infrastructure.

Huge

increase in capital spending so it

comes from that dot might we've had

this row in the past, the Scottish

government says that a lot of it is

money that they don't have

discretion to alter. It depends how

you interpret the figures. They say

it is relatively little on

day-to-day spending and a real terms

cut on that. An area of contention

between the governments. The cut in

stamp duty on property. Already it

is devolved we have Land and

Buildings Transaction Tax which is

already controversial in Scotland.

Again the Conservatives claiming it

is affecting the housing market.

Scottish ministers don't accept

that, they don't accept the premise

on which the Chancellor made his cut

in stamp duty today but they'll need

to look at it again because they

will face a political challenge.

They will say that if the Chancellor

is bringing in the cuts, you say

that they are ill-advised, you are

already helping the first time

buyers, you'll have to prove that

and show your working. On tax and

spending and property tax, three big

rows in the making.

Oil and Gas UK

Erikka. I'm imagining they will be

welcomed by the industry, something

I've found incomprehensible and

you're going to explain.

The

transferable tax history is going to

enable companies that own assets in

the North Sea, particularly ones

that have been going on for a long

time, that are older and nearing the

end of their life, this means they

will be able to sell those assets to

a new buyer and the tax credits that

go along to support the

decommissioning of it will be able

to be transferred to a new buyer

which should free up the buying and

selling of North Sea Trent and

assets.

Does that mean, as has

happened over the last few days,

there was an oil company bought,

some of BP's assets in the North

Sea. That means the company will get

the tax credits for decommissioning

that BP would have had.

Yes,

exactly. It has been coming from the

industry for a long time and I don't

know why it is the tax wouldn't have

been transferable in the first

place. Currently what we've seen in

the North Sea is the idea that North

Sea assets are being moved into the

right hands, the companies and

people looking to manage them in

terms of their late life. They are

looking at getting high production

values from them, they are trying to

extend them as long as they can.

Companies like which has done a lot

of transactions in the North Sea. It

is about allowing the transactions

to take place.

On the big picture

stuff, we've talked about the

effects in Scotland but this effect

Scotland as much as anybody else.

Economic growth forecasts, it looks

like pretty much in they bumped it

up to 2% at a forecast level but for

the foreseeable future it looks like

they are assuming that, the OBR is

assuming that the British economy

grows at 1.5% rather than the 2%

level before the financial crash. In

the long-term the of that is huge.

Already we've seen, the OBR tends to

actually be optimistic so who knows

what exactly they are downgrading

and what it means. It indicates they

are finally taking on board the

impact that Brexit is going to belay

Chedjou have on the economy, its

growth aspects. Interestingly Europe

is predicting that its growth is

going to be above that and will

outpace the UK.

Eliminating the

budget deficit, is it balancing the

budget or creating a surplus? The

phrase that has dominated

Conservative budget in 2010, the

most important thing to worry about.

It has done off the plate, there was

a little X by the OBR next to the

report saying that they didn't mean

it but there's no sense of when it

will be achieved even. What we do

have, there is a narrowing of the

deficit and they can pat themselves

on the back over that but what you

have is the problem of the growing

net debt. It is growing, because the

pound has tanked and it costs more

to service the debt. Corporate tax

receipts are lower, people aren't

paying as much on VAT because they

aren't spending and are worried.

paying as much in VAT because they

are not spending so much because

they are worried.

are not spending so much because

they

Leave that for the moment

because appearing in college green

behind me, I can see, the Scottish

Secretary. Is that a Labour Party

badge you are wearing? -- College

Green.

I am supporting Paisley's

bids to be the city of culture in

2021, it is a great bed, I am

supporting it as I hope everyone is,

we will see in the beginning of

December whether it has succeeded!

-- bid.

LAUGHTER

This extra money for the Scottish

Government, seems to be some

suggestions that half of that may

have today repaid at some point. Is

that true?

Some of the money comes

from the consequential for the

arrangements in

England, for funding of housing, so

it is a particular kind of funding,

but the Scottish Government, if they

have the initiative, if they have

the wherewithal, they can use that

money in innovative ways. The

Scottish Government has a track

record of innovative use of funding,

Scottish investment banks, Scottish

futures trust. The money is

definitely available, it is for the

Scottish Government to come forward

with mechanisms that will allow it

to be used.

Just to be clear, of

this £2 billion, how much is

available to the Scottish Government

for data Rhys Bend.

Over that

period, about half of it, it is a

mixture between capital and revenue

spending, 1.6 of it is capital

spending in total, and so that is

400 million in revenue terms.

Obviously it is spread over the four

years, it is an additional 2

billion, it is an additional amount

of money over and in real terms. And

so it is a significant increase in

Scottish Government spending. I have

been around the houses so many

times, I don't expect the Scottish

Government to come out in gratitude

for the fact they have extra money.

They are never going to do that. But

they do have the money, if they are

innovative with that money they will

be able to benefit people right

across Scotland.

By the end of this

period, this four year period, will

the Scottish Government's current

budget, day-to-day budget, have

increased, stayed the same or will

it have decreased in real terms?

The

overall budget of the Scottish

Government will have gone up 1% in

real terms, it is additional money.

Including capital spending?

Yes.

What about in revenue spending?

In

revenue spending terms, broadly the

same position they would have

anticipated being.

They anticipated

having a real cut.

Yes, what I am

saying is, they have budgeted...

They have budgeted on a basis of

spending, the money that has come

today, particularly the capital

money, is an increase in real terms.

So there is no suggestion that

today's budget has led to a cut in

the Royal spending that the Scottish

Government would have anticipated

they would have had.

That is not the

question I ask you but I am sure

viewers will have noted that. The

NHS, Philip Hammond announced extra

money for the NHS but then he said,

I cannot remember the phrase, but it

would come to some special

mechanism... That money will not be

Barnettised.

Money spent through the

Barnett rules is subject to the

Barnett Formula, our third...

This

money will not be.

Other money is

not subject to that formula, we have

announced the total, we have

announced the total amount of money,

which will be available to the

Scottish Government as a result of

Barnett consequential is from

today's budget.

I think what you

have just done is confirmed what I

suggested in my question, which is

that the money which was announced,

the extra money announced for the

NHS will be done through a

mechanism, as for example, the extra

money for Northern Ireland was done,

which will not be Barnettised.

We

have been fully transparent with

what is being Barnettised in terms

of the money that is coming to

Scotland. We have been clear exactly

what the money is that is coming to

Scotland, which is fully in

accordance with the Barnett Formula,

but additional money is coming to

Scotland, and directly will benefit

Scotland. We have announced the end

of the police VAT, that is £40

million, coming to police and fire,

hopefully, across Scotland,

unless...

OK, OK...

There is

significant direct investments into

Scotland, city deals in sterling,

Perth, Dundee, the growth deal that

will encompass the borders and the

North of England. This is direct

funding into Scotland. -- Stirling.

That money will be Barnettised but

what about another tranche of money,

negotiations that would in effect

lift the pay cap for nurses, but he

also said the money would be made

available separately should pay be

broken. Will that money be

Barnettised?

The Scottish Government

are responsible for the pay of those

who work in the NHS and other

devolved areas.

I understand that,

that is not the question I am

asking.

The point I have made

throughout the interview, there are

rules in relation to funding which

is Barnettised and they will apply

if the funding is within the Barnett

Formula envelope then it will come

to Scotland on that mechanism as

Barnett consequential is.

All right,

Yankee very much for joining us,

Scottish Secretary, David

Mundell. Pretty clear that that

money is not going to be

Barnettised.

It is certain it is not

going to be, the Chancellor made a

point of that. It'll be off balance

sheet, that will not have a

consequential for Scotland. David

Mundell also confirming that more

than half of the 2 billion is

capital. He is right in saying that

in the past it has a potential

benefit to Scotland. The quibble is,

they cannot spend it as they will.

On day-to-day spending, on improving

the health service and education.

They cannot spend it on public

sector projects.

He seems to be

suggesting, something like £1

billion of that could be spent,

because, you can have some capital

spending, seem to be suggesting half

of the money is...

1.6 billion...

Of

the whole amount was capital... And

some of that they might be able to

spend...

The Scottish Government say

the figure, that is 1.1 billion,

that money that is in control. This

is this is this is quibbling, it is

important, it is whether it is in

control of this money, justice,

ferrets taming Tom NHS...

LAUGHTER.

A source of ignorance, sadly

neglected, or whether they can spend

it on private sector projects(!) --

ferret taming, NHS... This is not

just straight up, spend the dosh, it

is money but it has strings

attached.

Trying desperately not to

say the words, I think he did

confirm that in real terms over the

next four years, the current budget,

day-to-day spending budget of the

Scottish Government will be cut in

real terms.

I agree, definitely.

Presumably, capital spending is

going towards the projects that they

have set out, showing the

borderlands growth deal, involving

some sort of capital spending in

order to grow that.

Not investment,

real money. But it is money with

strings, it is money not pictured in

that way, to be fair to David

Mundell, he was open about it, he

said he was being transparent...

The

other side of this, to be fair to

David Mundell and the Conservatives,

both Labour and the SNP tends to

say, we agree that we should balance

the budget, the current budget, we

just think that if we are going to

run up extra public debt, it should

be for capital projects. The

Conservatives could say, that is

precisely what we are doing.

On the

other one, public sector pay, what

the Scottish Government wanted was a

budget line that said we expect it

to go upwards, this is a new budget

line that covers it and covers it

for England and has a consequential

for Scotland and that's deal is

done. The Chancellor did not say

that, he hinted at finding ways to

pay for nurses but did not talk

about other sectors. And that

explains, we already knew, that

there is caution among the Scottish

Government, Nicola Sturgeon says

people are entitled to a fair pay

deal, in return for hard work, but

she always adds, it must be

affordable.

David Mundell was saying

that it is up to the scottish

government what it pays in assets,

but what the Scottish Government

would like is a consequential, so

they knew what a baseline was and if

they choose to spend more than that,

at least they would be getting

something.

How the nurses are paid

or anyone in the public sector,

there is a difference now, in

Scotland, there is the prospect of

lifting public sector pay cap, in

England, it is not.

We will be back

with more, later on.

Now let's speak to someone who gets

to mark the chancellor's homework

after an event like this,

it's

Carl Emmerson,

the director of

the Institute for Fiscal Studies.

Very striking figure in the

pre-budget document you produced,

you said if you compare the course

the British economy had actually

taken, compared to its trend growth

before the financial crash, we were

on schedule to be on one fifth

smaller as an economy than we would

have been. How is that affected by

the growth forecast being cut today?

That number has got bigger, what the

forecast is now saying is that

unfortunately going forward, the

experience of the last seven years,

growth has been abysmal, it is

likely to continue. Rather than the

experience of the seven decade up to

the financial crisis, where

productivity and growth was much

better. Compare to what we could

have expected, back in 2008, before

the crisis hit, looks like in five

years' time, we will be around one

fifth poorer on average than what we

could reasonably afford, that

affects living standards, wages will

not grow as much as we hope, today's

forecast shows no average wage

growth. After inflation. And also

government finances are a mess, it

means less income tax, less national

Insurance, less VAT, people are

poorer and spending less on items.

Dwelling on this one fifth thing, we

often see rows of columns in

government documents, all fractions

of 1%, but the point is, over years,

these make huge differences, the

difference seems tiny, between 1.5

and 2%, but it could mean the

economy is one fifth smaller than

where it would have been had the

financial crash not happen.

We had

the great recession, living

standards declined, unfortunately,

recessions happen much you have a

drop in living standards, but the

remarkable thing is, normally you

expect a strong recovery, a period

of very weak growth and then you

bounceback more strongly thereafter.

We have not had that bounceback,

only recently that living standards

got back to the level they were at.

We still seem to be growing at a

relatively mundane rate, and that

gap between where we are at and

where we would have reasonably

expected ten years ago keeps growing

and growing. We really have too hope

that the forecasts turn out to be a

and we get some bounceback.

Increasingly we think that is over

optimism, and better to cut cloth

according to a more pessimistic

outlook for living standards.

The

thing is, from the forecast, the

revised forecast, they put growth up

to 2%, way out so far in advance

that nobody can make a reasonable

forecast. For the timescale you can

make a reasonable forecast, should

the Obie be right, and they may be

wrong, but should they be right,

then it looks like we can look

forward to lower growth than we were

expecting pretty much indefinitely.

-- the OBR.

That is certainly the

risk, and if it continues for a very

long run, it will mean that the debt

accrued over the last four years

will be more of a burden, we have

not had as much income, people will

enjoy less spending, and government

finances will be hard pushed and

pushed back. So it is clearly a very

difficult environment, and shows

ultimately, productivity growth is

so important, if you can delivered

greater productivity growth, you

deliver greater prosperity.

The

other thing that struck us,

balancing the budget, budget

surplus, eliminating the deficit,

choose whichever phrase you like, it

was the only thing we were supposed

to worry about throughout George

Osborne's reign as Chancellor. It

featured in Philip Hammond's last

budget and now it is not even

mentioned.

Not mentioned at all, if

you went back to the last budget,

March, 2016, not that long ago, he

was forecasting a surplus on the

government budget in 2019/20, of £10

billion.

The latest forecast suggests will be

in debt by 35mm is -- 30 £5 billion,

which is a remarkable turnaround.

Joining us Brian, let's come down,

one of the things Philip Hammond had

to do was to make us all feel

better. It's been an extraordinary

economic recovery. Quite a strong

recovery but no one has noticed.

He

tried two approaches, firstly to

make us feel better and then to make

the Conservative benches feel better

and third, he must protect himself

because he's in a tight spot. They

march budget of 2017, he had to

cancel the National Insurance change

for the self-employed after a matter

of days.

It wasn't a good thing!

A

mess, a situation that is

disquieting. Then you have a

situation where he is regarded by

Brexiteers as being something of a

traitor. One of his predecessors

said that his actions, seeking to

ameliorate Brexit were tantamount to

appetite. When you are accused of

that you know you are in a tight

spot. He tried two tactics,

sometimes deploying apocalyptic

language about the sunny uplands

ahead for the UK. He deployed them

and then said, get on with the

detailed.

The other thing, when

spreadsheets Philip does the

apocalypse it doesn't sound like the

Apocalypse.

The other was disarming

soft abating humour, inference is

too deep -- references to TV, Kezia

Dugdale and Jeremy Clarkson.

The me

and Hammond one was good.

It was

first class but it strikes me that

he's doing these things to say

honestly, I'm a decent guy, please

give me a break, pal. It worked to

some extent, but you hear that,

there's no growth in the economy.

He

must make us feel better, has he

done anything to do that?

He has

meant that our wee dram in the pub

next year isn't going to be as

strong although if you like a bit of

cider you won't be in luck.

Everyone

has been talking about real living,

Carl Emmerson saying there is no

prospect for real living standards

going up for the next couple of

years.

There is the estimate for 2.4

million Scots presumably on low or

minimum wage who are going to have a

bit more in their pocket but how

much they feel it, I'm not sure.

There is the idea that there is

more, the minimum wage is going up.

There isn't much else.

We'll be back

with you in a moment. David Porter

is an increasingly darkening London

and has reappeared.

It is

increasingly dark. We will press on

before the rain comes. We have

sirens as well but that's par for

the course on College Green. My two

guests, Leslie, I'll begin with you

first and then I will move to you,

Christine Johnny. Firstly, Leslie,

the headline, £2 billion extra for

Scotland, that's not a bad headline

for the government.

We need to see

the small print of what it looks

like and how the money will be used.

There are plenty of homes for that 2

billion to go to and we have plenty

we could be doing with that level of

investment but we must see the

detail and how much translates into

cash that the Scottish government

will have at their disposal but on

the surface, good news.

Christine

Jardine, the UK government is

pointing out the positive as you'd

expect. They say that there will be

attacked Scott for nearly two and a

half million people in Scotland -- a

tax cut. It seems that Philip

Hammond has got the best out of what

was not a great economic situation.

You'd expect the government to talk

it up but if you look at it in stark

figures, 3.7 billion is being set

aside for the effects of Brexit. The

OBR says we will be £45 billion

worse off than it thought in March

this year. The economy won't be

growing, it will be shrinking, so

the overall picture for households

in the UK who will be £700 a year

worse off isn't good. He has

tinkered at the edges, Universal

Credit, not pausing it. We welcome

the fact that Police Scotland is

going to be exempt from VAT but this

problem could have been avoided in

the first place. We have a £200

billion black hole. We're looking at

a situation where Universal Credit

isn't being halted, there is no lift

in the pay for public sector

workers. It needed more medical

treatment.

Use a more radical but --

you said more radical but did he

have the money to do it?

The

government have put themselves in

this position because of a lack of

Brexit strategy. There are things he

could have done, he could have

halted Universal Credit, we need to

look at a root and branch review but

instead he has tinkered around the

edges. Not good enough. We need to

find a way of making sure that

people who are on Universal Credit

are getting a better deal.

As far as

Universal Credit was concerned we

were led to believe that there would

be changes. The fact that Christine

Jardine is saying he isn't reducing

the time limits and things like that

as significantly as the Lib Dems

would want, from the Scottish

perspective, how much of a potential

own goal is this?

Everyone

recognises it is fundamentally

flawed and their own backbenchers

recognise it. Pausing it is

sensible. The errors we can see, the

suffering it is causing should be

fixed and the measures could have

been addressed here and they weren't

all stop more widely we must think

of some of the courses under pinning

the economy, investment is down,

wages are down, productivity is

down. These aren't good indicators

that this economy is performing

well. We must look at the level of

poverty that were mentioned in

Jeremy Corbyn's speech. These things

don't point to a good outcome for

working people. The roll-out of

Universal Credit is just another

thorn in people's flash at a time

and they don't need it.

We are in a

new political situation, for the

first time in a generation, since

1992 we have a significant block of

Tory MPs down here in Westminster.

It seems from their point of view

that they've been able to twist the

Chancellor's arm.

Not to the extent

that you would hope they would. At

the end of the day they are doing

what Theresa May wants, following

the Conservative party off a Brexit

Cliff. They aren't pursuing the

things that people in Scotland would

like to see pursued. Well done for

getting the VAT lifted on the police

but they could have helped avoid it

in the first place in Scotland. We

are getting a lot of political

manoeuvring from them but we are

actually getting the substantial

changes, substantial concessions in

policy that we are looking for, on

Universal Credit, on house-building.

Not enough houses will be built in

Scotland over the next five years.

Christine talked about tinkering

around the edges but if you are an

MP from the north-east of Scotland

or if you are involved in the Oil

and Gas UK you are going to be quite

pleased by what the government has

done with this technical change. It

could have real benefits, couldn't

it?

A number of points to be made.

The VAT issue was wrong and we still

haven't got it right. The SNP messed

up, ignoring advice. The Tories have

allegedly twisted the Chancellor's

arm, but I don't think they twisted

it hard enough because why wouldn't

you reset back to where it was in

2013? That would be the thing to do.

In terms of oil and, 75 million is

the figure being quoted but that is

a drop in the bucket. Looking at the

industrial strategy or lack of it

there is more thinking required. To

my earlier point about investment

and wages, none of these things are

adding up to anything that's going

to kick-start the economy.

Will have

to leave it there. Somehow I think

in the hours and days ahead we'll

come back to the budget and what you

see as some of the flaws. For the

time being, back to you.

Lets recap

what the Chancellor's statement

means. On December 14, what choices

on spending does the Scottish

government have now?

To give us some insight -

joininng us from the Fraser

of Allander Institute is economist

David Eiser.

The Scottish government getting an

extra £2 billion from it but almost

half of that isn't money they can

spend. Just explained that.

This is

all about the consequential is

coming from UK government spending

and how they flowed to the Scottish

government. It's important to

distinguish I think three types of

consequential. There are

consequentials resulting from

day-to-day spending on public

services, consequentials relating to

capital spending, investment in

hospitals and roads and there is a

third kind, called financial

transactions. This is a

consequential coming to the Scottish

government as a result of the UK

government providing loans to

first-time buyers to support them

buying properties. Now the

constraint is the Scottish

government has in terms of those

types of consequentials is that it

has to use them to provide similar

types of loans in Scotland. That

doesn't necessarily mean that those

loans have to be associated with

loans to house buyers but it has to

be associated with loans that are

ultimately paid back. This can't be

used to support general public

spending increases on either the

resource side or the capital side.

They could use them to lend to

businesses rather than house-buyers?

As far as I understand that is a

notch and, yes.

Erikka thinks that

the changes to the oil and is

industry will be welcomed. They will

be welcomed, won't they?

The changes

to the boil and the industry in

terms of the offsetting

arrangements? Certainly yes, the

investment in the offshore sector is

down 50% is 2014. -- since 2014. The

announcement today allows companies

to transfer their historic tax

liabilities to companies who are

buying access to those older

oilfields. This means that new

companies can capitalise on this tax

break, effectively, and offset the

costs of decommissioning on the past

tax liabilities of companies that

they've bought the field from. I

think this is a positive development

but of course it doesn't change the

fact that the outlook for the

offshore sector is particularly

weak.

Overall, David, do you think

Philip Hammond has done anything

bold? Were you expecting something

more imaginative?

He was really

boxed in, boxed in by effectively be

fiscal target he set himself this

time last year, and the commitments

that his party has made to freeze

most of the main taxes. So in some

ways we weren't expecting anything

big or bald within that context. He

was boxed in. Within that context

he's found some additional money for

spending on public services, meaning

there are some additional

consequentials for the Scottish

government but it doesn't change the

fact that next year and the year

after that, the outlook for the

Scottish grant is that it will fall

in real terms. Still it is a

constraining picture in terms of

public finances over the next couple

of years.

What about welfare?

Iannone moves to make it easy for

people to get Universal Credit more

quickly. Will that have a big

effect?

I think that's a fairly

marginal change in the context of...

The big things here are the freeze

in the upgrading of the benefits

that we've seen since 2013 and 2014.

Those things make a really big

difference. Things like freezing the

work allowance and on. In the

context of those more major things,

the change to the timing is fairly

small-scale.

Thank you for joining

us.

Thank you very much indeed for

joining us. We should maybe take

that up.

That was one of the pressures on

him, do something about Universal

Credit, the two big issues are, were

people feeling that they had to wait

up to six weeks to get Universal

Credit, and the other thing was,

this freeze, that was not even

mentioned.

A four year continuing

freeze on benefits, basically for

those in work. We are halfway

through that and the freeze

continues, those benefits will

continue. With regard to Universal

Credit, new Universal Credit coming

in to replace a handful of others.

He's not withdrawing the benefit or

altering the approach, he thinks it

is good, still thinks it is an

incentive to stay in employment,

what he is trying to do is alter the

way it is paid. Announcing changes

to an early remuneration of the

situation, he announced loans, the

loan is in advance, the loans in

advance will be paid more readily.

Sorting out a situation which has

been described as heartbreaking and

heart-rending by individual

constituency MPs and not just on the

opposition benches, the

Conservatives have been saying this

as well, sagacious nods from the

Tory benches as well as the

opposition benches. Seeking to

address this with substantial money,

the cost is more than 1 million.

He

did not mention anything to do with

social care, given the problems

Theresa May had, in the run-up to

the election campaign, the whole

issue appears to have been shelved.

A massive problem with people who

cannot find the right level of care,

which boosts the cost to the NHS,

where people have to stay in

hospital, that is a problem across

the UK, Scotland, and it will only

get worse.

Also did not mention...

Let's go through a list of what he

did not mention, nothing about

pensions!

There was the expectation

that he might try to tackle

rebalancing between the millennium

generation and the older generation,

nothing about pensions or anything

that he was going to be doing about

that. Also, I noticed, for people

who are self-employed or their taxes

are structured in such a way that

they may make around 85,000 a year,

not making the same mistake that he

did last time.

Not revisiting it in

a more moderate way.

He's saying,

you are all on your own.

This party

depends, not entirely, not even

massively, but to a large degree, on

the support of the elderly middle

classes. At the start of the most

recent UK general election, they

announced a policy out of the blue

which would have impacted upon the

elderly middle classes. That really

worked well, in electoral terms(!)

that is why he is conscious and

steering clear.

Well lets speak to the man

who'll have to make those

decisions in December.

The Finance Secretary

Derek Mackay

has been paying close

attention to today's announcements.

Give a short interpretation of these

extra £2 billion, there seem to be

an understanding that half of it

would be financial transactions, and

acceptance from David Mundell, is

that your understanding?

Over half

of that for that four year period is

financial transactions, money with

strings attached, you cannot invest

in new schools or hospitals or roads

or traditional capital investment,

loans and equity on those type of

payments, it has to be paid back to

the Treasury, so in a sense, it is

not a £2 billion boost to Scotland,

it is a con, it is disappointing, it

is not accurate to portray it as new

money to the Scottish budget when it

is in essence money with strings

attached, over half of that £2

billion figure.

But, it which is

being suggested to us, the Scottish

Government would not necessarily

have to use that money for loans for

people to buy houses, could be used

for business loans and whatever,

what range of things can it be used

for?

It can be used for different

things, such as farmers say loans,

those kind of schemes, Help to Buy

schemes, the really important thing

here, we require investment in the

public sector, in the infrastructure

of the country, as a government, the

Scottish Government has been doing

that. What these figures represent

is a disappointing outcome from the

UK budget, and equally important,

maybe arguably more important, the

reduction in resource, a real terms

cut much in the resource budget of

over £200 million. Going into the

next financial year. That figure of

£350 million, to the NHS in England,

that translates to just £8 million

for the NHS in Scotland. Because of

the cuts elsewhere. This is a smoke

and mirrors budget at the hands of

the UK Tory Chancellor, very

disappointing for Scotland, even

things I would like to welcome like

police, fire, VAT, should have been

Daniel to go to address the issue. I

am looking for the £140 million that

Scotland's emergency services have

been paying out back from the UK

Government.

What is your response to

their argument, that this is a

problem of your own making, that he

knew perfectly well that by

centralising police and fire, they

would be subject to VAT and went

ahead and did it anyway.

Many

reasons to go ahead with the single

police and single Fire Service in

Scotland, incidentally, the Tories

supported a single police force as

well, they could have addressed

this. They have been in government,

they could have addressed this at

the stroke of a pen, on principle,

why have they changed their mind now

on principle, what has made them

change their mind. They knew this

was coming, there were many reasons

to create a single police service,

it has been far more resilient, we

have made efficiency savings, it is

a stronger service, I would intend

and argue, and this regulatory

change could have been made by the

UK Government at any time, as they

have done for many agencies that the

UK Government is responsible for.

I

am curious to get your reaction to

the increase in NHS spending, the

bit that Philip Hammond said would

be done in a special deal, which it

would appear would not be

Barnettised, it would be extra money

going to -- like the way that extra

money went to Northern Ireland as a

result of the deal with the DUP,

David Mundell has confirmed that it

will be the case to us, is that your

understanding, what do you think?

We

need to look into the detail,

incredibly comply, even if there is

Barnett consequential is coming from

the NHS in terms of expenditure in

England to Scotland, we still have

to look at the other relationship

elsewhere, so it looks as if we may

have had some of the consequential

is on the NHS but taken from us

through cuts elsewhere and other UK

departments. It is complex but I

would argue that the UK Government

has not spent enough on public

services, of course that will filter

through to Scotland's budget. Over

the 10-year period we have had £2.6

billion real term reduction in the

budget over that 10-year period. Any

further reduction in real terms for

the next financial year. This is a

disappointing settlement to

Scotland, if they had used the same

magic formula that seems to work for

the DUP in Northern Ireland, we

would be in a different position.

The other issue, Philip Hammond,

again seems to suggest that there

could be pay increases beyond the

pay cap for nurses but again, the

money would be found separately. Is

it your understanding, have you been

given any information about whether

any extra money made available by

the Treasury to fund the nurses pay

increase would be Barnettised?

Along

with the trade unions in Scotland we

have been campaigning and working

together to lift the pay cap and

support public sector workers. It is

clear the Chancellor has not done

that today, looks as though there

might be something for the NHS but

there is a like clarity around that

for nurses, could have presented a

paper policy today that gave clarity

and certainty and lifting the pay

cap and properly rewarding public

servants but he has not done that.

In terms of Scotland, we have said

we will lift the pay cap but how far

I can go was partly determined by

what the Chancellor did today and it

appears, he is not funding it

largely any pay increase within the

public sector with the exception of

the remarks he made around the NHS.

From what you are saying, you are

not clear whether the remarks he

made about nurses will involve extra

money for Scotland or not, that is

not clear.

Nothing clear in today's

numbers and budget, that is the

point I am making more generally

about pay, and specifically about

the NHS but if as a consequence of

pay review body findings UK

Government will move on that, and

again it is not clear if the UK

Government will fund that, looks as

if he might but my point is that we

should have had a public sector pay

policy today that was clear, that

lifted the pay cap and would be

funded by the UK Government. They

have failed to do that totally, that

is why I will have to look at what

we can do within the Scottish

Government to support public sector

workers.

Thank you very much indeed

for joining us.

A quick final word, I'm not sure if

what he just said is what David

Mundell said, have they got

different information?

No, I think

it is the same, that point is

strong, there might be money on

health, not April budget line on

lifting the pay cap, the Chancellor

did not talk about that, needles

about finding ways of assisting

nurses, Derek McKay is saying, he

challenged the Treasury to find the

money for lifting the pay cap in

England and in Scotland, he is

saying it is not happening and he

has two revises position on that.

Still in the situation with the

Nicola Sturgeon position, she wants

to provide a fair pay deal but she

was always looking at it has to be

affordable. Derek Mackay says that

the affordability question is now up

for grabs once more.

Which is a

warning to us that it may not be

quite...

It may be more difficult,

if they have to find the money, they

have defined it on resources.

I keep

saying Barnettised, what it means

is, extra spending normally, a

proportion of it, it becomes ever

more complicated, the more control

Scotland has overtaxed affairs, but

a proportion is given to Scotland,

and what we have been talking about

here is whether they are actually

taking lumps of money out of that.

Hugely compensated, remember when

the magic money tree emerged with 1

billion for Northern Ireland, people

were a little bit surprised and

expected Barnett consequential is

when there were not, it looks like

the same kind of... Jiggery-pokery?

Too strong a word? Preventing those

funds from going into the Barnett

Formula, which is a little bit

interesting...

Jiggery-pokery,

surely you mean sophisticated

financial instruments... 360 degrees

accounting logistics... LAUGHTER

I think it means what we will see,

there will not be a lot of movement

on wage growth for the public

sector, it will not be happening for

the private sector, and as we were

discussing earlier, about the

outlook for economic growth in the

UK, most widely, productivity, have

you heard a more gloomy outlook for

how that is going to be affected,

what we are actually facing is,

remember the Chancellor prefaced the

beginning of the speech by

indicating that the UK was the sixth

largest economy in the world. At

this rate, I think, actually, that

might be one of the last years is

able to say that as inevitably the

UK economy goes down that ranking.

I

don't want to be unfair, I know the

Treasury have produced papers on

productivity, but as Erica says, the

figures are dire, what Philip

Hammond had to say about it was

dire, what the ISS has to say is

even more dire... Philip Hammond did

not outline, apart from general

ideas of spending more on education,

what he intended to do, if any

thing?

To be fair to the Chancellor,

he gave an upbeat assessment in the

oratory, followed it with figures

that were decidedly... Well, did not

try to disguise them. There was

almost a constant internal

contradiction within this speech. We

have productivity figures, how much

we produced per head of the

unemployment. Behind the G-7, the

Eurozone, America, that is something

that has happened over the past year

or so, can be traced back to Brexit

uncertainty? Perhaps one can but the

Chancellor was arguing that that

could be turned around by addressing

technological challenged by seizing

the opportunities of new investment

and new initiative but he was not

saying it was happening right now,

he was not attempting, in my view,

in any way, to disguise the extent

of the concern and anxiety that he

has for the underlying economy.

That's all we have time

for this afternoon.

You can join Brian Taylor

for First Minister's Questions

tomorrow on BBC2

Scotland at 12 noon.

And I'll be back on

Sunday, join me then.

Bye for now.