Scottish Budget Politics Scotland

-- Good afternoon and welcome to the Politics Scotland budget

special. We will be crossing to the chamber of the Scottish Parliament

for the Finance Secretary's big statement very soon. With me in the

studio is our Business and Economy Editor, Douglas Fraser. You can

also follow our live online budget page at bbc.co.uk/scotlandnews.

Lots of ways to get of the information for what is an

important day at Holyrood. Firstly, John Swinney has �28 billion to

spend or so over the coming year, what will happen? It is getting

squeezed and he has boxed himself in with some promises. Protect the

NHS, free tuition fees. But he must talk about growth and jobs. The

politics as an v public demand that he says something about that. He

will have to say something about fairness.

I look forward to it Parliament's scripted it -- scrutiny of our

budget bill. I will work with other parties to build as much consensus

as I can. Stop and continues to face significant challenges as a

result of global economic conditions and the UK Government's

approach to public finances. The settlement we have received is the

toughest since devolution. Over a four-year period, the Scottish

Government budget has been cut by more than 11% in real terms. Within

that, our capital budget has been reduced by a third. The position

for next year is particularly challenging. It represents the 4th

consecutive year for which there has been a real-terms reduction in

paused on at the Budget are mine. In June 2010, when the Office for

Budget Responsibility set out initial forecasts for the UK

economy, if the predicted growth of nearly 3% in 2012. Recent forecasts

are less than half a percentage for 2012. UK GDP has now contracted for

four consecutive quarters. The decline has been driven by a sharp

fall in the construction sector which has fallen by 80% over this

period. This data reinforces the case Scottish Government continues

to make, that a different strategy is required from the UK Government.

There should be a stimulus for the construction sector. It will also

help to provide better housing, hospitals and schools. That is why

they called again on the UK Government to support a targeted

fiscal stimulus to create jobs. Global economic conditions continue

to affect us severely. Household income as remain under pressure. We

are focused on enhancing confidence in order to encourage private

sector investment and growth, and to help thousands were we can.

While the UK Government refuses to change course, this administration

will continue to do all we can within our power has to deliver

growth and support jobs. Over the past 12 months, we have acted

decisively to achieve this. Last September, we published our

economic strategy and the spending review which set out measures to

tackle unemployment. In the face of cuts being made to a capital

budgets, we are boosting capital investment through infrastructure

projects which will be delivered through a non-profit making model.

We are supporting a range of innovative finance initiatives,

such as the National Housing Trust. Our major investment programmes

support thousands of jobs across Scotland. Here are some compelling

cases which reinforce the strength of this administration's approach.

95% offer annual transport budget was last year invested back into

the private sector, supporting over 25% of civil engineering contracts

in Scotland and more than 12,000 jobs. It is estimated that our

housing budget of more than 750 million over three years would

generate around �3 billion of economic activity and support up to

8,000 jobs each year. Spending review also provided significant

investment in skills and post 16 education, including through it

hour opportunities for all initiative, guaranteeing a training

opportunity for all people aged between 16 and 19 who are not in

employment, education or training. It lent opportunities to real jobs.

Completion rates have increased our record 75%. From 2007 until the end

of this spending review period, we will have invested almost �5

billion in colleges, 45% more in cash terms than the investment made

under the two terms of the previous administration. The spending review

confirms decisive support for business, including great success

in a food and drink exports. Also the establishment of enterprise

industries. And generous business relief rates. Valued at �2 billion

over five years. At a time when household budgets and public

services are under pressure, the spending review provided funding to

deliver key commitments we have made to the people of Scotland.

Working with local government partners to support -- to enforce

the council tax freeze. Keeping our policy of no tuition tax -- and no

tuition fees. Scrapping it prescriptions charges. Improving

schools with the curriculum for excellence. Maintaining teacher

rumbles. Giving 1,000 extra police officers. Our draft budget will

ensure the delivery of -- of all of these commitments over 2013-14.

This is a government that delivers on its promises. The spending

review almost -- also put public reformed at the heart of dealing

with our economy. We want to use our resources effectively to meet

the needs of Scotland. We made sure that the shift to preventative

spending is essential to ensure sustainability of public services.

We have made �500 million available to three funds to support early

years adult social care and tackle reoffending. The draft budget

announced today provides an update on these funds. Looking forward, I

confirm today that'come agreements will incorporate a long-term

prevention plan that makes the A8 commitment to -- that makes the

commitment to invest further in a intervention. It reflects agreement

with local authority partners regarding police and fire services.

We must remain vigilant to changing economic conditions and respond

decisively. In developing the draft budget, I have scrutinised in

detail what scope exists to create additional flexible -- flexibility

to provide further stimulus. I have reached the following conclusions.

Scottish Water has delivered significant improvements in

services over 10 years. With an annual turnover in excess of 1

billion, it sustains 20% of the Scottish civil construction

industry. After four years of water charges being frozen, average

household charges are �50 lower than in England and Wales. The

quality of water services has been improved. Against this background

of high performance and efficiency, I have reconsidered the financial

position and have agreed that we can reduce our lending by �45

million in 2013 with no detriment to services or their investment

programmes. Furthermore, alone at made in 2008 will be repaid -- 8

bank loan. These steps demonstrate beyond doubt the value of retaining

Scottish Water in public ownership. I have also reviewed the benefits

of a robust approach to the management of major infrastructure

projects, such as the 4th replacement crossing. I am able to

release budget contingency of �20 million this year. I have taken

into account the efficiencies that Scottish Futures Trust is helping

us to love her in our overall capital programme. Over the past

three years, they have delivered a total of �371 million in savings

and benefits to the people of Scotland. We expect further

benefits in future, including in building new schools. I am able to

carry forward more than originally planned through the budget exchange

mechanism, freeing up �40 million of additional resources to be

deployed in the coming year. There is �31 million to be deployed. I

have considered the scope for redirecting resources within

existing budgets. I have considered an our position on non-domestic

rates. The Government has introduced several proportionate

measures. We continue to keep this matter under review. Last year, we

put in place a package of measures to help regenerate town centres and

encourage empty properties back into use. As part of this, we

believe the changes we are making to empty property relief have a key

role to play. I recognise there is more we can do. Two further

incentivising empty properties back into use, the local government

minister yesterday launched an amendment which will be used to

reward those who bring premises back into use. I come from to

Parliament that we're progressing the additional powers set out in

the stock and back with an additional �3 million allocated in

this Budget to meeting implementation costs in at 2014. By

exploring all avenues, the steps I have taken enable me to make a

number of other spending announcements today to boost

capital investment, tackle young unemployment and enhance economic

confidence by encouraging private sector investment. In February, we

announced a package of �380 million of capital spending over the period

until 2015, focusing on transport, housing, digital and maintenance

projects. In June, we announced shovel ready projects valued at

�105 million, targeted towards renewables, housing and transport.

There will be further investment in a road improvements and tourism

project. We will provide all �40 million this autumn and next year

for affordable housing. Please save the applause until the end. We will

deliver more homes more efficiently than was ever achieved under the

previous administration. 600 new homes were delivered last year. To

further boost the construction industry, we are unable to expand

the number of schools being built. We will increase the number of

schools being built from 55 up to 67 and we will build them sooner.

The Education Secretary will confirm details shortly, but I have

offered -- authorised the financing of more rapid delivery of the

programme, by bringing forward plant future involvement in two

this coming year -- planned. 350 schools have already been built or

refurbished in the last four financial years. More than the

previous administration was able to deliver in eight years. We have

half the number of children in crumbling schools. Our partnership

with local authorities remains central to our delivery programme.

I know that Parliament will welcome the joint commitment the First

Minister and the president of COSLA have made today, to work together

wherever possible to support economic recovery. Investment in a

Green economy can deliver Malta bolt economic and environmental

benefits. I am announcing �130 million of funding over this year

and next for a programme for energy efficiency measures. This will

provide opportunities for small and medium-sized construction firms. A

package will focus on supporting domestic households to improve home

insulation and measures to improve energy efficiency in the public

We will provide further funding of �2.5 million... Provide the

challenges we face, the Government is focused on opportunities for

growth and encouraging development. We have seen success in tourism. We

have had a 5% increase in visitor numbers. I announce the Investment

of �1.5 million in marketing. The National Museum of Scotland it is a

wonderful success, and has attracted over 2 million visitors

since it reopened. �1 million will be given to the maintenance of

historic buildings across Scotland. Building on the momentum provided

by the Olympics, Paralympics and the promise of the Commonwealth

Games, and recognising the impact sporting success can have, I have

allocated an additional �1 million to support athletes in the run-up

to the Commonwealth Games. We are committing an additional �6 million

across this year and next to focus on a community Leeds Initiative.

Our investment in cycling is is part of a wider investment. We are

responding as best as we can to mitigate threat. This project

contains �23 million to mitigate the cuts to council tax benefit,

and we will continue to engage with the Department of Work and Pensions.

There were has the case for independence been made more clearly

than in the area of wealth -- of welfare. Scotland will continue to

take a distinctive calls that uses public money effectively, and

reflect our core values that we must support the most vulnerable in

society. We will continue to implement Policies, including the

abolition of prescription charges, to help households across Scotland.

Our policy includes a commitment to implement the Scottish living wage,

not just in 2013-14, but for the remainder of this Parliament. These

measures will help enhance economic confidence, provide security 2000,

and support jobs across the economy -- provide security to thousands.

Latest figures show youth unemployment remains far too high.

I have been determined to do more to support those training for work.

I want to keep a student numbers at 2011-2012 levels. I will allocate

resources to establish an energy skills Academy, to support schools

for -- to support skills. 18 to 24- year-old need supporting. The

Government will assist in the creation of up to 10,000 jobs for

young people in the private sector. These measures confirm our

determination to do all we can to support the young people of

Scotland. The Government has produced a draft budgets. I have

announced Investment in a Green economy, skills and the work force

of a quarter of a billion pounds. I commend the budget to parliament.

Typical John Swinney. A call for the UK Government to provide

capital investment. Interesting to see what the opposition parties say.

I think Ken Mackintosh will speak first, then Gavin Brown for the

Conservatives, then we need one -- N will he Rennie. The cabinet

secretary for finance said last year he was describing a Budget for

jobs and growth, he plans to steer Scotland in a certain course. Now,

unemployment is higher in Scotland than the UK average. This SNP

Minister and administration have cost 30,000 public sector jobs over

the last year alone. The Finance Minister stands before us today

with no hint of humility, and no hint of apology. The worrying truth

is, he seems content to pass the bog. -- buck. Either to Westminster,

or to local authorities. He did not have the courage to mentioned the

consequences. What is the real terms cut to local authorities? How

many bin men having to lose jobs? How many people will have to

struggle for support? How many schools will suffer? How does his

decision mitigate the welfare cuts inflicted from the UK Government?

Scotland's young people at being harshly affected by the recession.

Why did the finance minister slam the college door shut in their

faces with last year's cuts to further education? Can If the

finance minister, was he right then and therefore wrong now, or is he

right now and therefore wrong then, because he cannot be both? One of

the few straps of good news is some help for the housing sector. Given

the cut last year, he is not even the undoing the damage he has

wrought on this industry. 12,000 builders lost their jobs last year,

due to his decision. Why not use Government revenue to free up

capital? What we have head yet again is, it is not me. When will

he take responsibility? Mr McIntosh axed asked about local authority

funding. A larger share of the budget and I inherited from all of

his Labour predecessors in Scotland. Secondly, let's look at the housing

situation. Between 2007 and 2011, this Government invested �2.3

billion in housing in Scotland. Between 2003 and 2007, �1.6 billion

was invested by the Labour Government. They were able to build

4832 houses. We were able to build 6882 homes, so I will take no

lectures about housing from a Labour Party that was so

inefficient in house construction, it could not build the houses. In

terms of welfare cuts, welfare codes, I would remind him he is

joined at the hip to the people who were cutting welfare in this

country! They are joined at the he a! -- at the hip! What are we doing

about it? As a result of partnership working with local

Government, we are putting money into make-up for the code's in

council tax benefit -- the court. We are not posturing with the

Tories like Ken Mackintosh. Order! Order! And I will not take a scrap

of a lesson from Ken Mackintosh about facing up to my

responsibilities. I have set a budget, a balanced budget, since

2007, and that lot have voted against any decent measure that has

been brought forward. We will face up to our responsibilities and we

will deliver for the people of Scotland. Gavin Brown. Can I thank

the Cabinet Secretary for the statement and the draft budget. I

was grateful for advance copies of the draft budget, because I found

the total budget just over �34 million. -- effective �4 billion.

More than �2 billion more at his disposable -- at his disposal than

he had before, yet he complains about savage cut. At best, this can

be described as an art full budget. Housing, John Swinney takes out

�100 million and things we should be grateful because he has given

�40 million back. The construction sector is struggling. We have high

youth unemployment and he takes �50 million out of colleges, and today

they should be grateful because they get so -- they are getting �70

million back. We see reductions over the coals -- we see reductions

all over. When you add this together, how does he justify his

statements are, and saying he has an unrelenting pursuit for economic

Can I thank him for his question? Can I start what the numbers? We're

always loved to start with the numbers. If Mr Brown looks at the

second page of the budget document, right up there, I'd chuck out the

information about the UK Government's spending review

settlement. -- I chart out. What it shows is that the total budget in

2012 was a 28 million. -- billion. It is now 24 billion. That is a

reduction in cash terms. If Mr Brown would care to look in detail

at all the numbers, which I am sure he will do, he will recognise that

the Conservative government in the United Kingdom... I have had to

deal with the fact that the United Kingdom Government has reduced our

budget for capital purposes by 33%. One third. That is the

irresponsible act that we have had to deal with. That kind of

reduction in the teeth of an economic recession. If you listened

carefully to my argument, we marshal an argument which is about

investment in the long-term future of the economy, which is capital

investment. It is the responsible thing to do. It is something I

would have thought the Conservative government would have been

attracted to in recognising the severity of the economic

circumstances. What Mr Brown has to acknowledge is that when his

government came to power, the forecast for growth in the economy

today was nearly 3%. Now it is less than half a percentage. That is the

rationale for investing in capital projects with in this country. Mr

Brown asks me what have I done to support the economy. There is �3

billion of capital expenditure which has been brought forward.

There are more schools which Mr Russell will speak about in the

next week. There is an immediate stimulus to the housing sector.

There is a stimulus to support the employment of young people in the

private sector. There are modern apprenticeships, which the

Conservatives voted against. There was the small business bonus scheme

which the Conservatives voted against. Mr Brown says, come on. I

am afraid these are the facts. The Conservatives voted against the

Budget last year and voted against the small business bonus scheme.

The First Minister says, bring back Annabel Goldie. It must have been a

sensible leadership that was taking the decisions in the last

Parliament and the Gloucester way in this Parliament. I hope that Mr

Brown, in examining the detail of the Budget, will acknowledge the

Government is doing -- is using every revolt at my disposal to

invest in the economy and that is what an have done. I would like to

thank the Finance Secretary for an advance copy of the statement. He

knows that last year the Liberal Democrats worked constructively to

deliver changes to the budget. We secured extra funds for colleges,

social housing and early intervention. This year, I hope we

can work again to protect those gains. In a budget which has

increased in cash terms, no matter what he says... Mr Swinney said he

wanted the relentless pursuit of economic growth. But his budget is

10am. This Government is more focused on independence. If he was

committed to doing all he could, he would release �2 billion locked up

in the accounts of Scottish Water, to invest in creating 100,000 new

jobs. Broadband, science, early intervention and energy efficiency.

That is the kind of change that prioritise sees the economy. Will

he make those reforms to release the money to create the jobs? Or

will he just beat him at? -- be timid. I am grateful for the

question. I will engage in dialogue with all the parties. I will

happily take forward those discussions. I would have thought

that he might have welcomed the steps I was taking to generate

maximum impact from the Scottish Water enterprise within our country.

It has leveraged out resources to be used and the support of the

economy, which previously we do not think we would be able to bring

into the Budget. I would have thought he would have welcomed that

in the budget. He asked me once again to go through the routine of

privatising its Scottish Water. Which has told him on countless

attentions -- countless occasions that I will not be privatising

Scottish Water under any circumstances. When his idea was

put forward by the Liberal Democrats before the parliamentary

election in 2011, the Scotsman newspaper reported on putting this

proposal to the decision maker on this question, to the Chief

Secretary to the Treasury, Danny Alexander. This is what that

newspaper reported. Danny Alexander failed to promise that the money

the Liberal Democrats' claims would be freed up would not be clawed

back by the Treasury from the UK Government. So, it is a kind of

strange situation But you sell the family silver and you don't even

get to keep the proceeds as a result!

Let pick up on some of the main themes of his draft budget. -- let

us. 1% pay increase for those and the public sector. The number of

schools to be built to increase from 55 up to 67. Scottish Water

will see its lending reduced by �45 million. Colleges will see �17

million more to maintain student numbers. That is something the SNP

have been criticised about in the past. Give us your interpretation.

He says this was the tightest settlement since devolution. But it

seemed that way? Yes, I does. He has found some money, especially in

Scottish Water, and he is distributing that. Housing is

getting a lot. It is about homes and it is about jobs. The SNP has

been under pressure from Labour over the last year. He has prepared

the political ground on that one. In terms of pay, 500,000 people in

stock and work in the public sector. How many of those will be directly

impacted by the announcement today? It is less than 30,000 who work in

the NHS. A lot of people will still have to negotiate. I think he will

soon that local authorities will apply the same 1%. Slightly more

for those earning less than 21,000 and a cap above 80,000. He is not

saying how that is getting funded. How much will have to be squeezed

out of other budgets, for example. The unions will be pointing out

that bat is still a long way short of the current inflation rate and

they have had a freeze for several years. They will continue to lose

ground if inflation does not come down. We have the Commonwealth

Games coming up. There is a good headline to be had out of this.

Elite athletes get him �1 million. They are arguing over the figures,

but it is something like �13 billion. �1 million extra for elite

athletes doesn't make for much of a difference on the budget, but it

will be good on the headlines -- something like �31 billion. There

is a will be an issue as well. Thank you very much. Lots more

analysis from you to come, Douglas. Our Political Editor Brian Taylor

is in Parliament. You predicted there was not much leeway for John

Swinney. That has turned out to be the case. The pay rise is

interesting, though we should be aware that it is only those

employees for and he has direct responsibility. That is quangos and

senior NHS managers. But it is probably the beginning of the

freeze in pay. The increased capital investment is interesting.

There is evidence of political sensitivity. He got a real taking

on housing and colleges last year. We have seen a retrenchment since

then and I think there is further retrenchment in the Budget today.

This is the document. If you go to the back, you get a detailed

breakdown of figures. You can see The areas that are suffering and

that his local government. A straightforward reduction from 881

million to 749 million. Other budgets are going down. Capital, he

is trying to burst. The court budget is down, housing, culture,

motorways and roads, concessionary fares for buses and the big cut is

on local government. That eye- catching announcements he wants us

to see, reasonable from his perspective, is this attempt to

improve growth. But the overall figures are of squeeze and cuts.

There will be fewer people employed in the public sector because of the

cuts you have spoken about. Not much from John Swinney on that. But

he did talk about the no compulsory redundancies policy of the Scottish

Government. And freezing council tax again. Freezing council tax,

prescription charges. He is trying to say that for those households

were struggling, there is some leeway if they are in the public

sector. There are other ways of trying to make life better for you.

John Swinney is not trying to pretend that this is anything other

than a series of cuts. I thought Ken Macintosh was then trying to

say that he had been responsible for 30,000 jobs. John Swinney is

obviously sensitive to that and came back extremely vigorously

indeed. Probably questioning what Ken Macintosh would do, given that

there is a limited budget as described by HM Treasury. Thank you,

Brian and a magnificent and braces. -- and your magnificent braces.

That's it for this afternoon. The budget debate at Holyrood continues

till 3:30pm and can be watched on the BBC's Democracy Live site or

follow our live budget coverage at bbc.co.uk/scotlandnews. And if