Finance and Sustainable Development Secretary
John Swinney
Scottish Parliament
November 14, 2007
___________
Presiding Officer.
Yesterday, at the University of Glasgow, the First Minister and I launched our Government Economic Strategy.
That Strategy brings together every strand of policy to support our purpose of increasing sustainable economic growth in Scotland. It is designed to raise the level of economic growth in Scotland to equal the rate of economic growth in the UK by 2011.
We want to go beyond that of course, to ensure that Scotland equals the economic success of small independent European countries. That is what this government means when we talk of a new age of ambition for Scotland.
Presiding Officer, a day on, and I am proud to be delivering to Parliament the first budget of this ambitious SNP Government.
Our economic strategy sets out the route map for higher growth for our nation. This budget sets out how we will invest to deliver greater prosperity for Scotland; to deliver our commitments; and to deliver on the hopes and the aspirations of the people of Scotland.
A copy of the Budget for each member is available at the back of the chamber and in the Scottish Parliament information centre.
Delivering in tough times
Since May, we have already taken a number of crucial steps toward delivering on the Government's strategic objectives.
• To build a wealthier and fairer Scotland we have refocused the enterprise networks; we have provided this year an additional £100 million investment in our University and College estate; and we are legislating to remove the unfair tolls on the Forth and Tay Road Bridges.
• To ensure a healthier Scotland we have taken action to remove hidden waiting lists and have protected local Accident and Emergency Units threatened with closure.
• To create a smarter Scotland we have already invested an extra £40 million in school buildings, employed more teachers and introduced the Bill to scrap fees for students in higher education.
• To make Scotland's communities safer and stronger we have committed to invest in our prison estate; we are taking action to tackle the scourge of alcohol related crime; and earlier this week the Justice Secretary set out our plans to deliver 1,000 extra police on the streets of Scotland.
• And, to deliver a greener Scotland we have set an ambitious target of an 80% reduction in emissions by 2050; outlined our plans to invest £1.6 billion over 7 years in a sustainable rural economy; and made clear our opposition to new nuclear power stations in Scotland.
This government already has a record to be proud of - and, it is just the start of what we intend to deliver for the people of Scotland.
Our plans for the next three years however must be set against the background of the worst financial settlement since devolution. Next year, our budget will rise in real terms by only 0.5% - compared to the 11.5% increase above inflation the previous administration received in 2003-04.
The annual average real terms increase for Scotland over the next three years is only 1.4%.
This position, when oil prices are at a record high, reminds us of what Scotland could achieve if we had the ability to balance our own revenues against our own spending.
It is some contrast that Scotland's budget is increasing in real terms by 0.5% next year, when the budget of equally oil rich Norway is increasing by almost 10 times that rate of growth - which shows what small independent countries can achieve.
This Budget is delivered against the backdrop of inherited spending pressures from the previous administration and spending decisions taken by parliament - against the wishes of this Government - such as the Edinburgh Tram project.
No previous Scottish government has had to plan as tightly and draw on such financial discipline.
A new approach to government and spending
Against that background, I have acted to ensure maximum resources flow to key public services.
Firstly, the government has faced some difficult decisions. We are in a tough financial climate and we will not be able to deliver on all of our commitments just as we would have liked. We are a minority Government and our budget proposals must be endorsed by Parliament. Therefore we have to consider in a tight settlement where policy commitments will also command parliamentary support.
I know there is insufficient parliamentary support for student debt servicing or for loans to grants and we must therefore prioritise funding on policies that we can deliver and which will be supported by Parliament. I am therefore not allocating funding for student debt servicing in the period of the Budget. However, despite the constraints we face, we will deliver funding for a phased transition from student loans to grants, starting with part-time students. We will consult on further student support and graduate debt proposals in 2008 - with £30 million available in year 3 to take forward this policy.
And, while I say this, I remind Parliament what we are delivering for Scotland's students by abolishing tuition fees. This measure will go a long way to providing a better deal for students in Scotland's universities and colleges - and it would not have happened without the SNP in government.
Secondly, in this Budget, we will pursue a much more prudent approach to financial planning. We are obliged and will live within the Budget we have been allocated. But we inherited an over-allocation in the Budget of £220 million. I intend to retain less than half of this over-allocation as a key element in my plan to avoid future underspends within the Budget. I want all of Scottish taxpayers' money to be used effectively. This Government does not want Scottish taxpayers' money being locked up in the UK Treasury.
Thirdly, this government came to office committed to a sustained programme of efficiency savings at a level of 1.5% on an annual basis. In light of the tighter financial situation, I have decided to increase the level of efficiency savings that will be required across the public sector. The target efficiency savings will now be set at 2% each year - releasing £1.6 billion by the end of the spending review period for investment in front-line services. The achievement of this target will be a significant challenge - and I make it clear that everyone in the public sector must play their part in delivering the clearer and simpler government that will make these savings.
Fourthly, I have negotiated with the UK Treasury, an unprecedented agreement - an agreement my predecessors were unable to negotiate - which will give Scotland access to our remaining resources currently held at the UK Treasury. That amounts to almost £900 million of End Year Flexibility that has been lying in Treasury coffers in recent years. This is Scotland's money and this Government has secured it on Scotland's behalf.
These four decisions will build on our ongoing work to streamline and de-clutter government and the public sector in Scotland. They will build on our new approach to government which will involve significantly reducing the number of quangos; simplifying the scrutiny and inspection regime; and introducing a new performance framework, based on outcomes for the people.
A key part of this Budget and approach is the development of a new and constructive relationship with local government in Scotland. I am therefore delighted to tell Parliament that I have reached agreement with COSLA on proposals that we both believe will deliver clear benefits for the people of Scotland. It is an agreement based on mutual respect and a belief in our shared responsibility to the people of this country. Scotland's local authorities are a key partner and that is why this government will:
• reduce ring-fencing, enabling councils to allocate resources according to local priorities;
• allow local authorities to retain - for the first time - the full amount of their efficiency savings to redeploy to other pressures
• recognise the democratic legitimacy of local government and devolve authority to them to make decisions that reflect local needs; and
• establish new outcome agreements with local government - aligned with Scotland's national priorities - which will be focused on what we want to achieve together for Scotland.
In return for this new approach to the governance of Scotland, local authorities will work together with the Scottish Government to implement a number of the Government's key manifesto commitments which are set out in my statement.
I have placed in the Scottish Parliament Information Centre, and at the back of the chamber, a copy of the agreement I have reached with COSLA and which all Scottish local authority leaders will be invited to endorse. I stress to Parliament that the package on offer is conditional on the agreement of local authorities to all elements of the proposal.
But, let me quote from the concordat between COSLA and the Scottish Government, which says that this "represents the best outcome that can be achieved". It represents for this Government a historic opportunity for national and local government to develop a cohesive agenda - an agenda of common purpose - that will improve the lives of the people of Scotland.
Detail of the delivery
The Scottish Budget that I am setting out today represents a crucial staging post on the journey toward a new approach to government.
Unlike previous budgets in Scotland, this one will match our spending with the overarching purpose of government - which for us is to increase the level of sustainable economic growth. We will do that through each of our five Strategic Objectives. This is a new, and joined up approach to public spending in Scotland which will focus and align all public spending on the achievement of greater Scottish success.
This framework helps the whole of national and local government, the Parliament and the public to understand our priorities, and to hold us accountable for them.
And as government we are ready to be held accountable for our actions by the people who matter - by the people of Scotland.
Greener
In our election manifesto we set out our ambitions to build a greener Scotland and in this Budget, we are delivering.
Our spending and our actions will reduce the impact we have locally and globally. It will protect and enhance Scotland's unique natural environment.
The investment will be targeted to help us make much greater use of our substantial renewable energy resource; to reduce the climate change emissions from transport, housing and business; and to improve Scotland's record on waste management and recycling.
Across government we will ensure high standards of environmental performance and design as we refurbish the public sector estate, including schools, hospitals and prisons, and require the same of all new buildings and investments drawing on public funds.
We will protect our environment through record levels of investment in Scottish Water's infrastructure programme and provide additional funding for the Scottish Environment Protection Agency's efforts to reduce pollution.
And we will invest record amounts in public transport, providing a total of £2.65 billion over the next 3 years for our railways - that includes Parliament's funding for Edinburgh Trams. We will also invest a total of £740 million over the period to support bus services and bus travel and increase by 40% spending on direct support for sustainable and active travel. This, along with the work of local authorities, will reduce car dependency and increase the proportion of people using public transport, walking and cycling.
That is investment which is good for our economy and the right choice for our environment.
And we will do more:
Over the next 3 years, we will invest a total of £154 million as we move towards becoming a zero-waste society, we will provide a total of £45 million for new woodlands - extending forest cover and our ability to absorb CO2 emissions, and we will create a new Sustainable Development and Climate Change fund worth a total of over £30 million.
We will treble support for community and household renewable generation to £13.5 million each year.
And because our climate and our environment are so important to this government's Purpose and agenda, we will do more.
Our manifesto proposed a Saltire Prize to encourage innovation in renewable generation. I am proud to confirm today that we will deliver an annual prize fund of £2 million to reward ongoing excellence in research.
And, we will also deliver a £10 million horizon Prize to attract the cream of the world's scientists to put Scotland firmly on the international map as a leading centre for renewable energy solutions.
This will be the largest renewable energy innovation prize in the world - and, it will be founded here, in Scotland.
Safer and Stronger
Our manifesto also set out our determination to make Scotland's communities safer and stronger - and, in this Budget, we are delivering.
Our spending will help communities thrive and become better places to live and work. We will invest to provide greater opportunities in all parts of Scotland by focusing on improving housing, regenerating disadvantaged neighbourhoods, fighting crime, and reducing the fear of crime.
We will equip our fire service to respond more effectively to local and national emergencies with an extra £51 million over the next 3 years for a state of the art communication system.
We will invest an extra £107 million over the next 3 years in new prisons and an improved prison estate.
We will develop a more cohesive approach to tackling the problems of drug misuse with increased investment in the Health and Justice portfolios delivering £94m million in total over 3 years.
And we will support a more coherent policy on punishment and prisons, including a shift away from short custodial sentences to tougher community penalties, backed by additional funding of a total of almost £8 million over 3 years.
Before the election, we spoke of growing and vibrant communities across Scotland and that is what we will deliver.
A total of £54 million over the next 3 years in new resources will be made available to increase the capacity of our police service to protect the communities of Scotland and deliver 1,000 more police officers on Scotland's streets.
We will take targeted action to help regenerate the most disadvantaged communities with the support of £145 million each year to tackle poverty and deprivation and help more people overcome barriers and get back into work.
The government has set out how we will work with Scotland's local authorities, developers and builders to increase the rate of new housing supply in Scotland to 35,000 a year by the middle of the next decade.
To meet Scotland's housing challenge I can announce today investment of £1.47 billion in new and better housing as the government's contribution to achieving this target.
Smarter
Presiding Officer in our manifesto we set out the ways we would make Scotland smarter
In this Budget our spending will lay the foundations for the future well-being and achievement of our children and young people, improve skills across the population and better align our universities and colleges to the creation of wealth in Scotland.
We will work with local government towards improving the learning experience for children and young people by improving the fabric of schools and nurseries and developing and delivering the Curriculum for Excellence
100,000 3 and 4 year olds will benefit from an increase to 570 hours of nursery provision in 2010, putting us well on the way to meeting our commitment of 50% more nursery provision by 2011. And we will work towards ensuring access to a teacher for every pre-school child.
And, in partnership with Scotland's local authorities, I am delighted to announce that we will move as quickly as is possible to reduce class sizes in P1 to P3 to a maximum of 18 - just as we promised we would do.
And we will do more:
We will legislate to extend entitlement to nutritious free school meals to all primary and secondary school pupils of families in receipt of maximum child or working tax credit in 2009.
Following a successful conclusion of this year's pilot we will also further extend free nutritious school meals to all P1-P3 pupils in 2010.
We will give more school pupils opportunities to experience vocational learning.
And, in collaboration with other parties in the chamber, we hope to improve support for children, young people and families at risk, including providing allowances for kinship carers of looked after children.
A smarter Scotland is a key element in meeting our overarching Purpose of increasing sustainable economic growth. To achieve this, we will once again do more.
We will invest a total of £5.24 billion over 3 years in the further and higher education sectors in Scotland - a cash increase of almost 11%. On capital, with an extra £100 million funding package this year, we will deliver 20% more investment over the lifetime of the Parliament than previous plans, maintaining the competitiveness and effectiveness of the sectors .
Record investment in Scotland's future - investment in growing opportunity and prosperity for our nation.
Healthier
Presiding Officer, before the election we said that Scotland could be healthier and in our manifesto we set out a series of proposals to deliver the faster, local access to health care people expect and deserve.
And in this Budget we are investing even more to achieve this healthier Scotland. We will target our spending to support people to lead healthier, longer, and economically productive lives. Our investment is focused on supporting better health across Scotland, reducing inequalities in healthy life expectancy and further improving our health service.
That is why we will invest a total of over £37 million over 3 years to strengthen primary health care in the most deprived areas.
And it is why as part of an overall package of over £350 million over 3 years of new money in health improvement and better public health, we will invest a total of £85 million to reduce the harm done by misuse of alcohol, a total of £9 million for further action to reduce smoking and a total of almost £35 million on diet and physical activity for health and to help prevent obesity.
And yes, to deliver a healthier Scotland we will do more.
Additional funding for sport - extra money, increasing funding from £34 million to over £43 million each year -over and above the £22 million over 3 years now earmarked to deliver a successful Commonwealth Games in Scotland in 2014. There will of course be more significant investment outwith this spending review period for investment in the Commonwealth Games.
There will be extra investment in prevention, screening and early detection of serious illnesses, over three years, of £64 million for an immunisation programme to protect women against cervical cancer. We will provide £54 million to screen people admitted to hospital for MRSA and to help prevent the spread of infection. And, we will invest £41 million for a national screening programme to detect serious illnesses early.
And there is more. Over the spending review period:
£30 million to ensure more flexible, out of hours access to primary care
£97 million to phase out prescription charges to ensure that sick people are not financially disadvantaged;
And £20 million in better access to NHS dental services by introducing a prevention-based school service, starting in the most deprived areas, and by establishing a third dental school for Scotland in Aberdeen.
Central to our manifesto was a commitment to the people of Scotland was faster treatment on the NHS.
And that is why I am proud to confirm today that the Health Secretary has also identified £270 million - £90 million each year - to ensure that by the end of 2011, nobody will wait longer than 18 weeks from GP referral to treatment for routine conditions.
Real progress for patients with the SNP Government.
Wealthier and Fairer
Presiding Officer. We said before the election we would make Scotland wealthier and fairer - and we will deliver on that promise.
The government has made sure that we are targeting our spending effectively to increase our competitiveness to make Scotland a more attractive place to live, work and invest; to generate more opportunities for work; and ensure that the benefits of a wealthier Scotland are shared fairly across the nation.
The Enterprise Networks, recently refocused by the Scottish Government, will receive £1.6 billion over the next 3 years to support the process of economic development across Scotland - supported by other measures to stimulate economic growth.
That is why we are increasing investment in Scotland's strategic transport networks, providing over £2.5 billion by 2010-11 to support the efficient movement of goods and people.
It is why we are increasing support for ferry services from £74 million this year to £111 million by 2010-11, which among other measures, will allow us to take forward our proposed Road Equivalent Tariff pilot to the Western Isles.
It is why we are providing record levels of funding for an enterprising third sector with a £63 million development programme and a £30 million Investment Fund to encourage greater investment in assets, business development and the skills of those working in the sector.
And, it is why we are supporting record levels of investment by Scottish Water to ensure that it delivers levels of service to customers and efficiency we require here in Scotland.
We entered the election in May offering a social democratic contract with the people of Scotland.
Throughout this statement I have highlighted the many ways we are honouring that contract with higher levels of investment in frontline public services.
The second part of that contract - alongside investment in key public services - was our commitment to lower and fairer taxation.
Our small businesses are the lifeblood of our local town centres and the beating heart of our communities. To provide the competitive advantage that these small companies require, I am delighted to announce that, from April 2008, 150,000 small businesses across Scotland will see their business rates reduced and, in due course for many removed, by this SNP government.
And, I am also delighted to announce that, as part of the historic agreement we have reached with local authorities, I am putting in place the resources to deliver a freeze in the Council Tax - just as we promised we would do.
Presiding Officer, I have taken the right decisions to release resources for key public services; I have constructed a package that will create new opportunities for the people of this country.
This Budget represents the start of a new era in Scotland's government. Today, we take a major step to aligning the whole public sector in support of the Government's purpose and its objectives. We are fulfilling our promises to deliver:
• shorter waiting times for healthcare,
• smaller class sizes in early years,
• reduced rail journey times between our major cities,
• better support for drug rehabilitation,
• an ambitious programme to tackle climate change,
• the reduction - and then the removal - of business rates for many of our small businesses,
• and we have put in place the resources to freeze the Council Tax - just as this Government promised we would do.
This is a Budget to set Scotland on the route to growth.
It heralds a new era of optimism, opportunity and delivery for all of Scotland.
With investment in our public services, matched by lower and fairer tax, I believe this Budget meets the aspirations of the people. And I commend the Budget to Parliament.