Malcolm comments on the Scottish Government's spending proposals

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Scotland's Budget for 2010-11: Stage 1 Debate Malcolm Chisholm (Edinburgh North and Leith) (Lab):
One advantage of the budget process is that we can hear a great deal of evidence from a range of stakeholders and experts before we come to the chamber to debate the budget. I am sure that members have surveyed much of the evidence. The key message that comes through from a vast number of people who gave evidence is that the budget is deficient in supporting economic recovery. That is why Labour's key demand is that there should be movement in the economic area.

I could not list all the bodies that put forward that point of view, but they include the Centre for Public Policy for Regions, the Scottish Council for Development and Industry, the Scottish Trades Union Congress and many business organisations. The main areas that are cut in the budget are the capital and revenue areas that are most usually linked to economic development. Perhaps the most surprising point of all is that, although many budget lines contribute to economic activity, none of the budget lines that are directly related to economic development initiatives has risen compared to the 2010-11 plans that were set out in the draft budget for 2009-10. In other words, the budgets that were set more than a year ago have not been increased, despite all the difficult economic developments that have occurred in the past year. It would be difficult to find another Government in Europe that has not changed its budgets in response to the recession.

The Economy, Energy and Tourism Committee encapsulates the evidence in its conclusion, which is on page 44 of volume 2 of the Finance Committee report on the budget. It states:

"based on the near universal evidence we received from business organisations, trade associations, economic commentators and the trades unions, we do not believe that the budget proposed is the right one for the economic challenges ahead."

That was supported by the Labour, Liberal Democrat and Conservative members of the Economy, Energy and Tourism Committee. It is regrettable that the Conservative party has withdrawn from that analysis of the budget today.

Joe FitzPatrick:
Will the member acknowledge that neither the Economy, Energy and Tourism Committee nor the Finance Committee proposed any amendments to improve the budget? These are difficult times and difficult decisions have been taken, but nobody in the Parliament has been able to offer costed alternatives to the budget.

Malcolm Chisholm:
The most important speech to come will probably be that of Wendy Alexander, because it points a way forward for us in the next two weeks. When I say that Labour's key demand is some movement in the economic area, in practice that means in relation to capital spending.

GARL has been flagged up by colleagues, as it will be by others to come. I will speak briefly about housing, which I am sure Mary Mulligan will also address. Those are the two areas of capital spending in which we are particularly interested. Until we have a clear statement of the timing of capital expenditure, we cannot make proper decisions about it. If we get such a statement in the next two weeks, we will be able to make significant adjustments to the budget that will boost economic recovery. As is well known, housing is an excellent candidate for that because of the strong multiplier effect of housing developments and because, as we all know, it also has an important social impact on individuals and communities. The third reason is to do with timing, which is of the essence when we make decisions about capital expenditure. I am concerned that we should meet the internationally recognised and admired homelessness target for 2012, which is only two years away.

John Swinney (The Cabinet Secretary for Finance and Sustainable Growth):
Where does Mr Chisholm believe the priority should be in any redirection of capital expenditure in the Government's programme? Is it to the Glasgow airport rail link, to housing or to both?

Malcolm Chisholm:
We are putting both forward for consideration in the debate today. One of the Finance Committee's recommendations was that we should have a greater connection between outcomes and budget choices. We all want a certain outcome in relation to housing by 2012, so we must make choices about the overall allocation of expenditure and its distribution - if I can casually make my Edinburgh point - in order to achieve that objective.

The Government's other stated objective in the budget, apart from supporting areas that boost economic recovery, was to protect front-line services. Indeed, the cabinet secretary spoke today about investment in education being at the heart of the budget bill. In Edinburgh, to which I return briefly, a 2.5 per cent cut to the education budget is proposed for next year.

The cabinet secretary does not have the mechanisms to protect front-line services and he needs to address that question. I am not asking a question about overall allocations to local government although, following what David McLetchie said, I point out that Edinburgh's revenue increase is 1.76 per cent for next year compared with the Scottish average of 2.9 per cent. Half of that 1.76 per cent increase is for the council tax freeze, so we will have an increase of less than 1 per cent, which is why so many cuts are looming. As finances get tighter, it is even more important that the distribution is looked at as well as the overall amounts.

Supporting economic recovery and protecting front-line services are the right priorities for the budget. It is just unfortunate that the Government's actions do not follow its rhetoric. January 20th 2010, (Column 22893-5)