Treasury Spending: Grants to Devolved Institutions

Kirsty Blackman Excerpts

Tuesday 3rd July 2018 Commons Chamber

[Kirsty Blackman (Aberdeen North) (SNP)]

I thank the Backbench Business Committee for agreeing to schedule this debate, and I thank my hon. Friend the Member for Glasgow South (Stewart Malcolm McDonald) for making the application and all the Members from across the House who agreed to back it. My hon. Friend is unwell today, which is why I am here in his place; I hope that Members understand.

As the House would expect, I shall mainly focus my comments on the Scottish context, but I wish first to touch on the other devolved institutions. My Welsh colleagues have often expressed their concerns about how the Barnett formula applies to Wales. The issue was further compounded by the recent cancelling of the Swansea tidal lagoon project, which would have generated significant income for Wales. The reality is that Wales has been badly served by the UK Government.

On Northern Ireland, the main estimates include £410 million arising from the confidence and supply agreement. The SNP has stressed on numerous occasions how shocking it is that the Prime Minister has entered into this grubby deal, giving huge amounts of cash to Northern Ireland just to keep herself and her Government in power. But the biggest problem about the whole deal—apart from the fact that the Tories, with whom we fundamentally disagree, are being propped up by the Democratic Unionist party, with which we have even more fundamental disagreements—is that the money does not generate Barnett consequentials. If Northern Ireland is receiving £1 billion, Scotland should receive £2.9 billion and Wales £1.6 billion. Given that Scotland’s discretionary budget has been cut by 8.1%, or by £2.6 billion, between 2010-11 and 2019-20, I hope that the UK Government will understand why the people of Scotland and of Wales are so deeply unimpressed by their behaviour.

[Chris Elmore (Ogmore) (Lab)]

In addition to the provision of the DUP bung, Wales has lost £1.2 billion, or 7%, since 2010, so we are talking about a 7% real- terms cut. Despite that and despite the myths peddled by the Government, health and social care spending in Wales is still higher per head of population than in England. Does the hon. Lady agree that we should talk in facts and that the real-terms cuts happening in Wales and Scotland are having a real impact on people’s lives?

[Kirsty Blackman]

I agree. What we should be doing in this debate, and what I will try to do in this debate, is to lay out what the real-terms cuts actually are. We cannot have constant fudge from the UK Government, whether on the Wales budget or on the Scotland budget. We need to be accurate about how much is being cut from these budgets.

Scotland’s fiscal resource budget has seen a cut of 9.1% over this period, and our total fiscal budget will be cut by 8.4% in real terms. The UK Government have been talking about the Barnett consequentials that are coming to Scotland, but the reality is that most of that money is financial transactions money. Financial transactions cannot be spent on normal day-to-day spending. They cannot be spent on resources for our NHS, for example, because they have to be paid back. This is not real money that the Scottish Government can spend.

We are also seeing a £230 million resource cut in 2018-19, but despite that, the SNP Government at Holyrood continue to protect public services and to invest in measures to unlock innovation and drive increased productivity. On policing, unlike the UK Government, we have not cut the numbers of police. At this point, I would like to congratulate the new Scottish Justice Minister, Humza Yousaf. It is possible that Donald Trump will visit Scotland. I am certainly not a big fan of Donald Trump coming to Scotland, but I am pleased that Humza Yousaf has managed to convince the UK Treasury—I thank the Minister for doing this—to provide an extra £5 million to cover the cost of rolling out the red carpet. I do not want Donald Trump to come here anyway, but he has had the hand of welcome extended to him by the Prime Minister, so it is completely reasonable that the UK Government should cover this cost.

[Bill Grant (Ayr, Carrick and Cumnock) (Con)]

In reference to Donald Trump, the President of the United States, does the hon. Lady not agree that he is one of the single biggest investors in Scotland, whether in the north-east in Aberdeen or in Turnberry in my constituency, where he employs 300 people and has invested more than £200 million? I would welcome Donald Trump to my constituency. Does she agree?

[Kirsty Blackman]

I do not give a stuff how much Donald Trump has invested in Scotland, because he is separating families, and that far outweighs any good that he has done with the investment that he has made.

[John Lamont (Berwickshire, Roxburgh and Selkirk) (Con)]

The hon. Lady has criticised the financial transactions as the means by which the UK Government are delivering extra funding to Scotland, but does she not agree or accept that the Scottish Government have used financial transactions to invest in housing, in vital infrastructure projects and in other business support? It seems to me that she is happy to criticise the UK Government for using this model but is not prepared to accept that the Scottish Government use exactly the same model for their investments.

[Kirsty Blackman]

I am pleased that the Scottish Government are receiving the financial transactions money. However, the UK Government cannot say that this is money that can be spent on day-to-day spending, because it cannot. The Resolution Foundation has specifically said that it cannot be spent in that way.

--- Later in debate ---

[Luke Graham (Ochil and South Perthshire) (Con)]

rose—

[Kirsty Blackman]

I will not give way, because I want to make some progress.

That money cannot be spent on day-to-day services such as our NHS.

On the NHS, our Scottish Government have invested an additional £550 million in health and social care. We have increased the health and sport budget by 9.6% in real terms between 2010-11 and 2018-19. In addition, our NHS Scotland staff will be offered a 9% pay rise over the next three years. That is the highest NHS pay uplift offered in the UK, and I am pleased that we can recognise our NHS workers in this way, particularly in the 70th year of the NHS.

At Treasury questions this morning, the Chancellor confirmed that Scotland’s share of the NHS uplift will be £2.27 billion in 2023-24, but the Treasury has not yet confirmed how this uplift will be paid for. Will it require devolved tax hikes, or will there be a cut to Barnett consequentials coming from elsewhere to fund this additional revenue? The people of Scotland need clarity, and it would be most welcome if the Treasury provided that clarity at the earliest possible opportunity.

The Scottish Government are investing more than £3 billion during this Parliament to deliver 50,000 affordable homes, including 35,000 for social rent—an area that had sadly been neglected by the UK Government. Although it is important that there is enough supply so that people can buy homes, it is also important that those who cannot afford to buy homes have secure rents at levels that they can afford.

In my maiden speech, I said that the Scottish Government’s scrapping of the right to buy was one of the most monumental moves that has been made. I was a local councillor for eight years before I did this job, and a phenomenal number of people were waiting for council housing at that time because of the amount of housing stock that had been sold off. The number of people waiting has now reduced in my constituency and in Aberdeen in general, but this has only happened because Aberdeen City Council is now able to invest in building homes without the fear that they will be sold off immediately.

[Kirstene Hair (Angus) (Con)]

Will the hon. Lady condemn the parents of her party’s leader—the First Minister—who took advantage of the right to buy?

[Kirsty Blackman]

Many people took advantage of the right to buy, because it was the rule that they could do so. I do not think that people should be allowed to do that, which is why I have supported the Scottish Government’s move. I will not criticise the UK Government for doing this south of the border, but I urge them to look at what is happening in Scotland—particularly with council housing, but also more generally with social rent. This move has improved people’s quality of life, because they are now able to have long-term rentals, secure tenancies and a roof over their heads. I think that that is more important than being able to buy their own homes.

[Ian Murray (Edinburgh South) (Lab)]

I am glad that the hon. Lady and her colleagues have been successful in getting this important estimates day debate, but I do have to pick her up on something. I represent a city that has a waiting list for social and council housing of 26,000 people. The Scottish National party has now been in power for over 10 years, during which time that list has doubled, not halved.

[Kirsty Blackman]

The Labour party was in charge in Holyrood before and could have cancelled the right to buy then, but it sadly did not. Unfortunately, we are trying to undo the legacy of Margaret Thatcher, who put in place the right to buy. We are trying to undo the legacy of the decimation of our council housing stock. The reality is that we can only build houses so quickly, and we are doing our very best. I would like to see the Labour party do a better job, to be honest.

[Hugh Gaffney (Coatbridge, Chryston and Bellshill) (Lab)]

Does the hon. Lady agree that if people cannot buy council housing, they need to get social housing? Let us give our young people a chance to have a start in life with a new house. Let us start building social housing and creating jobs.

[Kirsty Blackman]

Of the homes that the Scottish Government are building, 35,000 are for social rent. The reality is that the Scottish Government have put in place a huge number of schemes to allow first-time buyers to get into the housing market, including joint purchase schemes, whereby people go into joint purchases with the Scottish Government. These measures have been incredibly successful in ensuring that people can get a foot on the housing ladder.

At Westminster, politics gets bleaker by the day. As the Tories hark back to the 19th century, our Scottish Government are pressing on with a forward-looking, 21st century agenda to boost innovation and the economy’s productive base. The Scottish Government have set aside resources of £340 million to provide initial capitalisation for the Scottish Investment Bank. Our Scottish Government do not have power over all the levers to generate economic growth, but we are doing what we can to ensure that our economy can keep pace.

In Scotland, 70% of taxpayers are paying less in income tax this year, assuming that their income has not changed. Some 50% of taxpayers in England—those who earn the least—are paying more income tax than they would if they were in Scotland. Despite all the cuts from Westminster—[Interruption.] I am being queried on this, but these are Library figures—I can send them on to the hon. Member for Stirling (Stephen Kerr) if he is interested in seeing them. Despite all the cuts from Westminster, Scotland is the fairest-taxed part of the UK.

I want to touch briefly on oil and gas; as an Aberdeen MP, most people would expect me to do so. We welcome the UK Government’s move on transferable tax history. We pushed for that for a very long time—I have been raising it for about two years in this place—but it is coming along too slowly. The more quickly the transferable tax history changes can happen in relation to oil and gas, the better. I understand that they are intended to be in place in November this year. I very much urge the Government not to extend that deadline further back, because the quicker this can happen, the better. The changes ensure that new investment can be made in late-life assets in the North sea. It is really important that we ensure that this comes forward.

On investment in the North sea, I would very much like the UK Government to ensure that they are fully behind the Oil and Gas Authority’s “Vision 2035”. This is absolutely vital not just for the north-east of Scotland but, more widely, for any companies that are involved in oil and gas and for all the jobs that are supported by that. To be fair to Scottish Conservative Members, they have been very supportive of “Vision 2035” as well, but the more people who talk about it in this place and outside it, the better. We need to be talking about anchoring our supply chain in the north-east of Scotland and throughout the rest of the UK far into the future, so that even once there is no oil and gas left in the North sea, we continue to have that world-class, recognised supply chain and can continue to generate the tax revenues from it.

It would not be a debate in this Parliament if I did not raise Brexit. The threat of leaving the customs union and the single market is undoubtedly the biggest threat to Scotland’s economy, and so to the Scottish Government’s spending power. For the period 2014-20, Scotland received €476 million in European regional development fund money and €465 million in European social fund money. There has been no commitment from the UK Government that they will plug this gap in spending in Scotland after Brexit. In 2016, the EU common agricultural policy supported payments of £490 million in Scotland. Will the Government guarantee this money beyond 2022? Our farmers need to plan long term about how best to manage their land, and they need clear guarantees.

The convergence uplift moneys of €220 million—as I said, this was mentioned this morning—were supposed to go to people like Scottish hill farmers who are receiving the lowest levels of support in the EU. Unfortunately, because of the way that the UK Government decided to distribute the money, instead of more than 80% coming to Scotland, only 16% came to Scotland. I am very clear that that money should have come to our farmers in Scotland, yet it did not.

[Luke Graham]

The hon. Lady is talking about farmers’ payments. Does she not recognise that over £150 million has been spent on an IT system that has had no benefit to hill farmers and that farmers’ debt in Scotland is at a record high, not because of Westminster but because of the SNP in Edinburgh?

[Kirsty Blackman]

I am very sad that the hon. Gentleman does not recognise that £160 million of EU funding should have come to Scotland. It is important that Members across the House push for this money to come. It is also really important that it is guaranteed in future years as well and not lost now and therefore lost in future years. It is very important that we get that money. [Interruption.] The Minister asks where we will get this money from. What about the Brexit dividend that we are apparently supposed to be getting? The Brexit dividend could be spent on the EU convergence uplift money. I am very clear that there is not a Brexit dividend, but the Government seem to think that there is, so it would be great if some of it could go to places where the EU would have spent it.

Scotland’s universities are world-leading. They generate wealth for our economy, support innovation and increase productivity, but they rely on close links with EU countries. Changes to their funding and collaboration structures could have a devastating effect and wide-ranging economic consequences.

But there are further threats from Brexit, and I want to highlight two. The first is the reduction in immigration from EU citizens that is likely to hit us. This is a problem not just in that it will reduce our cultural diversity and the richness of our society, but in that it will have a direct impact on tax generation. If we cannot attract migrants to live and work in Scotland, we cannot grow our tax base, and we will not have enough workers to support our ageing population.

Every week in my office, I speak to people from outside the EU who have been hit by the UK Government’s immigration policies. Many of them are particularly high earners and have paid a huge amount of tax into the UK Government’s coffers over the years, yet they are being denied the right to stay in the UK. The loss of the post-study work visa also means that the brightest and best cannot stay in Scotland. I am concerned that the system for EU migrants will become as bad as the system for non-EU migrants and that we will exclude highly skilled workers from outside the EU—I will get towards the end of my remarks shortly, Mr Speaker; I can see you getting a bit antsy.

I am really concerned about this. I am constantly shocked that the UK Government believe that making it more difficult to move here will help. They need to be honest with the general population about the fact that migration brings benefits in terms of tax revenues, and more Conservative Members could do with standing up and saying that more often, so that we can take better decisions about immigration. We expect to discuss the Trade Bill and the customs Bill in this place before the summer recess. I cannot make it any clearer to the UK Government: leaving the single market and the customs union is an economic catastrophe. Tariff barriers and non-tariff barriers will have a drastic effect on any company that exports to not just the EU but countries that the EU has trade deals with.

The UK Government are mismanaging Brexit, just as they are mismanaging grants to the devolved institutions. Scotland would be far better off if we were an independent country. If we had the levers to close the per capita income gap with small advanced economies by focusing on productivity, population and participation, we would have an additional £22 billion in GDP and a potential additional £9 billion in tax revenues. That is £4,100 per person. Being part of the UK is holding Scotland back. The UK is not working for us.

[Several hon. Members rose—]

--- Later in debate ---

[Andrew Bowie (West Aberdeenshire and Kincardine) (Con)]

I rise to speak as a Conservative MP proud of what my Government are doing and delivering for Scotland. Thanks to this Conservative Government, by 2020, the block grant to the Scottish Government will have grown to £31.1 billion—a real-terms increase over the spending review period; thanks to this Conservative Government, day-to-day spending in Scotland will increase by £500 million; thanks to this Conservative Government, the capital budget, which is used for crucial investment in Scotland, will increase by £566 million; and thanks to this Conservative Government, and their commitment to investing in our national health service, Scotland will now receive an extra £2.27 billion in real terms. A Conservative Government are governing and delivering for the whole United Kingdom, including Scotland.

But what do we hear from my hon. Friend the Member for Aberdeen North (Kirsty Blackman)—and I use the word “friend” sincerely? We hear no acknowledgement that Scotland is the second highest per capita-funded nation in the UK; no acknowledgement of the huge spending boost delivered in last year’s Budget; no acknowledgement—and I am surprised at this—of the £18 million delivered for the Aberdeen city region deal, the £20 million delivered for the Edinburgh city region deal, or the £8 million delivered for the Inverness city region deal. No, what we hear instead is the Scottish National party, and the Administration in Holyrood, bemoaning the fact that the extra £2 billion delivered in last year’s Budget is somehow a con, because the money is financial transactions capital funding.

[Kirsty Blackman]

Will the hon. Gentleman give way?

[Andrew Bowie]

I should be delighted.

[Kirsty Blackman]

I was very pleased to hear the hon. Gentleman mention the Aberdeen city region deal. I was a huge supporter of it. Indeed, I initiated an Adjournment debate on that very subject during my first few weeks as an MP. Does he not recognise, however, that the Scottish Government are providing more funds for the deal than the UK Government? Will he push the UK Government to match the Scottish Government’s funding?

[Andrew Bowie]

I welcome the contribution of the Scottish Government to the Aberdeen city region deal, but the hon. Lady must acknowledge that the deal would not have happened if the UK Government had not driven it ahead.

For goodness sake, give me strength. The argument about the financial transactions capital funding is ridiculous not only because, let’s face it, the Scottish people do not care what type of money they are getting as long as the Government spend it in a way that can benefit them and their communities, but because the Scottish Government have themselves used that type of funding for affordable housing, business investment and infrastructure projects. But then, consistency has never been the watchword of the Scottish National party.

Indeed, why allow the focus to fall on how the money is being spent? It is much easier to concoct the false narrative that Westminster is doing Scotland down and short- changing it; that the reason NHS Tayside and Grampian are in crisis, the reason Police Scotland is failing, the reason for the state of the management of education north of the border—when are we going to see that education Bill?—is that, somehow, the Tories are underfunding Scotland. That, say SNP Members, is why they are having to raise income tax; that is why they are forcing councils to raise council tax, making Scotland the highest-taxed part of the UK and Aberdeenshire—forever the Scottish Government’s cash cow—the highest-taxed part of Scotland.

In fact, none of the problems facing Scotland in 2018 is due to underfunding from this Government at Westminster. They are all due to the incompetence of the Scottish Government, who could not organise—well, a tea party in a café. While moaning about not getting enough money, and while punishing the hard-working people of Scotland by raising their taxes, the Scottish Government actually underspent their budget by half a billion pounds last year. But that is not the worst of it. Not only are they not spending the money that they already have; not only have they ensured that Scottish workers keep less of their salaries than their English and Welsh colleagues; most disgracefully of all, they are spending money hand over fist on the biggest and most bloated Executive that Scotland has ever seen.

The new SNP Government at Holyrood is truly gargantuan. At present, 42% of SNP MSPs are on Nicola Sturgeon’s payroll. Talk about buying patronage! Please do not do any more of it, or the Government Whips might get some ideas. There are more Ministers than there ever were when Alex Salmond was First Minister, and he was not someone who ever sold himself short. The SNP Government have twice as many Cabinet Ministers drawing salaries as Alex Salmond had in his Government in 2007.

It is clear, at the end of the day, that it is the Conservatives who are delivering for Scotland. The SNP should spend less time complaining, less time giving jobs to the boys and girls, and more time governing. The conversation that we should be having now is about how we can best spend this dividend to improve Scotland’s services. So let us see an end to the grievance politics and the “it wisnae me” narrative. Let us work together and build a better Scotland, inside a stronger United Kingdom.

--- Later in debate ---

[Kirsty Blackman]

I appreciate the chance to have a minute at the end of this debate. On the debate and the way it has been conducted, I appreciate the fact that so many people have taken an interest in the finances that are being granted to the devolved institutions. I really hope that, when it comes to the Budget process later this year, we see the same level of interest.

Finally, the change in the process is welcome to ensure that we can actually debate the estimates, but I suggest that further change is still needed to ensure that the estimates debates can be meaningfully amended and that proper alternatives can be put forward so that we can make it clear what our alternative spending plans would be and that we can have actual meaningful votes on them.