19 December 2001

Committee Debate: Budget Process 2002-03: Stage 2

Scottish Parliament

Wednesday 19 December 2001

[THE PRESIDING OFFICER opened the meeting at 14:30]

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Budget Process 2002-03: Stage 2

The Presiding Officer (Sir David Steel): We now proceed to the Finance Committee debate. Des McNulty, the convener, is introducing the committee's report on stage 2 of the budget process.


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Stewart Stevenson (Banff and Buchan) (SNP): I was entertained by John Young's description of finance in local government. It reminded that me that someone once said that there are three kinds of people in local government—those who can count and those who cannot.

Following Alasdair Morgan's remarks about Des McNulty, I shall be watching the latter's future with interest—although, right at the moment, it is elsewhere. Clearly an interest in money is the route to preferment. On the other hand, Mr Davidson suggested that we should take less interest in money. I suppose that a Tory can afford to say that. I wish David well on the back benches, and perhaps even further back at a later date.

I want to bring a seasonal note to the debate and to wish all members here, and all those who may be watching on the monitors, a very merry Christmas. Something quite important in relation to Christmas has just happened: I have made an exciting discovery. Previously, we had accountancy and economics; now we have brand-new spanking Liddellomics. It will be a popular event at children's parties everywhere this Christmas as it is one very impressive trick. We have heard Helen Liddell talking about how she can make £1 million disappear from our pockets, apparently without effort. Read GERS, see the show. However, as in magicians' performances everywhere, we will not see how the trick is done unless we stop looking where the performer wants us to look and instead see the hidden hand behind her back. It is Gordon Brown's.

I have a few things to say that are a little less frivolous. First, on capital, it is not at all clear from the Executive's figures how capital is deployed in the service of the Scottish Executive. When the Rural Development Committee was looking at its numbers, I found a mysterious £56 million, of which £42 million was cost of capital. No explanation was given as to what that was or where it had come from. I speculated that it represented an asset of perhaps half a billion pounds. Three weeks later, lo and behold, I was told that that was true. The point is that no assets and liabilities were expressed as they would have been on a public company's balance sheet. There was nothing to enable me to see from what assets and liabilities the capital charge that was expressed in the revenue part of the budget had come. That is not universal throughout the numbers that are presented to us, but it is all too common.

Public-private partnerships and private finance initiatives are another way of avoiding expressing what has happened to the figures and the way in which accounts are translated from capital into revenue. That is hard to track, harder to understand and impossible to justify. It goes slightly against the grain for me to praise the Scottish Prison Service, whose report came to hand today. However, the SPS is at least open and honest in relation to the PFI at Kilmarnock. Unfortunately, the running costs are expressed as £12,363,000, whereas in another part of the budget the same costs are some £40,000 less. The SPS maintains its record of being unable to provide accurate information, but at least the layout and expression of information in its report is useful.

I want to say a little about indirect taxation. The Scottish Parliament has no direct influence on indirect taxation. Nonetheless, the effects of the many indirect taxes introduced by Westminster are pervasive in the Scottish economy.

Iain Smith: Will the member give way?

Stewart Stevenson: I am sorry, but I am in my final minute.

Those effects are also pervasive in the budget. For example, the aggregates tax will increase the cost of building projects by 5 per cent, yet there is nothing in the budget that mentions that effect in the future. The document is already incomplete. The increase will come into effect in April if it is implemented. Fuel tax is another example. It fluctuates and rises, and there is no mention of it in the budget.

At the core of the debate is the fact that although we do not have direct influence on matters such as indirect or Westminster-led direct taxation, it is possible to influence those matters. The Northern Ireland Assembly unanimously agreed to make representations to Westminster on that subject and was successful in obtaining a derogation for Northern Ireland for the aggregates tax. Some people in some devolved administrations can stand up for the people. It is time that Labour and the Liberal Democrats stood up for the people of Scotland.


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