SPEECH BY FINANCE SECRETARY, JOHN SWINNEY MSP, TO SNP ANNUAL CONFERENCE

SPEECH BY FINANCE SECRETARY, JOHN SWINNEY MSP, TO SNP ANNUAL CONFERENCE

WE’VE GOT WHAT IT TAKES TO DRIVE RECOVERY AND INVEST IN PUBLIC SERVICES

Speaking at the SNP’s 75th Annual conference in Inverness today (Friday) at the Eden Court Theatre, the Cabinet Secretary for Finance and Sustainable Development , John Swinney MSP, said Scotland and its Government has what it takes to drive recovery and invest in Scotland’s public services.

Commenting Mr Swinney said:

"Since our Conference last met in Perth, the agenda of our Scottish Government has focused relentlessly on tackling the challenges facing our country – the need to deliver economic recovery, the difficulties caused by cuts to our Budget from the UK Labour Government, the importance of protecting frontline public services and the need to make our contribution to tackling climate change.

"All of these issues have been to the fore in my work as Scotland’s Cabinet Secretary for Finance and Sustainable Growth. But I have been greatly assisted in this task by my colleagues. By the First Minister and the members of the Cabinet. By the members of the Parliamentary Group. And particularly by my Ministerial team, Stewart Stevenson as Minister for Transport, Infrastructure and Climate Change and Jim Mather as Minister for Enterprise, Energy and Tourism. And we have all been assisted by our two Parliamentary Liaison Officers, Joe FitzPatrick and Shirley-Anne Somerville. Please join me in thanking a fantastic team.

Climate Change

"One of the high points of the parliamentary year has been the passage of the Climate Change Act, recognised around the world as the best and the most ambitious piece of legislation to tackle one of the greatest problems facing humankind. We formulated that Act with a great deal of dialogue and discussion, bringing together parliamentary opinion, with public opinion and opinion within the broad range of non-governmental organisations. We built a consensus of ambition that we could and should act. And we have backed up this legislation with a delivery plan to demonstrate how in transport, energy, business and household activity we can achieve these ambitious targets.

"On Tuesday, I met European Commissioner Dimas in Brussels. Commissioner Dimas has responsibility for Climate Change issues. His first words to me were that Scotland had passed excellent and ambitious legislation on Climate Change. I was proud to be representing Scotland and our SNP Government in that discussion.

"Many people ask why are we acting on this subject? Many ask what difference Scotland can make to a global problem into which we are relatively minor contributors?

"Our answer is crystal clear. We are determined to be responsible citizens of the world. Scotland has shown on the issue of climate change that we can lead on the international stage. Scotland can have a strong voice in the world.

"Our country has rightly won strong plaudits across the world for our actions and leadership on climate change. We have a great story to tell, a great example to explain. We want to share that story with the global climate change summit in Copenhagen and have appealed – in a spirit of partnership – to the UK Government to enable our Ministers to be part of that delegation. Despite the support of NGOs and other devolved administrations, the UK Government has said no.

"Scotland should be at the centre of the process and no matter what the UK Government says, our Government will make sure Scotland’s voice is heard on the international stage.

Economic Recovery

"On the international stage we have promoted Scottish interests and here at home we have worked to protect Scottish interests. And that has been no more so than on the economy.

"In July last year, long before the Treasury acted, long before the UK Government started to intervene, our SNP Government started to form our Economic Recovery Plan. We recognised times were going to get tough and we needed to be quick off the mark to deal with the consequences.

"Our early action to accelerate capital spending on housing put more resources into new social house building and kept construction workers in jobs. Our priority to distribute European Structural and Social Funds sustained employment and gave new skills training opportunities with over £335 million supporting 474 projects across Scotland.

"The further announcements on accelerated capital spending have seen local authorities spend £90 million on new or refurbished schools, social work and recreational facilities.

"£29 million has been invested to deliver road improvements on the A9 and the A96 and enhanced park-and-ride facilities.

"Projects have been taken forward to develop the SECC in Glasgow and also the Fife Energy Park. Highlands and Islands Enterprise has match funded infrastructure projects with the University of the Highlands and Islands and has advanced other projects in Moray and Argyll.

"These are just some of the projects taken forward. And they have all had the benefit of keeping people in employment with new opportunities across Scotland. And although the conditions have been tough, these measures, and the actions of our Government, have kept unemployment in Scotland lower than the rest of the United Kingdom and economic activity higher in Scotland than the rest of the UK. Protecting jobs - that’s the record of this SNP Government.

"Our Economic Recovery Plan has had a beneficial effect on Scotland at a time of recession. Our Plan is supporting 15,000 jobs in Scotland and giving vital support to the construction industry. That is why we want to do more. Because we operate within a fixed budget, we cannot just deploy new resources much as we would like to do. Without the consent of the Chancellor we cannot stretch our Budget to meet the essential investment objectives that we know are working for Scotland and which we wish to see delivered.

"We believe there is a compelling case for the Chancellor to assist economic recovery by further accelerating capital budgets into 2010-11 in order to support thousands of jobs across Scotland in these tough economic times. With further acceleration of capital expenditure, we can invest in key sectors of our economy such as housing, transport and other infrastructure activities that are essential to the safeguarding of jobs and to recovery.

"The Chancellor has an opportunity in his Pre-Budget Report to accelerate more capital expenditure. For every £100 million in extra capital spending, we can safeguard 1,500 jobs in our country. We call on the Chancellor today to deliver the resources and the impetus and opportunity to enable this Government to protect the livelihoods of people in Scotland.

"From our first days in office our Government has been focused on improving Scotland’s economy. The Recession has not changed our focus – it has simply increased the scale of the challenge.

"Our early actions have clearly established the foundations of recovery. Focusing our enterprise agencies on supporting the businesses that can grow and create new employment. Supporting the new industries like renewables that have such potential for development with a quarter of Europe’s wind and tidal power alone.

"And supporting the back bone of our economy – the small business sector – with the Small Business Bonus Scheme that has cut or abolished business rates for thousands of small companies. Real action to safeguard our small businesses in Scotland.

"And we have done more. When we came to office, the Government had a poor record at paying its own bills on time. The target was to pay bills within 30 days and even that target was regularly failed. Spurred on by the First Minister’s direction, we set a new target of paying the Government’s bills within 10 days to give vital cash flow to our business community. And I am delighted to report to conference today that last week Scotland’s Government settled 95.3% of its bills in 10 days giving real help to the businesses of Scotland.

"One of the groups that we believe has a key role to play in economic recovery and in changing the way we do business is the third sector. That’s why we increased funding for Scotland’s voluntary organisations in this spending period by 37%.

"For the first time, Government is focused on building the social economy and developing a new generation of social enterprises that can create new opportunities for some of the hardest to reach in our society. We have established the Scottish Investment Fund that is now distributing support to develop the social enterprise sector.

"And we have been working with the third sector and our local authority partners to ensure the third sector has a strong place at the top table of decision making in Scotland. Just two weeks ago we published along with COSLA a statement that entrenches the role of the third sector in Scottish public policy. This is a welcome step.

"But we recognise that the third sector is not immune to the current financial difficulties and faces some tough times. For that reasons I was delighted to announce the Government has established a Resilience Fund totalling £1.7 million to give additional support to the third sector in these difficult times.

"And I am delighted to announce a further measure today to extend the entitlement to water rates relief to small charitable organisations for another five years. I am also pleased to announce that we will be increasing the maximum income of those benefiting from the scheme to ensure that more of our charities can benefit.

"The third sector makes a big contribution to our economy as well as the social fabric of our nation. These measures will ensure that small charities, churches and voluntary organisations have more assistance at a tough time. This Government is determined the voluntary sector will be at the heart of our efforts to increase sustainable economic growth in Scotland.

Scottish Budget

"My core duty is to manage the public finances of Scotland and to ensure we set and deliver a balanced Budget each year. There is no room for over-spend in the fixed budgets of devolution. No room for running up a new deficit of £180billion as Alistair Darling has just done. We have to live within our means. And this SNP Government has proven – each year we have been in office – that we can set a balanced Budget, that we can implement a balanced Budget. The SNP Government knows how to manage the people’s money.

"Earlier this year of course we had a bit of a hiccup in the Budget process. Some of the Opposition parties thought they could have their cake and eat it. They thought they could vote against the Budget without any consequences. They thought there was a way to attack the Budget and not face up to their responsibilities. A week after voting against the Budget the Opposition were back – but this time - they were voting for the Budget. They found out the hard way that you can’t play games with the public services of Scotland.

"And I hope those lessons are to the fore in the thinking of Opposition parties in forming next year’s Budget. I have presented the draft budget to Parliament against the backdrop of a significant squeeze on public expenditure. The Scottish Government's departmental expenditure limit—the money over which we have direct control—will reduce in real terms by 0.9 per cent, compared with this year.

"That is the first real-terms cut in the Scottish budget since devolution imposed by Westminster. We have taken the correct decisions to accelerate capital expenditure in order to counter the effects of recession. That step has helped to boost the economy, but the Treasury requirement to repay that resource at a critical point at the start of economic recovery, poses a threat to that recovery.

"But the real terms cut is also happening because the Chancellor of the Exchequer has decided to reduce our budgets with a £392 million cut in the planned resource budget and a £129 million cut in the Scottish Government's planned capital budget. So when people say beware the cuts of a future Tory Government – and we know the cuts the Tories’ can make - I say don’t forget the £500 million cuts from the current Labour Government.

"Those pressures in 2010-11 will be the first of a sequence of pressures on the public finances. A range of forecasters predict significant real-terms cuts to the Scottish budget of up to 8.5 per cent between this year and the end of 2013-14. Reductions of that size would bring substantial challenges, so our decisions in this budget must take account of the medium-term outlook.

"It’s for that reason the Government has taken a set of very difficult decisions in forming the Scottish Budget for 2010/11. One of those difficult decisions was to cancel the Glasgow Airport Rail Link. I know that decision has disappointed some people. But we have to be able to put the public finances on a stable footing for the years to come. And we have given a commitment to the City of Glasgow to give new support to the Fastlink transport system and the upgrade of Dalmarnock Station for use in the Commonwealth Games, two decisions that will significantly enhance transport connections in the City of Glasgow. This is something the SNP Government is completing, something labour never fulfilled the M74, upgrading the M80 and spending £1 billion to improve the Glasgow Edinburgh rail infrastructure.

"And there are other actions that we have taken to deal with the Chancellor’s cuts. First, our core Scottish Government administration budget will be cut by £14 million in 2010-11. We accept that, while asking others to save money, we must rein back our central Government spending.

"Secondly, we are asking local government to take its pro-rata share of the Chancellor's cuts. Scottish local authorities have said they will work within these new limits to protect public services working in a spirit of partnership with the Government. We welcome that approach.

"Thirdly, additional savings will be found by reducing spending on a number of projects and programmes that give us a better ability to protect frontline services and economic recovery.

"At the UK party conferences over the last few weeks, there has been a Dutch auction about public spending cuts and the effect on public services. Nick Clegg wanted savage cuts and then got into a guddle about what that meant. Gordon Brown – forever on the fence - couldn’t decide if he was cutting public spending and then went for it, as usual, in a panic. And the Tories – well – you heard what I had to say about the Tories on public spending.

"Our approach has been different. We have taken the difficult decisions within Government to protect the programmes that matter most to the people of Scotland: spending on front-line public services, such as schools and hospitals; our economic recovery plan, including support for skills development and hard-pressed businesses; and programmes that help to protect households at a time of economic hardship. This Government doesn’t play games. This Government’s got what it takes to manage Scotland’s public services.

"So our Budget for 2010/11 will maintain investment in our economic recovery plan. We will invest in the new technologies and industries of the future. We will continue with the small business bonus scheme. We will invest in the rail network in Scotland to encourage greater use of our public transport systems and we will provide free bus travel to more than 1 million people – including extending that to injured veterans.

"We are delivering sustained investment in Scotland's health service, making sure Scotland is well prepared to respond to the flu pandemic.

"We are supporting investment in the further and higher education sectors and are protecting the essential investment in skills that will enable us to emerge from economic difficulties.

"We are taking forward our £1.25 billion school building programme, which will see young Scots in communities across Scotland benefit from the best possible learning environment.

"Our partnership with local government means that we will work together to deliver all the commitments that were made in the concordat that was signed in November 2007. Local Government will be receiving – as we promised – a rising share of public expenditure in Scotland. That reverses the trend under Labour and the Lib Dems and demonstrates this Government’s commitment to invest in frontline services in the communities of Scotland.

"And our financial agreement with local government provides for us – working in partnership - to put more money in people's pockets, with resources being made available once again to freeze the council tax for the third year in succession – real help to Scotland’s hard-pressed families.

"Our approach also ensures that money is available to meet commitments that were given in previous budgets, such as additional investment in modern apprenticeships, the on-going development of the home insulation programme and the Edinburgh capital city supplement. We will continue to prioritise spending on action to combat climate change across a range of Government programmes, and specifically through the climate challenge fund, which is assisting community action to reduce emissions.

"And although we are working within very tight constraints of public spending, this SNP Government will never forget those who are not as fortunate as we are here in Scotland. We have international obligations whether on the issue of climate change or the need for international development. So I know Conference will welcome the fact that in a tight public spending environment the Scottish Government will propose to increase the budget for international development from £6 million to £9 million next year.
Fiscal Autonomy

"Running through my comments today has been the current necessity for restrictions that force our Government to operate within a fixed financial envelope set by the UK Government with only limited flexibility. We have demonstrated we have the skill to steward the nation’s resources. And we believe that the nation should be trusted to deal with its own finances.

"Our opponents came up with a wheeze to compete with our dynamic agenda for Scotland – a wheeze called the Calman Commission. It devised a scheme that could never be described as dynamic nor ambitious but we should consider what it offers.

"On income tax, Calman’s proposals would expose the Scottish Budget to a significant degree of volatility and vulnerability without giving us the levers of economic control to counter these effects. And even if revenues were rising in Scotland, we would still not be the beneficiaries. The UK Government would remain in the driving seat of controlling the Scottish economy while the Scottish Government would be left picking up the pieces. And who would want to pick up the pieces of this UK Labour Government’s handling of our economy. Under Calman, over 80% of revenues generated in Scotland would flow to the UK Government and despite the views of their expert panel Calman proposes no share for Scotland of North Sea Revenues.

"On borrowing, Calman has a more positive proposal, conceding that borrowing powers would help the efficient planning of public projects in Scotland and we agree. The problem is there is no action on the Calman agenda. Labour has stalled and are silent. The Tories are in retreat promising no action for years. And the Lib Dems now realise they have been taken for mugs and their members are pressing to support our Referendum on Independence.

"History could not be clearer. Scotland’s political and constitutional agenda moves ahead only when the driving seat is occupied by the SNP. As public spending gets tighter, and the absurdity of wasting billions on new Trident missiles becomes ever more obvious, the need for Scotland to take our own financial and economic decisions is paramount to safeguard the future of our country.

Conclusion

"Delegates, as we meet for our 75th Conference, our Party and our ideals have come a long way.

"From the imagination and aspiration of our founders, to the principled and disciplined approach of our Government, we have remained true to the ideals that set this Party on its journey. The ideals of freedom, equality and a determination that Scotland should play her full part in the world.

"Our founders were told they would never get a Party off the ground. And they did.

"They were told they would never enter Parliament. And they won seats.

"We were told we would never have a Scottish Parliament. And we have one now.

"We were told we were the party of permanent opposition. And we are now the Government of Scotland.

"Our next step is to win the argument for Independence. And we’ve got what it takes to win that NOW."