 Cllw reminders dismissed. The first item of business of business this afternoon is a statement by Derek Mackay, on the Scottish Government's Draft Spending and Tax Plan for 2018-2019. The Cabinet Secretary for Government and Constitution will take questions at the end of a statement so that there should be no interruptions or interventions in the end. I call on him. Derek Mackay I am delighted to set out Scottish Government budget proposals for 2018-2019. Given rydian panfiood yw bod duch yn eu cyfwyrhau i bael i Caerdydd Sgr controller i gael'r gweld fagu oedd i'r fglwmp yn hyn. Felly, mae'n fawr i ddwyngu dweud ei fyddfa, ac mae'r perth yn fawr i gael i'r ffwng, ac mae'n bwysig i gael i gael i'r llei, ac mae'n fawr naddwydau i gael i'r llei. Mae'n masoedd i gael ei練ymau a paio a chyfnodau i ddechrau i gaelu i gael i ddimogledd, ariadau neulluniau, iddynt yr Unedig oherwydd daeks wrth gennymau of thriving illusau gresod Sabodreid ar brexit o rhan nutrition. Of Steven yn ffiscal environment for any budget in the devolution era? Will Mr Findlay wait till the end of the statement for the point of order? Okay, Mr Findlay, if it's a genuine point of order, if I find this a political interruption, I will not be happy, Mr Findlay. Mr Findlay. Point of order. Presiding Officer, we usually receive statements when the cabinet secretary starts his statement. Apparently this time we're not getting until he finishes. Is that a change in procedure? Okay. I get the point, Mr Findlay, but that's not the point of order. Cabinet Secretary. As a result, we face the most challenging economic and fiscal environment for any budget in the devolution era. However, the fundamentals of the Scottish economy remain strong. Since 2007, Scotland has largely closed the productivity gap with the rest of the UK, and in 2017, our economy continued to grow. The number of people in work has reached a record high and unemployment is close to its lowest ever level. Today, the Scottish Fiscal Commission has published its first comprehensive report on Scotland's economic and fiscal forecasts, and my thanks go to the commission for their work. The SFC report underlines the fundamental strengths in our economy. It predicts continued growth, that employment will rise further and that earnings growth will match the UK. However, the commission also highlighted the negative impact Brexit will have and the challenges that we will face from a declining working age population. It forecasts that productivity growth will be subdued, that the labour market will tighten as a result of reduced migration, and that that will impact on GDP. While the commission's forecasts for growth are more cautious than other forecasters, it is clear that, to grow faster, we must boost productivity and grow our working age population. That is why this budget sets out immediate measures to stimulate economic activity and improve productivity. For Scotland's future prosperity, this Parliament must also reach a consensus on the powers that we need to increase the number of working-age people in Scotland. We must continue to make the case for a common sense solution to Brexit that keeps Scotland and the UK in the single market and the customs union. Even while we do that, however, we will redouble our efforts to ensure that our economy will flourish, no matter the outcome of the negotiations. Equally important to the budget's economic context is the fiscal context. Over the 10 years to 2019-20, Tory austerity will see the Scottish Government's fiscal block grant allocation reduced in real terms by £2.6 billion. Despite the claims of the chancellor, as the independent Fraser of Allander Institute recently stated, by 2019-20, the resource block grant will be around £500 million lower than in 2017-18. Of course, we welcome the additional capital funding that will transfer to Scotland, and we will make good use of the financial transactions that are available. However, the reality is that we cannot spend financial transactions on teachers, nurses or police. Instead, we will use Scotland's own resources to invest in our public services and provide the support and infrastructure that our economy needs to flourish in a low-carbon, high-technology world. We believe that strong public services and a vibrant economy go hand in hand. Undoubtedly, our public services require a strong economy to generate investment, but equally, the most successful economies in Europe are built upon the firm foundation of strong public services. The heart of this budget is immediate action to support the economy, a series of key investments and programmes that deliver for business now, and build the right environment for the future. The global economy is changing at an unprecedented rate, but Scotland already has competitive advantages in many industries of the future, such as life sciences and renewable energy. The budget therefore delivers an increase of £278 million at a 64 per cent increase in the economy, jobs and fair work portfolio. The additional funding contributes to investment of almost £2.4 billion in enterprise and skills through our enterprise agencies and our skills bodies. The increased investment includes a 70 per cent uplift in our funding for business research and investment, taking our investment in the coming year from £22 million to £37 million. The budget also contains an initial £10 million to support the news south of Scotland enterprise agency, and it doubles to £122 million, the funding allocated to the city region deals. Through the Scottish Funding Council, the budget also invests around £1.8 billion in our colleges and universities, providing a real-terms increase in their funding. The investment funds the teaching, research and innovation that will provide opportunities for our young people, train the workforce of the future and drive up our productivity. The budget allocates an initial £18 million for the new national manufacturing institute announced by the First Minister on Monday, and construction of this new centre of excellence begins next year. Scotland has a world-leading reputation for our efforts to tackle climate change to support our transition to the low-carbon economy, and the budget allocates £60 million for a low-carbon innovation fund. We will also invest £1.2 billion in our transport infrastructure, including support for new and improved road and rail developments, not only dualling the A9 but turning it into an electric highway and delivering new railway investments such as the electric trains that are now running between Edinburgh and Glasgow. In addition, we will make a £20 million investment in the coming year to support the transition to electric vehicles and support more green buses. As promised in the programme for government, the budget doubles investment in active and sustainable travel. In total, this budget invests over £4 billion in infrastructure, part of our £20 billion infrastructure investment plan over this Parliament. I can confirm today that the budget also includes the first steps towards one of the most significant infrastructure projects in this Parliament—a superfast broadband for the whole of Scotland. At the end of this year, we will achieve our target of delivering fibre internet access to at least 95 per cent of premises. As a result of our actions to date, Scotland has experienced the fastest rate of progress of any part of the UK, but we want that progress to continue. Our new reaching 100 programme is an ambitious plan to make superfast broadband available to every home and to every business premise in every part of Scotland by 2021. This commitment will position Scotland at the forefront of the digital revolution and is unmatched anywhere in the UK. I am therefore delighted to confirm to Parliament that the initial procurement for the reaching 100 programme begins today. Over the next four financial years, it will be supported by investment of £600 million and investment in skills, innovation, new technologies, manufacturing, infrastructure and broadband. Those are all part of a package of measures to improve our productivity, boost our trade and make Scotland the most attractive place to do business. We will support the internationalisation of our businesses and help to boost exports through the work of Scottish Development International. We will also support our culture sector with a £10 million investment in a new screen unit and funding to protect arts and culture. Let me turn to business rates. Following the Barclay review, I confirmed that I would go beyond what is recommended with a set of new reliefs to incentivise investment. Our growth accelerator means that no business rates increases will be payable for new or improved properties for a period of one year. A separate additional measure will ensure that no new build property will enter the valuation role until it is first occupied. The budget also protects our small business bonus scheme, which lifts 100,000 properties out of business rates altogether. The scheme is part of the most competitive package of rates relief anywhere in the UK, and in the coming year, the package will be worth around £720 million, a record high. I can also now confirm that we will accept the remaining Barclay recommendations almost entirely, except on charity relief, which we do not intend to curtail for universities or council alloys. An implementation plan, providing fuller details on how and when those reforms will be implemented, is being published today. The Barclay review also favoured a switch from RPI to CPI for the application of the inflation rate uplift to the poundage rate, but was unable to recommend that in the context of its revenue-neutral remit. For many Scottish businesses, though, that was the number one ask of the budget. I can therefore announce today that the inflation rate uplift for the poundage next year will be capped at CPI, not RPI. Our package of business rates measures provide a boost of almost £100 million and help to keep Scotland the most attractive place in the UK to do business. Nowhere is the interaction between investment and public services in a successful economy seen more than in education. Raising the bar for all in closing the attainment gap is the key priority for this Government. Since my last budget, over 2,300 schools have benefited from targeted investment and 506 extra teachers are teaching in Scotland schools because of our attainment Scotland fund. I am therefore delighted to announce today that I am increasing the attainment Scotland fund to £179 million. That means that £120 million will again be allocated directly to headteachers through the pupil equity fund, and a further £59 million will be providing targeted support for children and young people in greatest need. I am also allocating £10 million for support to children and young people with complex additional support needs. We recognise that a strong education system relies on a strong teaching profession. That is why I am committing an overall funding package of £88 million in the local government finance settlement to maintain the national pupil-teacher ratio and ensure that places are provided for all probationer teachers. That budget also protects our continued commitment to university education free of tuition fees. This Government is committed to getting it right for every child. We want Scotland to be the best place in the world to grow up, and since its introduction in August, more than 20,000 baby boxes have been delivered, and this budget funds this important part of our social contract. A child's early years are critical in determining outcomes in later life. Since 2014, we have increased high quality early learning and childcare by almost 50 per cent to 600 hours per year. By 2020, we will increase publicly funded entitlement to 1,140 hours per year, benefiting thousands of children and parents across Scotland. That requires us to invest now for the long term. In 2017-18, we provided £60 million to support the expansion. For 2018-19, we are allocating £93 million in resource funding and £150 million of capital funding. That is a total investment of £243 million next year. That will support the expansion by upskilling the early years workforce, refurbishing and expanding existing premises and constructing new settings. It will also provide funding for graduate-level early learning and childcare courses. That means that, in the coming year, we will invest almost a quarter of a billion pounds to build more nurseries, support childcare professionals, create jobs and graduate opportunities and provide support for parents. Ours is the best publicly funded childcare package in the UK and an investment that will pay dividends throughout the lives of our young people. Local authorities are our partners in delivering vital services, and I welcome the constructive engagement from COSLA. Throughout our discussions, I have made clear my desire to treat local government fairly, and I believe that this budget does so. I know that local authorities have been concerned about a possible cut to their budgets of around £300 million. However, as a result of the decisions that underpin this budget, I have been able to avoid that. I can announce today that the local government resource budget will be protected in cash terms and a capital budget will be increased in real terms, resulting in a total increase in local authority core funding of £94 million. In addition, local authorities have the option to increase the council tax by up to 3 per cent, and if they choose to do so, they will raise an additional £77 million, which would secure a real-terms increase in local government funding. Local government will also be beneficiaries of the doubling of investment in city deals. Our police and fire services also make a huge contribution to our local communities, and we will deliver more than £20 million of additional investment to protect the police revenue budget and an additional £5.5 million for continued transformation of the fire service. Scotland's police and fire services will also retain the full benefit of, at long last, having the ability to recover VAT, boosting their spending power by £35 million in 2018-19. The budget also secures investment in key measures to make our communities safer, including tackling domestic abuse, reducing re-offending, protecting witnesses and modernising the justice system. Ensuring that everyone in Scotland has access to good quality secure affordable housing is a key part of making Scotland fairer. New figures out this week show that, since 2007, this Government has delivered nearly 71,000 affordable homes, and we are building social rented housing at twice the rate of the Government in England. Our commitment to deliver 50,000 affordable homes over the five years of this Parliament is a significant challenge, but one that we are determined to meet. The benefits of this investment will be felt throughout our society for generations to come, and therefore delighted to announce investment in 2018-19 of £756 million, part of our commitment to invest over £3 billion in affordable housing over this Parliament. We will also take steps to make home ownership a reality for more of our young people. To help to achieve that, I am introducing a new relief on land and building transaction tax for first-time buyers up to £175,000. All first-time buyers will benefit from that, and as a result, 80 per cent of first-time buyers will be taken out of LBTT altogether. Alongside that record investment in housing, we will also invest £137 million in 2018-19 in energy efficiency and heat decarbonisation. Good quality affordable housing is one way in which we can help to drive down poverty. One of the most devastating results of Tory austerity has been a rise in rough sleeping and homelessness. Our programme for government set out a national commitment to eradicate rough sleeping and transform the use of temporary accommodation. In 2018-19, we will invest £10 million in anending homelessness together fund that will invest £50 million over the next five years. That will drive change and improvement in line with recommendations of the homelessness and the rough sleeping action group. We will also tackle child poverty in all its forms. The budget supports the first investment of a new £50 million tackling child poverty fund, which will help to address the underlying social and economic cause of poverty. We will also continue to mitigate UK welfare reform, investing more than £100 million on interventions, including the bedroom tax, the reversal of the bedroom tax and the Scottish welfare fund. The Parliament is currently passing its own social security bill, and although I cannot allocate funding for specific benefits until the bill is completed, I can confirm that I will allocate additional funding in the year to support the landmark step of increasing carers allowance. That increase will be delivered by summer 2018 and will be backdated to April. The staff in our schools, hospitals and other public services do an outstanding job. We have always sought to offer a fair deal, particularly for the lowest paid, by ensuring that all public sector workers earn the living wage and that those on low pay receive guaranteed increases. However, now is the time to lift the 1 per cent pay cap. We are determined to provide a pay package that is affordable and one that also reflects the increasing cost of living. I am grateful for the constructive engagement of the trade unions on this matter, including the joint letter from myself and the STUC to the Chancellor ahead of the autumn budget. Unfortunately, those calls were ignored by the Chancellor and this limits how far we can go on pay. However, unlike Governments across the UK, we committed to lifting the pay cap and we will lift it. Today, I have published a progressive pay policy and I can confirm that we will deliver a guaranteed minimum pay increase of 3 per cent for all public sector workers earning £30,000 or less. For those earning above £30,000, we will limit the increase to 2 per cent and apply a cash cap of £1,600 to those earning £80,000 or more. That demonstrates our commitment to closing the gap between the lowest and highest paid. This is a framework that will apply to the public sector pay negotiations. However, let me make clear three additional points. First, notwithstanding the policy that I am setting out today, we will respect the recommendations of independent pay review bodies. Secondly, we will be mindful of any developments for NHS staff elsewhere in the UK to ensure that our health service staff are treated at least as fairly as those in any of the UK nations. We will retain flexibility to enable us to address any particular recruitment challenges. Once again, the Scottish Government is leading by example, delivering honour promises and putting fairness at the heart of what we do. Our decision to lift the pay cap will benefit thousands of nurses and healthcare staff. I know that I speak for everyone in the chamber when I thank our NHS staff for the work that they do in caring for the people of Scotland. Our approach to health and care is one of reform and investment. That is why, in the coming year, we will invest £110 million in the reform of primary care, supporting our general practitioners and health centres to meet the changing needs of our people. We will increase our direct investment in mental health and child and adolescent mental health in particular by a further £17 million. The third annual increase in a row will help to deliver an additional 800 mental health workers over this Parliament. The budget will also deliver over £550 million in 2018-19, in direct support of social care and integration through the Scottish Government and NHS investment. We will continue to support free personal care and the roll-out of Frank's law by April 2019. Underpinning all of that is increasing investment in the NHS. This year, to increase health resource spending in line with inflation would require an additional £200 million. That is equal to the amount being cut from Scotland resource block grant in real terms this year by the UK Government, but we have been clear that, over this Parliament, we will increase health resource spending by a total of £2 billion, considerably more than inflation. Today, I can confirm that an increase in health resource funding in 2018-19 will not be £200 million. It will be more than £400 million, taking our total front-line investment to over £13 billion in the coming year. On this budget, we are investing in the NHS, increasing social care investment, protecting local services, delivering a growth package for business and supporting the low-carbon transition, providing real terms increases for our universities and colleges, expanding childcare, directing more resources to head teachers to close the attainment gap, protecting our police and fire services, safeguarding culture in the arts, taking action to alleviate poverty, lifting the public sector pay cap. However, in the face of real terms cuts to our block grant, it has been possible to deliver for the NHS and support those other investments only because of the decisions that I have taken on tax. We do not take tax decisions lightly. In November, we have set out four key tests that any change to income tax would have to meet. It must protect low earners, make tax fairer, generate additional revenues for public services and protect our economy. We also commissioned advice informed by the Council of Economic Advisers on options for additional rate of tax, having carefully considered contributions from the public civic society and business community. I have decided to reform Scotland's income tax system. Using the limited powers available to us, the decisions that I have reached will make our income tax system fairer. They will safeguard those on low incomes and overall, when coupled with our spending decisions, will protect and grow the economy. It will provide essential revenue to enable us to invest in our NHS without imposing cuts on vital services such as social care, business support, police or education. Our proposals have been modelled by the Scottish Fiscal Commission and the revenue forecasts underpin this budget. Where forecasts suggest that a particular tax change would result in a significant behavioural impact, I do not have the luxury of simply ignoring it. As a result, I have set income tax policy at levels that the analysis says will generate additional revenue. The changes that I am proposing are as follows. First, I will increase the higher and top rates of tax by 1 per cent point to 41p and 46p respectively. That sets the top rate of tax at a level that will generate the most income, with the least risk of losing revenues next year in damaging the economy. Had we gone further, our modelling indicates that once behavioural effects in forstalling are considered, a higher rate could actually reduce income tax revenue next year. That is not a decision that any sensible Government would take. Secondly, I will freeze the basic rate at 20p, but to make the system more progressive, I will introduce a new intermediate rate of 21p. The intermediate rate will apply to income between £24,000 and a higher rate threshold of £44,273, which will increase in line with inflation only. To make Scotland's income tax system even fairer and more progressive, I have chosen to make one further change. I can announce today that I will introduce a new Scottish starter rate of income tax of 19p. That new rate will apply to the first £2,000 of taxable income between £11,850 and £13,850. That new starter rate, combined with the increase in the personal allowance, will ensure that no one earning less than £33,000, which is 70 per cent of all taxpayers will pay any more in tax than they do now for given incomes. On the contrary, anyone earning below £33,000 will pay slightly less in tax in the coming year than they do this year. The introduction of the new starter rate will also mean that those earning up to £26,000, which is 55 per cent of all taxpayers in Scotland, will pay marginally less tax than they would if they lived elsewhere in the UK. The specific tax reforms that I have announced today will raise an additional £164 million for investment in our public services and our economy. However, taken together with our tax decisions last year, the projected growth of our tax revenues relative to the UK as a whole and relative economic growth, our income tax receipts in 2018-19, are forecast to generate £366 million more than the corresponding block grant adjustment under the fiscal framework. Those decisions have therefore enabled me to reverse the real-terms cut that Westminster has imposed on our resource budget next year, whilst ensuring that Scotland is not just the fairest tax part of the UK, but for the majority of taxpayers, the lowest tax part. In all of those decisions and the interests of our economy have been at the forefront of my mind. I have already outlined a range of economic investments, and I want to briefly mention two more. One of the touchstone pledges from our programme for government was the creation of the Scottish National Investment Bank to provide long-term patient capital to support innovation and drive productivity growth. Today, we signal our ambition for the bank with a commitment to an initial £340 million capitalisation between 2019 and 2021. However, while the bank is being established, I intend to create a dedicated building Scotland fund. That fund will be worth £150 million over the next two financial years, and its purpose will be to support innovation and housebuilding, help to deliver modern low-carbon industrial and commercial facilities, and provide further support for business-led research and development. We will set out further details shortly. The new fund, together with an additional of £96 million investment in maintaining the most attractive system of business rates in the UK, a 70 per cent increase in funding for business R&D, £60 million of investment in delivering low-carbon technology, over £4 billion of investment in new infrastructure, doubling investment in city deals, a £600 million package to deliver 100 per cent superfast broadband to all, and almost £2.4 billion of funding for enterprise and skills, demonstrates beyond doubt that the budget backs Scotland's businesses and will help to grow Scotland's economy. That is a budget. It is a comprehensive package of measures designed to protect all that we hold dear. It provides the investments that we need to meet the challenges of today and seize the opportunities of tomorrow. It uses the power of this Parliament sensibly and in the interests of the country as a whole. It overturns the Tory cuts to our block grant. It delivers an additional £400 million to the health service without damaging other vital services. It protects the vast majority of taxpayers. It is a budget for fairness and a budget for growth. It is a budget for all of Scotland, and I commend it to the chamber. The cabinet secretary will now take questions for just under the next 60 minutes, so, if you wish to ask a question, please press your request to speak button now. I call on Murdo Fraser. Thank you, Presiding Officer. Can I start by thanking the cabinet secretary for advanced sight of his statement, heavily redacted as it was? It looks just like the SNP's plans to grow the Scottish economy. Presiding Officer, one thing is absolutely clear from the Scottish Government's budget today. You cannot trust a word that the First Minister or the Scottish Government say. In the SNP manifesto last year, the wording was perfectly clear. They promised to freeze the basic rate and income tax throughout the Parliament to protect those on low and middle incomes. Unless there be any doubt as to what that meant, it was helpfully clarified by the First Minister in this chamber, as recently as May this year, when she said this, when inflation is rising and living standards are under a lot of pressure, it is not right to increase income tax for those who are on the basic rate. Today, Presiding Officer, the SNP and every member of this Government has broken their promise to the Scottish people. Despite pledging not to increase taxes for those on the basic rate, a pledge repeated 53 times and despite 65 per cent of the Scottish population in May last year voting to endorse that position today, they are proposing to do the opposite and increase taxes for those on the basic rate. No one will believe a word they say ever again. Can the finance secretary tell me exactly how many people currently paying tax at the basic rate will see an increase in the tax that they pay as a result of his new tax announced today? Let me be clear, Presiding Officer. There is absolutely no justification for the tax rises being proposed. According to SPICE, the Scottish Government's block grant from Westminster is going up in real terms from this year to the next. In the analysis that was published on Tuesday from the Fraser of Allander Institute, the Scottish Government's total block grant, resource and capital, but excluding financial transactions, is on track to increase by around 1 per cent between 2016-17 and 2019-20. If the finance secretary had done his homework properly before he came to the chamber this afternoon, he would know that financial transactions are not included in that figure. There we have it. There we have it. Not hundreds of millions of cuts, no Westminster austerity, but a budget increasing in real terms over the next three years. The tax rises announced today for basic rate payers are the result of policy choices made by the SNP and no one else. When we see the Scottish Fiscal Commission's projections for economic growth, we will know exactly where the problem lies, because what it will show is that the Scottish economy is projected to grow at a fraction of the rate of the UK economy as a whole. It is the failure to grow the Scottish economy and the failure to expand the tax base that leads the SNP to put their hands into the pockets of hard-working Scottish families and businesses to try and bail them out of the mess that they are making of the Scottish public finances. Not only will we see taxes rise but, once again, we are seeing cuts to local government. The front-line services that millions of families depend on, not least in our schools, will be slashed back at the same time as taxes are going up. Under the SNP, we all pay more, but we are getting less in return. The message of this budget is simply this, do not be ambitious, do not be hard-working, and do not be successful in the SNP Scotland, because we will penalise you for our failure to grow the Scottish economy. Will the finance secretary now take this opportunity to apologise on behalf of his Government for breaking their promise in their manifesto? I would have thought, given First Minister's question, that Murdo Fraser had two hours to change his script and failed to do so. First of all, the biggest threat to Scotland's economy, the UK's economy, as it happens, is the Tory party with its economic mismanagement and mishandling. However, if you want to talk about the philosophy and economics of the Tories, it remains the case that, again, they want to raise less and spend more. It is just not possible that we have provided a balanced budget. Murdo Fraser has asked whether I apologise. I am very proud of this budget, because it invests on the things that we hold dear. I think that it speaks to the kind of Scotland that we want to build, so I am very proud of this budget. Murdo Fraser has spoken about basic rate taxpayers. Check the document that the basic rate has been frozen, but, as a matter of fact, of basic rate taxpayers, 80 per cent will pay less next year—not more, less, Mr Fraser—and 55 per cent of taxpayers, ending up to £26,000, will pay less than elsewhere in the UK. For a majority of taxpayers, Murdo Fraser is the lowest-tax part of the UK. Do you know what is even more important than that? It is that using our tax system in a progressive fashion makes us the fairest part of the United Kingdom, and that is something to be proud of. We have all quoted the Fraser of Alland Institute, and I will happily do that, because Murdo Fraser has mentioned capital spending and, in particular, financial transactions. FAI has said that the Scottish ministers are constrained in how those financial transactions can be used. It remains the case that resource spending next year and for the next two years is going down, just as it has done over the past period, amounting to a £2.6 billion reduction to Scotland's resource budget. However, I have been doing my homework, Mr Fraser. I have another figure for you. If I have followed Tory tax policies, I have established what it would take from Scotland's front-line public services, so I costied what they told me to do on income tax and LBT on council tax reform, on large business supplement. What I have now discovered is that, to follow Tory tax policies, in addition to the block grant reduction, would reduce the resources that are available to front-line services by a further £501 million. In the next hour, if I hear any Conservative ask for more money for anything, I will point to that half-a-billion-pound reduction if I followed their tax policies. I will not follow their tax policies, but I will follow our policies that deliver fairness and social justice and a stronger economy. Presiding Officer, this Parliament was designed to be a power for change, to take Scotland to a better place and to bring decision making closer to the people. While the Tories force austerity on the UK, we in Scotland should be using the powers of our Parliament to deliver an alternative. The truth is that Scotland needs real and radical change, not tinkering around the edges. It should be based on the principle of from each according to their means, to each according to their needs. A penny on the top rate just does not do it. This Tory-like draft budget fails on all of those tests. As the cabinet secretary would know had he taken the time to speak with the councillors, the council workers and the trade unionists who lobbied this Parliament today in communities and workplaces across Scotland. There is a growing mood of frustration and discontent, which is increasingly directed towards an SNP Government that has simply presided over Tory austerity and has added to it. We know that tens of thousands of local government jobs have been lost, that there are three and a half thousand fewer teachers, £1.5 billion already stripped from our councils since 2011, so how many local jobs will be cut this year by this budget? When the cabinet secretary says that he knows that councils were worried about a potential £300 million cut, that is true, but what he is doing today is cutting day-to-day spending in real terms by £134 million. When councils have already told him that they need £545 million just to stand still, that is an effective cut of almost £700 million to our lifeline local services, so why won't the cabinet secretary stand up for properly funded local services? Why won't he stand up for properly funded lifeline services? Why won't he stand up for the people and communities of Scotland? Just a gentle point to Richard Leonard, the microphone amplifies what you are saying to the chamber. I have to say to begin with, during the course of yesterday's debate, I was told that James Kelly was the finance spokesperson. I know the term of office for a labour leader is pretty short these days, but one day for the finance spokesperson, that is setting a new timescale for Labour spokespeople. I heard Richard Leonard at First Minister's questions talk about housing. I listened very closely to what he was saying. I thought that it was very important what was being said around housing. That is specifically why we are putting more funds into support house building in Scotland. As to the specific questions, why don't we use the powers of the Scottish Parliament? We are using the powers of the Scottish Parliament. We are using them to the full to protect the people of Scotland from Tory cuts. If only the Labour Party had helped give us more powers, we would have been able to do even more to protect the people of Scotland in the face of Tory austerity and Brexit mismanagement. There is still a shout-out about the powers thing. The Tories say that they do not use the powers that we have. In terms of Richard Leonard, he wants us to use powers that we do not have. What we are putting forward is a credible budget with real investment in our social priorities, setting out the kind of country that we want to build and using our tax system in a way that is progressive and fairer. I have set out priorities in education, economy, environment and health, but if I stick to what the Labour Party is proposing today and give it all to local government, a view that it is entitled to have, what has the NHS done to upset the Labour Party? That means no new resources for the NHS or anyone else. When the Labour members get up in the next 48 minutes, let us see if they ask for resources elsewhere when their proposition is only given to local government and in relation to local government. The Tories were projecting a 3 per cent reduction—about £300 million reduction to their budget. That is not what I am proposing. I am proposing a flat cash plus a capital increase. What that means is that we are using our powers. If councils use their powers, they will have a real-terms increase for our front-line services. Richard Leonard is still shaking his head. I will make one final point to Richard Leonard. He explained very recently why the eight Labour authorities did not increase the council tax. He said that because the Scottish Government did not give councils enough money, Labour councils would raise even less. What a ridiculous proposition from the Labour Party. We have supported local government and a range of other priorities, and we will be very proud of the job creation, the services that it supports, and the interventions that it will deliver to create a fairer society. For nearly two years now, the Scottish Greens have been leading the argument for reform of our income tax now that we have the power to do it. By adding new rates and bans, we showed that we can raise additional revenue for our public services while reducing tax at the bottom end of the income scale, not at the top end as the Conservatives at the UK Government seem to continue to want. I am delighted now that that basic argument for a more progressive tax structure appears to have won the day, and we are going to be seeing changes not as soon as I would have wished them. We should have been here last year and not as far as I would wish them either, but that basic argument for a more progressive income tax has won the day. We have also made the case for an uplift in public sector pay. Given the rising level of inflation, it is unacceptable to see those who have continued to see reductions in their real terms pay be given even more cuts. I recognise that the UK Government budget does not make that easy, and the Scottish Government is now proposing a CPI inflation uplift for those under £30,000 but not an inflation uplift for everybody else. I will wait to hear the response of the unions who represent those workers before taking a final view, but certainly those who are at the bottom end of the income scale absolutely deserve the pay increase that we have argued for and that the Scottish Government today is applying, at least to its own workers. The downside of what we have heard today is that the cost of that pay increase in local government is not being met by the Scottish Government grant to local councils. The Scottish Government is right to use its powers to increase the total revenue budget in real terms for the Scottish budget, but then to pass on a real terms cut to our local councils is not acceptable. If we include the additional costs that our councils will face if they are going to apply the same kind of 3 per cent uplift to public sector workers who are delivering vital services that every single one of us depend on, it is clear that the Scottish Government is going to have to make changes to its local government settlement. Can the finance minister tell us that if he does not do that, if he does not change what he has proposed today for local government, is there any consequence other than real terms pay cuts, service cuts or job losses in our councils? I should remind the chamber on what I have said around local government that the settlement that I am proposing is far better than they were forecasting or expecting. Specifically on the point around using powers, I have said again that if councils use their council tax powers up to a level of 3 per cent increase that would put local authorities into real terms growth. Patrick Harvie also covered the tax structure point. He is right to say that this Government, being a minority government, had to engage and consult and listen and I have certainly been doing that and I think that that has been evidenced in our proposition, but I also want to give stability to the country as well. We all have to compromise in a Parliament of minorities, but I have embarked in an open and inclusive style to ensure that we can come to some sort of consensus on tax and that should continue. We set out four key tests on what we would do with income tax, to raise revenues for public services, to use a tax system in a way that protects lower income earners, to have a system that delivers progressivity and also to support our economy. Of course, that relates to how we choose to spend those resources as well. I specifically mentioned the top rate of tax earlier on. Richard Leonard also touched on it, as has Patrick Harvie previously. We have decided to put the top rate of tax at the level that raises the most amount of money. Sure, that is a sensible and progressive thing to do so that those resources can be invested without deterring investment to Scotland. On pay, we do not set the pay policy for local government, but we have set out, I think, a very fair public sector pay policy for those under our control, which is using the pay policy in a progressive fashion, just as we have done with tax policy. There are sufficient resources within the settlements proposed to support a fair pay settlement. The final point that I would reinforce is one that Patrick Harvie made himself, which is that the chancellor did not give us anything extra for pay and said very little in the UK context. There is the independent pay review, specifically for health. Of course, we will look at that closely and set out our position in that regard. With no new resources, in fact, a real-terms reduction in the resources that fund pay, we have had to make necessary decisions to support our public services and properly re-umerate our public sector workers. I have tried to do that in the fairest way possible. Willie Rennie We will scrutinise the tax announcement today. The devil is often in the detail, but it seems that this is a modest increase in taxation, an approach that we argued for at the election and an approach that he opposed at the election. The budget does not do enough to meet the long-term needs of the economy and does not include the transformational investment in education that we argued for. We are far behind England on the attainment funds, many years behind, and the small increase that is announced today will not close that gap. Colleges have only got half of the money that they asked for just to stand still. That will not reverse the £150,000 cuts to college places over the past few years or train the mature students or women that desperately need extra support. If he thinks that a paltry £17 million will solve the problems in our mental health services, he needs to think again. The settlement for local government is harsh, passing the buck for cuts to councils. The pay increase is welcome, but can the finance secretary explain who is paying for the pay increase? Are councils and colleges being given extra funds to pay for this increase? I think that the budget pays lip service to many of the challenges that this country faces. Does he not just accept that? Again, just on a wee point of accuracy, I am pretty sure that what Willie Rennie said previously would have ring-fenced all extra resources just for education. Again, just like the Labour Party is entitled to take that position, that does also mean no new money for anything else, including the national health service, and for that matter mental health within the national health service. I am afraid when it comes to actually delivering a budget, the detail is really important on such matters. Colleges have had a very fair and reasonable settlement. It is a real-terms increase for higher and further education. Of course, we have come to a settlement on pay award for college lecturers as well. Yes, they are adequately resourced, and local government has a fair settlement as well. However, you cannot escape the fact that you only wanted to ring-fence all resources for one particular part of the public sector, which means that you cannot demand more in every other area. Is there a basic principle on how you apply your policies to the budget in the future? Thank you very much. I have allowed a lot of latitude to front-benches to make their party's position clear and to ask a question at length. There are just over 30 minutes and there are just under 30 people who wish to ask questions, so you can all work it out for yourselves. Short questions and short answers. Kate Forbes is to be followed by Dean Lockhart. I am the pay-alone to the cabinet secretary. Fast internet connectivity is vital to the economic and social wellbeing of our rural community, so I welcome today's announcement of an incredible £600 million over the next four years to expand vast broadband. As this is a reserved matter, can I ask the cabinet secretary whether the UK Government has made a financial contribution? To be fair, it should, because it is a reserved matter and it should have been getting on with us. We are surpassing what the UK Government is delivering in terms of quality, speed and reach, covering every part of the country. At its contribution to the £600 million, it is £21 million. Dean Lockhart is to be followed by Kenneth Gibson. Just when you're ready. The Scottish Fiscal Commission forecasts have just been released for the next five years. They show that Scotland's economy will grow at less than 1 per cent for the next five years and will continue to underperform the rest of the UK for the next five years. That's 14 years of SNP underperformance. Given the dire outlook, why has the finance secretary completely ignored the advice of large and small businesses throughout Scotland that any increase in tax will cause long-term damage to the Scottish economy? The same business organisations also didn't say cut tax by half a billion pounds, which is what the Tories proposed with their tax policies. The number one ask of many businesses actually was to make the poundage for business rates CPI, not RPI, and I've announced that the business rates poundage will be CPI, not RPI. A range of investments, whether it's on higher education, innovation hubs, internationalising our produce or supporting businesses to grow or the most generous package of business rates relief in any part of the United Kingdom and investing in all those public services, is a good budget for business as well. Specifically in relation to the forecast, doesn't the UK Government take any responsibility for the economy or any responsibility for the economy in Scotland? The UK economic model doesn't work for Scotland. We know that to be the case, and what the SFC has said in its analysis, which is now published today and its forecast, is that the greatest threat to Scotland's economy is Brexit, is downward migration, is inflation and all those pressures that have been created by the economic geniuses in the Tory party. Kenneth Gibson, to be followed by James Kelly. I welcome the finance secretary's statement. Can I remind the chamber how many people in Scotland will enjoy a reduction in their income tax from April? Can I confirm that many thousand more could have shared in this had the UK Tory government not cut £500 million from Scotland's resource budget over the next two years, and the Tories simultaneously want to cut tax and increase spending? Can the cabinet secretary tell us how much less he would have to spend for services such as the NHS under their plans to cut taxes only for the better off in society? To be fair, I do not think that even the Tories understand their tax and economic policies at the moment. It seems to have come as a surprise that I have costed what their tax policies would mean for public services. To be precise, that is a £501 million reduction front-line public services. To remind the chamber on income tax, more than 70 per cent of taxpayers will pay less tax next year. Those earning under £33,000 will pay less tax. For 55 per cent of taxpayers in Scotland, earning up to £26,000 will pay less tax than elsewhere in the United Kingdom. That is a good proposition. I also represent the best deal for what you pay and what you get, the best deal anywhere in the United Kingdom. James Kelly, to be followed by John Mason. Much as Derek Mackay likes to spin it, the budget represents at least £134 million cut to local councils. Why is it that top-rate taxpayers earning more than £150,000 are only asked to be paid to pay an additional £1P on their rate, while local people and local communities face the prospect of job losses and losses to vital public services? I can see why James Kelly was reshuffled after 24 hours in the post as a finance spokesperson. Kezia Dugdale might be back from the jungle, but James Kelly is additioning for pointless. What I was pointing out in the proposition that I was setting out earlier is that income tax will be made more progressive. That is an important shift. The more money you earn, the more money you pay towards public services in Scotland. Why did I not go further on the top rate of tax? All the advice that I have been given by the Scottish Fiscal Commission, the Council of Economic Advisers and others, was the optimal point at which to raise the most amount of money. Surely that is the objective of the exercise to raise more money to invest in our public services in a fair and progressive way. The Labour Party is saying set it higher for whatever reason, which will raise less money. Mr Kelly, that means less money going to things like local government. I am trying to raise more money in a fair and progressive way. Do we get it yet? Are we there yet? To be helpful, I will share the workings of the SFC and the Council of Economic Advisers to set out how the rate that I have set is absolutely meeting the commitment of raising the optimal amount of money for Scotland's public services. John Mason, to be followed by Maurice Golden. The Barclay review recommended the removal of rates relief for independent schools. Can the cabinet secretary clarify the position on that? That is right. That was a recommendation of the Barclay review. I am accepting it in part. I want to be clear about that. All the details are in the implementation plan that is published today. I want to make an important distinction on special schools. I think that their support should be continued and also those schools with exceptional circumstances. Full details are in the chamber, but, as I said, I would respond having engaged with the sector, listened and looked at all the evidence to ensure that we make the right balance decision. Essentially, independent schools, other than those that I have mentioned, should be treated the same as council schools. Maurice Golden, to be followed by Alex Neil. How much extra tax will a primary school teacher earning £35,000 per year pay as a result of the NAT tax? That is just pathetic. It depends on how much that teacher happens to earn. Teachers, such as others, will welcome the public sector pay policy as well, I will say again, because everyone will be interested in that. Those earning under £33,000 will pay less tax. Alex Neil will be followed by Jackie Baillie. First of all, I congratulate the finance secretary for the additional measures that he has taken in relation to child poverty. I fully understand that he cannot do anything in benefits until the social security bill is enacted and the appropriate administrative arrangements are put in place. However, in the meantime, between now and the finalisation of the budget, if he is able to identify any additional spare cash, can he give priority to giving more money into projects such as the tackling child poverty fund? With the increase in child poverty and the scale of child poverty that we have in Scotland, it is an urgent measure that I know that he agrees requires further action by the Scottish Government. I think that Alex Neil raises a very fair point in looking at the impacts of the budget spend on how it impacts on people and the most vulnerable in our society. I know that Alex Neil will agree that many of the measures in here support the most vulnerable and protect people from the welfare reform, so-called from the Conservatives, such as reversing the bedroom tax and the Scottish welfare fund. Our new measures to give children and young people the best start in life and yesterday, the big idea from the Tories was to not go ahead with the baby box. I do not know what it is that the Tories have against giving children the best start in life, but I will consider very closely what Alex Neil has said about tackling child poverty and looking at what other measures we may be able to consider. That is why I also appreciate the work of the Child Poverty Commission as it works with us to address this very significant issue. Jackie Baillie is to be followed by Ivan McKee. I welcome the recognition that economic growth matters. It does, after all, affect our future budget allocation under the terms of the fiscal framework, but growth has been downgraded by the OBR, downgraded by the Fraser of Allander Institute and downgraded by the Scottish Fiscal Commission. It is predicting weak growth of less than 1 per cent over the next five years. We have not seen such downward trends in decades. Given that the Scottish economy underperforms the rest of the UK, the forecast from the Fiscal Commission suggests a much lower growth in Scotland, half that of the UK. Has the cabinet secretary quantified the impact on the Scottish budget if we do not match growth in the rest of the UK? I do not think that Jackie Baillie was properly representing the SSC report. It did not—what is suggested, of course, was the impact of Brexit uncertainty, and essentially that was what was subduing the growth forecast that we, of course, have to rely on. I do not have the luxury of ignoring their forecast, but what Jackie Baillie wants to hear in terms of what our budget has will be favourable because of the decisions that the Government has taken. It is the good governance and the tax decisions that the Government has taken that has ensured that we will have more resources to spend on Scotland's public services and will continue to have more resources, with the commercial, business and enterprise interventions that we will make. Jackie Baillie has missed every positive industrial and economic intervention and tax interventions that are announced in the budget, and that is why Jackie Baillie does not understand that we will actually grow the Scottish economy with the interventions that we will make. Now, either Jackie Baillie knows that to be the case, she just does not want to admit it, or it is Jackie Baillie that does not understand the SSC report. I have had the luxury, of course, of being briefed by the SSC, and I am absolutely convinced that the policies that we are setting out today will deliver economic growth. Ivan McKee to be followed by Adam Tomkins. Can the cabinet secretary outline how the Scottish Government will capitalise on the Scottish National Investment Bank to drive economic growth in the Scottish economy? I have said that we will set aside resources to put into the Scottish National Investment Bank. I am sure that that will be warmly welcomed as part of our massive infrastructure programme that will support both housing and the infrastructure of our country, and I think that it will be very warmly received by the business community. Adam Tomkins to be followed by Clare Adamson. Thank you, Presiding Officer. The SNAP tax budget effectively splits the basic rate of income tax into three. How much will this additional bureaucracy cost to administer? Who is paying for it, and what are its implications for pensions relief? I thought that Adam Tomkins was pro devolution. Now he is saying that we should not use our powers because it might cost some money. I tell you something. When we have delivered devolved taxes and used our powers, Revenue Scotland has done it in a far more efficient fashion than HMRC or any UK Government agency. Of course, we engage with HMRC and we give it sight of our tax policy and then they in turn absolutely cost what it will be for us to deliver policies, but it is a fraction of what we will raise for Scotland's public services. That is why an early decision on such matters is so important in giving stability to the people of Scotland. Clare Adamson to be followed by Ian Gray. Cabinet Secretary, the provision to local government to vary council tax by up to 3 per cent will bring vital funding going forward. Will the cabinet secretary be prepared to explain to my constituents what the long-term consequences of the Labour administration, put into power by Tory councillors in North Lanarkshire, will be to them continuing to fail to maximise their revenue going forward? As I have said, if local authorities choose to use their council tax powers, if they use them up to 3 per cent in every council, that will raise £77 million for local government services. Ian Gray to be followed by Ben Macpherson. The independent review into student support reported last month. Among other things, it recommended parity of support for FE and HE students. Can the cabinet secretary explain how £5 million allocated in his budget will provide parity for FE students or are they to be betrayed just like university students who are promised their debt would be paid off? We have increased resources in real terms for higher education and further education. We are considering that report in full. We have already taken steps to support people, and we will give it further consideration. Ben Macpherson to be followed by Miles Briggs. To ask the cabinet secretary how his innovative and progressive budget proposals will benefit Edinburgh. Considering the capital's needs, opportunities and population growth. I must apologise to Ben Macpherson. I could not hear it because the Tories were shouting at Ben Macpherson at the time. It must be good. We will make Scotland an attractive place to live, work and invest in. It is the best package for support for business, people and society compared to anywhere else in the United Kingdom. A range of interventions for the economy, for education and for the environment to make sure that Scotland is a very attractive place. I am sure that someone like Ben Macpherson will sell Scotland positively other than the Tories who wanted to shout him down, because all they know is that they want to talk Scotland down. You are the total opposite. The Tories are the total opposite of an economic development agency. They are the drag on Scotland's economy. Miles Briggs to be followed by Graeme Dey. Meanwhile, back in the real world, Scotland is facing a recruitment crisis in our NHS, including the lack of nurses, GPs, road geologists and consultants. Order, please. Let's hear the question, please. Our Scottish medical schools are attracting and accepting just 50 per cent of Scottish domiciled students. Can I ask the cabinet secretary today, hiking taxes for these vital NHS staff? What message does that send out for people deciding to come and work in our NHS in Scotland? When I was looking at the Tory request for more spending, one of the main culprits is Miles Briggs, which does not surprise you, because there is his question about more spending on health. Actually, it is this Government by our decisions on tax that will be able to spend more record sums on the NHS, but there is just one difference between us and the UK Government. We support our nurseries with bursaries as well, something that the Tories don't adequately do as one example. The Tories yet again want to raise, less and spend more. Only the SNP can be trusted to invest in our national health service. Graham Dey, to be followed by Anas Sarwar. The programme for government was lauded as the greenest ever. Can the cabinet secretary encapsulate for the chamber just how the budget facilitates the transition to a low-carbon economy? There are a range of interventions around the transition to a low-carbon economy, around transport, housing, innovation and digital, as well as energy efficiency. I think that there is a range of measures that will show that this is true to the word of the programme for government, which was described by many environmental campaigners as the greenest programme of any government in Scotland in terms of devolution. I say that this budget puts our money where our mouth is. Anas Sarwar, to be followed by Richard Lochhead. After seven years of pay restraint imposed by this Government that is meant to be real terms, pay cut for nurses and teachers, a commitment to finally break the pay cap is welcome. But we still do not have a firm commitment of a real terms pay increase for public sector staff. Following on from both Patrick Harvie and Willie Rennie's question, which the finance secretary failed to answer, can the finance secretary confirm whether he will provide specific and additional Scottish Government money to fully fund this pay increase or whether health boards, local authorities and others will have to find this money from their existing budgets, meaning further cuts to services or job losses? I need to say to Anas Sarwar that in all the budget settlements that I am proposing and those that Anas has mentioned, we are increasing those budgets. Take just NHS and over £400 million increase in the NHS. Of course, incidentally, if the UK Government does act positively in the independent pay review for the NHS and if that does result in a more generous proposition than the one that I am putting forward, we have said that we will at least match that. The resources that we have put into portfolio budgets has created the capacity to fund the pay award that I have announced in public sector pay policy this afternoon. I will make one final point. Whatever the Labour Party is saying in this chamber, where they are in power, they have not lifted the public sector pay cap. I thank the cabinet secretary for a transformational budget that is extraordinary, given the financial constraints imposed by a Conservative UK Government that would rather blow £1 billion bribing the DUP or spend tens of billions of pounds exiting the EU rather than support Scotland's public services. Can he confirm that there is now no reason for the right-wing Conservative-led Murray council for proposing cuts in support for vulnerable children and their schools, given today's announcements? I appreciate Richard Lochhead's comment. He touched on some of the other issues, which, of course, if we got a share of the DUP bung money that was provided to the DUP by the right-wing Tory Government, that would support us massively in terms of our public services. Of course, in VAT, for police and fire, we have given more resources to police and fire, and because of the ability now to reclaim the VAT, they will be better off. I am looking forward to the back money from the Tory Government of some £140 million. Richard Lochhead is right that in the face of a reduced real-terms budget in resource Brexit uncertainty, we have provided for more support for schools across the country, a fair settlement for local government and targeted support within that through the attainment fund and the pupil equity fund, which will address the attainment gap, a key defining mission of this Government. The cabinet secretary seems to be indicating that he will be making exemptions for special schools and music schools when it comes to their ability to retain eligibility for charitable relief. Can I ask him what reaction he has had from the Scottish Charity Regulator about how those exemptions will meet the terms of the current charity law? I have only just delivered the budget. I have not been looking yet. I have not yet had the chance. I am busy engaging with the chamber. I have not yet engaged with others as to the consequence of the budget, but I tell you what I do know. I tell you what I do know is that we set out—barclay did not make a special case for special schools, I have to say, in terms of independent schools, but we in listening to the sector see the case for relief to continue for those special schools and others where that is appropriate. We have taken the right sensitive decisions in that regard. It will have no negative effect on their charitable status, as I understand it. However, what we choose to do around non-domestic rates is absolutely fair and consistent. Clare Hockey to be followed by Daniel Johnson I refer members to my register of interests and that I am a register of mental health nurse with an honorary contract with Great Glasgow and Clyde NHS. To ask the cabinet secretary how much money will be spent on innovation and reform of GP services and primary health care, and whether primary care is receiving an increasing share of NHS front-line investment in the budget? It is approximately £110 million. Daniel Johnson to be followed by Tom Arthur £93 million for early years is of course welcome, but is it not correct that this money is ring-fenced to local government and contained in, not on top of, local government lines, which has own level 2 figures show a declining in real terms this year? Surely the new nursery places should be in addition to, not instead of, core council services? I would have thought that Daniel Johnson would have been happier about the budget settlement. He has mentioned in the past that childcare and teaching was really important. Is some of the resource ring-fenced? Yes, it is. Do you know why it is working? It has employed and allowed local authorities to employ hundreds more teachers in our schools to target the attainment gap. The formula is working, the resources are working and in schools, in education and in childcare, too. That is being delivered in partnership with local government, so it is fair to be part of the local government settlement. Tom Arthur to be followed by Donald Cameron Thank you, Presiding Officer. Can the cabinet secretary outline what action the Scottish Government is taking to protect a diverse, world-leading cultural sector in light of major cuts to UK lottery receipts? I know that many in the culture sector may have been worried about the budget, understanding the resource reduction that Scotland faced, and that there is a downturn in lottery income. The UK Government has not lifted a finger to support the culture sector in those challenging times. That is why the Scottish Government has not cut its budget, but has increased resources towards culture. There are major events in Scotland next year, and we have stepped in to provide an additional £6.6 million for Creative Scotland to ensure that it can maintain support for the regular funding programme, despite the cuts from the lottery. Donald Cameron In relation specifically to funding for the Scottish National Investment Bank, can the cabinet secretary confirm that he will be using some of the extra £1.1 billion pounds of financial transactions funding from the UK Government to back it? I welcome the announcement today that the Scottish Police Service and the Scottish Fire Service will be keeping all the funds that they would have been paying in VAT. Can the cabinet secretary confirm that the SNP Government will continue to pursue the UK Government to pay back the £140 million of that that it has already taken? Of course, we will pursue the UK Government for this sum, but in this budget I also proposed to increase the police resource budget. We had a manifesto commitment to protect front-line police budget, and we are absolutely doing that in supporting fire service transformation. There is extra resources for police and fire, and of course we will have the ability to reclaim VAT. We look forward to the UK Government giving us back the £140 million that it has taken from Scotland. Neil Bibby, to be followed by Emma Harper. Since 2011, Derek Mackay's own council and renfisher has faced £172 million of cuts. This week, it was announced that funding for families first, a vital support service supporting vulnerable families in Johnston, Foxbar and Gallowill, is to be discontinued. You might not be the leader of renfisher council anymore, Mr Mackay, but these are still your cuts. If local authorities like renfisher are being fairly funded, why on earth is your own SNP council justified in making these and other cuts? Why have COSLA's call for a truly fair settlement of at least £545 million being completely ignored? Well, let's wait and see what renfisher council's administration actually has in their budget, rather than the usual scaremongering that they get from the Labour Party every year. I say to Neil Bibby that the overall local government settlement is a fair one, as I have said. It protects local government resources in terms of resource and provides more on capital. If they use their council tax powers by up to 3 per cent, it will raise an additional £77 million, putting local government resources into real-terms growth. Considering the context in which we are setting the budget, that feels pretty fair to me. Emma Harper is to be followed by Rachael Hamilton. The cabinet secretary has highlighted that Tories want to cut tax and increase spending. Can the cabinet secretary reiterate for the chamber how much less we would have four services such as the NHS under Ruth Davidson's plans to cut taxes for the richest? In understanding the Tories' tax plans better than they do, I now understand that it would mean a £501 million cut from front-line services if we were to follow Tory tax policies. Rachael Hamilton is to be followed by Tavish Scott. Thank you, Presiding Officer. May I draw members to my register of interests as a small business hospitality owner? Given current concerns over forecasted low economic growth in Scotland compared to the rest of the UK, does Derek Mackay not think that he should be doing more to stimulate business? The fact that Scottish firms operating from medium-sized and larger premises already pay more than they would in similar premises in England due to last year's doubling of the large business rates supplement. Why does the Scottish Government continue to punish hard-working employers and family-owned businesses that make Scottish companies less competitive than their UK counterparts? I am not sure whether Rachael Hamilton has just come into the chamber and missed all my business announcements in the budget. It is important to reflect on what was announced last year. Last year, we enhanced the thresholds for small business bonus, and now that lifts 100,000 properties out of business rates. We also ensured that fewer businesses were paying the large business supplement by amending the thresholds there, too, and we lowered the poundage last year. This year, the number one ask of businesses was to use CPI, not RPI, for the poundage, and that is exactly what I am doing. As well as all the other interventions on innovation, on skills, on attracting people to come to Scotland, on the infrastructure investment and on digital, we are preparing for the future to put Scotland ahead of the curve in terms of technological intervention skills and, of course, the right environment for businesses to grow. That is why the key business decisions and the key business interventions will matter so much. I look forward to the engagement with the business community as to how it supports on-going economic growth. The finance secretary said that it was a budget for all of Scotland, so why did he accept his Government's crystal clear commitments, not to me or to Liam McArthur, but to the island's councils, to support ferry services within Orkney and Shetland in today's draft budget, given Parliament's vote last week? Actually, the Scottish Government is delivering on our commitments to the Northern Isles, just like all parts of Scotland. One of the key items funded in this budget is delivering the equivalent of road equivalent tariff to the Northern Isles. That was in our manifesto, that was in our powering our island community's perspective, and absolutely we are investing that in this budget. The question for Port Arish Scotland and Liam McArthur will be, are you going to vote against that kind of investment that we are putting into the budget, specifically in relation to inter-island ferries currently run by the council? I will continue to engage with both council leaders. Both council leaders told me that the Liberal Democrat constituency members would be coming to see me this week with a proposal to try and put internal ferries funding in the budget. My door was open but I did not get the visit from the Northern Isles constituency MSPs. I simply say this. This is a minority government. I will require consensus to get the budget through. I said to the Liberal Democrats that if they wanted me to put it in the budget, would they come and engage with me? If I did put it in the budget, would they vote for it? I did not get an answer to that. I am a fair and reasonable guy. My door is still open to engage with other political parties. If you want me to support other items, then by all means, engage with me positively and constructively. Bruce Crawford, to be followed by Clare Baker. Can I ask the fair and reasonable cabinet secretary to remind me just how much additional money is being put into city region deals? You will know that, cabinet secretary, it means so much to me representing Stirling. Just for the fun of it and to wind up the Tories, can you remind me what the percentage of Scottish taxpayers will pay less tax as a result of your announcement? 70 per cent of taxpayers will pay less tax. On the other point, on city deals, we are doubling the funding to city deals to more than £120 million. Clare Baker, to be followed by John Scott. Outside the Scottish Parliament this morning, Denise Christie of the FBU said that, we risk our lives every day. Fire appliances are sitting idle because staff have been cut. The fire and rescue service is to get a flat budget settlement in real terms in this budget. Firefighters have told me that the VAT recovery is not enough to plug the gap in their service. There is a £5.5 million for transformation, but it is feared that that means closure of stations in the loss of front-line firefighters. Can he guarantee that this budget will not mean that? Of course, Annabelle Ewing, the appropriate minister, will continue to engage with FBU in terms of the on-going transformation of the fire service, but I see the extra money that we are allocating to the fire service as a good thing. Maybe the Labour Party should welcome that extra money. Of course, the extra spending power that comes from the ability to reclaim that VAT that they could not do before, so greater spending power and actually more resources, and hopefully we can deliver a transformation that keeps Scotland safe. Of course, appropriately supports the firefighters that do a fantastic job. Thank you, Presiding Officer. I declare an interest as a farmer. I note in the level 3 budget in the rural economy and connectivity chapter that the payments and inspections administration budget has risen from £62 million to £82 million, a rise of 30 per cent. Is this a further cost attributable to the failed CAP payments computer programme or something else? A final question from John Scott. I think that farmers will welcome my budget decisions, which, following on from the Barclay recommendations, were to put agricultural land on the role. I chose not to do that because there was no intention, of course, to tax them. There is support for our farming community, there is support for produce coming from the farms, as well. They will know that their interests are now most threatened by the mishandling of the UK Government of Brexit and what may come from those negotiations. We will continue to support our farmers, including the scheme that I have worked with, with Fergus Ewing, which has ensured that extra financial support was able to go to farmers earlier than they would otherwise have received their grant. That has ensured that they got more financial support earlier, and I know that that was very warmly welcomed by the NFU. I thank all members and the cabinet secretary for getting through a lot of questions. We will take a few moments for members to change seats.