 The next item of business is a statement by Derek Mackay on response to the autumn statement. The cabinet secretary will take questions at the end of his statement, so there should be no interruptions or interventions. I would ask members who wish to speak in this statement to press their request to speak buttons now. I call on Derek Mackay. Presiding Officer, I would like to take this opportunity to respond to the autumn statement that was delivered by the chancellor last week and to set out the implications that will have for Scotland's public finances and wider economy. The autumn statement and the accompanying analysis from the Office for Budget Responsibility starkly highlighted the detrimental impact that Brexit and the UK Government's approach to the negotiations is having on the economy and the UK's public finances. The Scottish economy demonstrated its underlying resilience prior to the EU referendum in the face of considerable external headwinds. GDP grew by 0.4 per cent in the second quarter of this year, wages grew in real terms over the past year and the labour market has continued to strengthen. The most recent labour market data shows that the unemployment rate has now fallen to 4.7 per cent, the lowest rate since 2008 and below that of the UK. The number of people in employment in Scotland has increased by more than 166,000 since 2010. The Scottish economy is therefore well placed to face the challenges that are likely to emerge over the coming year. However, it is clear that Brexit has significantly increased economic uncertainty and has damaged business confidence and investment intentions. The forecast set out by the OBR anticipates that Brexit will lead to investment being postponed or cancelled, higher inflation squeezing household real incomes and reduced trade with the EU. That in turn is expected to lead to lower economic growth, lower wages and lower tax revenues and in turn higher borrowing and debt. As a result of lower growth, the OBR now forecasts that the borrowing over the next five years will be over £110 billion higher than forecast in March, with the OBR attributing £59 billion of that increase solely to Brexit. It is clear that the deteriorating outlook for the UK economy and the UK Government's austerity policies will hit low-income families hardest. Analysis by the Institute for Fiscal Studies shows that, as a result of Brexit, reducing growth and increasing inflation by 2021, average real wages will still be lower than they were in 2008. That implies 13 years without any growth in real wages, the longest period of stagnant wages since World War 2. The true cost of Brexit has been laid bare by this Tory chancellor. As our nation continues to debate our constitutional future, the choice that we face is becoming clearer. If we are stuck with the hard right, hard Brexit of the Tories, we face lower growth, more borrowing, higher debt and higher inflation hitting hard-press families. That is one future that Scotland now faces. I believe that we must build a different future and give Scotland a different choice. In the face of a deteriorating economic outlook, the chancellor had a choice to make on fiscal policy. He had the opportunity to take a fresh approach and to abandon his predecessor's rigid adherence to austerity. However, despite the rhetoric of resetting fiscal policy under the chancellor's plans, Scotland will continue to see a real terms cut to the funding that it receives to pay for public services. By 2019-20, the Scottish Government's discretionary budget, Fiscal Dell, is expected to be more than 9 per cent lower in real terms than it was in 2010-11, reducing the scope that we have to mitigate Westminster austerity and invest in growing inner economy. That is before we see the impact of £3.5 billion of additional and so far on allocated cuts that the chancellor has confirmed that he plans to impose by 2019-20. The chancellor announced some welcome capital investment in the autumn statement, which will provide consequentials for Scotland, and we will use every penny available to us to invest in supporting our economy. However, again, this is simply moderating the cuts that have been already imposed on the Scottish budget. Scotland's capital budget will still be around 8 per cent lower in real terms in 2019-20 than it was prior to the start of the UK Government's austerity programme. Despite that, in contrast to the silence and inaction of the UK Government, we have already taken swift action in the wake of Brexit to support the economy by bringing forward an additional £100 million of capital investment. We are working hard to secure Scotland's continued relationship with Europe, and we have already set out plans for a £500 million Scottish growth scheme to support Scottish business. Where the UK Government last week failed to adjust economic policy for the impact of Brexit, this Government is using every lever at our disposal to protect Scotland's economy. It is also clear where the chancellor failed to act as to protect Scotland's economy. Last week's statement failed once again to offer support to our North Sea oil and gas industry. Support for exploration would help to secure future investment, and the chancellor chose not to make that support available, and I will be raising that with him when I meet him tomorrow. I will also be raising what is perhaps the most concerning aspect of the autumn statement—the lack of measures to help low-income households. Instead of supporting households in the face of deteriorating economic outlook, the policies that are being pursued by the Westminster Government are exacerbating the situation. The reforms to tax and social security being implemented by the UK Government are highly regressive and the limited support provided in the autumn statement is dwarfed by the social security cuts that have already been announced. For example, the resolution foundation estimates that, as a result of the changes to the economic outlook and policy measures being implemented during this Parliament, a dual-earning family with three children on low incomes will be £3,650 a year worse off by 2020. Likewise, it estimates that a lone parent working part-time on the national living wage could be £2,640 a year worse off. That is equivalent to an 18 per cent cut in their household income. Virtually, all households would struggle in the face of an 18 per cent cut to their income. However, for households who are already dealing with rising bills and have little spare income, a cut on this scale is simply unacceptable. Hardworking families should not have to pick up the tab of the UK Government's austerity policies or their decision to leave the EU. Scotland did not vote for Brexit, yet this renewed economic squeeze is going to hit families here, many of whom are already struggling to make ends meet. Despite those cuts, the UK Government is pressing on with its policy of giving the top 10 per cent of the adult population a significant tax cut by raising the higher-rate threshold. There we have the Tories in a nutshell, the lowest-income families are hammered whilst the better-off are given tax cuts. This Government is taking a different approach to growing our economy and building a more equal society. We will set out the full details of our income tax policy in the draft budget on 15 December, but I can confirm today that we will use our tax powers to set Scotland on a fairer, more progressive path than the one chartered by the Tories. Let me be crystal clear, this is not the time to give large tax cuts for those on the highest incomes. We will maintain our commitment to support people in Scotland affected by the UK Government's cuts to social security via the Scottish welfare fund, mitigating the bedroom tax and through the council tax reduction scheme. When we gain powers over £2.7 billion of social security spending in 2018-19, we will seize the opportunity to improve the support that people receive where possible. In two weeks, I will bring forward my draft budget proposals. Unlike the missed opportunities in the UK Government's autumn statement, we will ensure that our proposals support our economy, tackle the inequalities in our society and protect high-quality public services for all. We are a Government for all of our people and I will bring forward a budget for everyone. In the draft budget, we will build on the actions that we have taken by delivering the ambitious infrastructure investment programme set out in the programme for government, including significant investments in affordable housing, digital, energy efficiency, transport and health. We will take the first steps in our commitment to further expand early learning and childcare to 1,140 hours a year and increasing funding for the NHS over the life of this Parliament. We will protect the police resource budget in real terms, while providing direct funding to schools to improve attainment. We will continue to mitigate the worst impacts of UK austerity and build a social security system based on dignity and respect. Therefore, I look forward to setting out our budget proposals on 15 December. Thank you, Presiding Officer. I thank, as is customary, the cabinet secretary for the advance copy. What a dismal statement we have just heard from him. One would not think that the UK economy was the fastest-growing economy in the G7 and projected to continue to grow strongly, and with economic performance already well ahead of the dire predictions that we heard prior to the Brexit vote, a vote that I would gently remind him was supported by at least some of those on the benches behind him. What the autumn statement delivered was an increase in personal allowance to £12,500 by April 2020, helping the low-paid, benefiting 2.6 million Scots and lifting 113,000 people out of tax altogether. There was no mention of that. There was no mention of the increase in the national living wage to £7.50 per hour. There was no mention of the freeze and fuel duty for the seventh successive year, no mention of the extra £2 billion spending on research and development, no mention of the £3 million extra for Scottish charities and no mention at all of the city deal for Stirling and Clackmannanshire, which we were celebrating last night in this very building. The cabinet secretary talks about cuts. What Spice have told us is that, in 2017-18, the Scottish Government's budget will be up in both revenue and capital, a total of £140 million in real terms over the current year. Does the cabinet secretary accept that analysis and, if so, can he explain how a £140 million increase in budget amounts to a cut? Secondly, the cabinet secretary has signalled again that the Scottish National Party Government intends to make Scotland the highest tax part of the United Kingdom. How does he expect our economy and our tax revenues to grow if he sends out a signal that Scotland is a country where, if he is successful, we will penalise him? First of all, when the chancellor meets me tomorrow, I do not know that I will improve his mood, but many Conservatives in the House of Commons described the chancellor as fairly miserable. I suppose that that is because he is looking at the financial assessments that he has been given on the state of the economy as a consequence of the Brexit decision. Not just the Brexit decision, but the appalling handling of the UK Government in negotiations and the position. Even the OBR has said or none the wiser as to the Government's position. In terms of Scotland voting to remain as Murdo Fraser knows, 62 per cent of those who voted voted to remain should be respected by the UK Government. Politics is about choices. Murdo Fraser raises tax, and we believe that it is the wrong choice at this time. To give a tax cut to the richest in our society, the only tax rate that changed under the UK Government was the additional rate. It is a typical Tory approach to hammer the less well off and reward the richest in our society with tax cuts. That is not a choice that the Government supports. That is the proposition that we put forward to the people of Scotland when we won the Scottish Parliament elections earlier on this year. In terms of the budget position, I welcome the fact that there is certainly some capital stimulus. We have been calling for it for some time, and I welcome the fact that our budget was not opened negatively. I have given a welcome around that, but even with the increase in figures from the Barnett consequentials, a marginal increase in real terms for resource for one year does not undo the 9 per cent reduction over a 10-year period that the Tories have bestowed upon Scotland. The Conservatives are not the generous overlords giving us fantastic new resources. They are simply giving us some resources back that have been taken away over a consistent and sustained period that has damaged so many parts of our society. We will make the right choices on 15 December, but that will not include a tax cut for the richest in our society at this time. Kezia Dugdale Last week's autumn statement showed us that the old Tory mantra of cut, cut and cut again still holds. The chancellor confirmed that the same cuts to public spending remain in place. Cuts will put at risk the life chances of people who just want to get on in life. Today, the new tax powers devolved to this Parliament mean that we can do things differently, and we should use the powers of this place to stop the cuts and invest in schools and our local services. I agreed with the finance secretary when he said that this is not the time to give large tax cuts for those on the highest incomes. It was Scottish Labour who first made the case not to pass on the increase in the threshold for middle earners last October, but we should go further too and ask those with the broadest shoulders not just to forego their tax cut but to pay their fair share. When he is faced with the prospect of the swinging cuts that he is about to make, why won't he ask those earning over £150,000 a year to pay a 50p top rate of tax? As Kezia Dugdale is well aware, it is not our position to simply pass on the pain of austerity to individual taxpayers through a basic rate increase, but on the additional rate increase. Our analysis showed that it might end up costing the Scottish Government money. In that scenario, it would be counterproductive to raise tax to the point that we have less resource. However, our tax position will remain under review, but we have set out in the manifesto what we propose to do around tax, which will ensure that Scotland is an attractive place to live and to do business, but we will deliver a package on taxation that is fair and balanced to individual households, taxpayers and to invest in quality public services. That is a divergence from the proposition from the Conservatives. However, we will continue to engage with society on that and our proposition around council tax will also raise resources for quality services, so we will make sure that we get the balance right on the proposition that we have presented to the people. Bruce Crawford, to be followed by Dean Lockhart. We have heard all the posturing attempts by the Tories to put the best spin possible in frankly chaotic public finances, but let us cut to the chase. What will be the longer-term real decrease in the Scottish budget as a result of the announcements that are made in the autumn statement, and how damaging will those be to public services? The figure that I have given is accurate that it is a 9 per cent reduction in the Government's overall discretionary spend over the period of a decade, and that will continue to be challenging particularly around resource for protecting front-line services, but we will do our best to achieve protection of those public services with our very balanced approach, but it is a 9 per cent reduction in the Government's overall discretionary budget spend. Let me start by welcoming the new city deal for Stirling. The autumn statement provides us with a timely comparison of the state of the UK economy under a Conservative Government and the state of the Scottish economy under the SNP. 2.1 per cent growth in the UK economy compared to SNP growth of just 0.7 per cent in Scotland. A UK budget deficit of 4 per cent of GDP declining to 1 per cent compared to a SNP notional deficit of 9 per cent of GDP. Productivity in the UK in the second quartile—projectivity in Scotland under the SNP in the third quartile, and Scotland seeing the lowest growth and employment rates of any region in the UK under this SNP Government. Can the cabinet secretary explain what steps he will be taking to address increasing underperformance of the Scottish economy? Dean Lockhart would be wise to look at some of the underlying issues in the Scottish economy. A major challenge for us has been around oil and gas. I would be surprised if the Conservatives weren't aware of the pressures there. Much of the economic levers around that and other parts of our economic policies still rest with the UK Government. The UK Government has to take some responsibility for the economy of Scotland as well. On oil and gas, the Scottish Government specifically asked for interventions that would assist in that area in terms of investment and support. It was nothing in the Chancellor's statement to support the oil and gas sector in Scotland at an issue that will certainly raise tomorrow. There is good news in terms of oil and gas revenues and the forecasts around that, but much more could have been done to support that particular sector. On the positive steps around city deals, the Scottish Government has worked very constructively with local authorities and the UK Government around city deals and will continue to do so. We are recalibrating our economic policy, focusing on export opportunities in other areas as well as being outlined by the economy secretary and the First Minister. We will do even more to support our economy, such as through the Scottish growth scheme, where we want to support private sector entrepreneurs as well. There are a range of actions that we are undertaking to support Scotland's economy, but I am sure that it will not be lost in the chamber. Right now, the greatest threat to Scotland's economy is Brexit and the mishandling by the UK Government in terms of membership access to the single market. The UK Government should take that issue far more seriously and certainly become far more mature in its engagements with the European Union so that we can remove some of the uncertainty and volatility that is certainly impacting on the economy, as is explained by your chancellor. Marie Todd will be followed by Neil Bibby. Would the cabinet secretary agree with me that this autumn's statement illustrates the gulf between the political rhetoric and the reality from the Conservative Party? Theresa May promised just last month to confront social injustice and said that the Conservatives were now the party of workers, the party of public servants and the party of the NHS. However, that was not evident in that statement. There was no mention of the NHS and, in fact, we learned a great deal more about just how badly hit the most vulnerable in our society will be and indeed many working families will be by wage freezes, welfare cuts and rising inflation. Analysis of the issue, but one element that Marie Todd was able to touch upon, as he remembered during the referendum on the EU, people were told that it would be £350 million extra for the NHS. Not a penny announced by the chancellor in terms of new resources for the NHS, another part of the sham around the EU vote. However, the Government will continue to protect the NHS and will continue to support low-income households through the range of measures that we have currently got. However, yes, the Tory chancellor has failed to reset economic policy and end austerity in the way that many of his colleagues were suggesting. The finance secretary has welcomed the capital investment in the autumn statement and has said that he will use every penny available to support our economy. Given the link between economic growth and our future revenues, it is imperative that every penny of capital spend is invested wisely. Can the finance secretary tell us what areas of capital spend he will prioritise for new projects to boost economic growth? In the interests of transparency, when he publishes his budget, will he commit to providing the Parliament with information on what the Scottish Government believes the economic impact will be of each of those projects, particularly in relation to job creation? I think that it is a fair attempt from Neil Bibby and it was a fair question and a good point around capital investment and how it connects to economic growth. I certainly agree with that point, but I am sure that you, in asking the question, will not seriously expect me to preview the budget. However, I think that I was able to outline in part, in my opening statement, some of the areas that are important to government, which have also featured in the programme for government as well. For example, housing and infrastructure would not be a surprise to the chamber. In terms of value for money analysis, some of that work is undertaking some of the economic return as well. I will reflect on the point about how we could maybe provide analysis about investment in a capital programme and what we think the return on that is. That is a reasonable request and I will reflect on that, but of course some of that will be around particular assumptions in modelling, but I think that it is a very fair question, which helps to make decisions around the budget process and where capital investment should be targeted. However, there will be a range of considerations on that and I hope that that is a helpful answer. I join members with short questions and short answers. Patrick Harvie to be full by Mike Rumbles. Thank you, Presiding Officer, and I thank the cabinet secretary for the advance copy of the statement. I was interested that it cited the work of the Resolution Foundation. Does the cabinet secretary agree with their analysis that it is not just wider tax and benefit changes but also the change to the personal allowance by the UK Government, which is deeply regressive? The bulk of the benefit from that particular change goes to the richest half of households and the poorest save virtually nothing. Does he agree that the Scottish Government is going to have to go beyond its manifesto commitments on tax if we intend to reverse the deeply regressive nature of UK Government policies? Patrick Harvie is certainly right to identify that when you look at the package of changes in the round, the Conservative Government is proposing people who are less well off. There is no doubt about it unless you are particularly well off to start with. I think that you have to look at the totality of tax and social security propositions to recognise the impact that it is having on families. I know that the First Minister, and I have certainly said before, will continue to look at our tax position and at the transfer of powers coming to Scotland to make sure that we get the balance right to try to support low-income households. We have a manifesto proposition that we want to adhere to, but I think that it is correct to say that we will have to look at all the different levers that we have to try to support some of the less well off at this time. The Resolution Foundation has provided some very helpful work around the current position and the decisions by the UK Government that will require a further reflection. Mike Rumbles will be followed by Gil Paterson. The finance secretary has more money available for next year as a result of the autumn statement, but what is his position with funding for all schools? Local authorities are not a protected budget line under the SNP Government, so they are going to get hammered. Half of what they do is education. How will he protect schools, given that this is a decision that falls to him as a result of the autumn statement? Of course, there speaks that a man who voted against more money for education when we were proposing changes around taxation, but I will tell Mr Rumbles that I am engaging with local government in talks around the financial settlement. I believe that I will have a constructive relationship with local government, and I will be able to produce a budget that prioritises education, so it would be wrong to say that any concerns have been dismissed. This is a Government that said that education and addressing the attainment gap is a priority, and that will be seen through the Scottish budget. Gil Paterson will be followed by Liam Kerr. Many thanks, Presiding Officer. Does the cabinet secretary agree that the total lack of any plan for Brexit from the UK Government is continuing to threaten both the Scottish and UK economies, and that the UK statement fails to mitigate the threat in any way? To be concise, Presiding Officer, because I know that we are short of time, I share that concern. I think that the UK Government is acting in a reckless way, and it is impacting on the UK and the Scottish economy. Liam Kerr, to be followed by Gillian Martin. He brings up oil and gas in his statement and some of his answers. Industry body oil and gas UK has said that the UK continental shelf is now the most ffiscally competitive in the world, thanks to changes brought in by the Conservative Government. Last week, the chief executive of oil and gas UK said, and I quote, we are pleased with the autumn statement. Why are oil and gas UK wrong in the cabinet secretary right? Cabinet secretary, I think that Liam Kerr should be aware of the additional requests around support for decommissioning, tax incentives and further exploration. That is further actions that the chancellor could take to support oil and gas in the north-east of Scotland. I am very surprised that the Conservatives seem to think that they have never had it so good and that more cannot be done to support that particular sector. I know that those are measures that I have asked the chancellor for that has the support for the sector. Maybe the Scottish Conservatives should join us to try and support that sector even further. Gillian Martin will be followed by Jackie Baillie. Does the cabinet secretary agree that this failure to address oil and gas industry pressures leaves the Scottish Government again in a position where we can only attempt to mitigate the effects of their cavalier attitude to this important component of the Scottish economy? Isn't it time that the Scottish Government had the fiscal powers devolved so that it could do the job properly? We have been, as a Government, in a position to support some people through swift actions around council tax reduction, the welfare fund and how we tackled the bedroom tax. Of course, if we had more fiscal levers, we could do even more. Some of the changes that the UK Government has undertaken in the autumn statement dwarf the overall changes to social security that are hammering some of the less well-off and more vulnerable in our society. The cabinet secretary painted a very complacent picture of the Scottish economy, but the truth is that GDP has been falling in every quarter since the start of 2015 and is consistently worse than GDP for the rest of the UK. With downward revisions to growth forecast for the future, does the cabinet secretary agree that one of the best investments that he can make to grow the economy is to invest in education? On that basis, can he explain to the chamber why he is not committing to providing a real-terms increase in education spending? I will not preview the Scottish budget on 15 December, but I have made it clear that education is a priority. I continue to work with local authorities and, of course, it is the case that we want to target attainment and the inequality gap in attainment. I hope that we will continue to have the support of the Labour Party to do that. What is the cabinet secretary's direct response to third sector groups and churches who slammed the autumn statement for offering little hope as measures went nowhere near far enough to reversing cuts that are already made? I concur with a number of those comments. I just point out to people in the chamber around work from the Resolution Foundation, which showed that tax and welfare reforms being introduced by the UK Government during this Parliament are highly regressive with those at the bottom of the income distribution seeing the largest losses in both cash terms and as a share of their incomes. That is the reality of the UK Government's changes. I know that the Tories are silent at this point, but I cannot understand why the Labour Party is objecting to that commentary from the Resolution Foundation, because I think that it does highlight some of the terrible impacts that will be as a consequence of this right-wing chancellor's decisions on Scotland and the UK.