The Scottish Government

Spending plans 2003-2006

Finance Minister Andy Kerr's statement to Parliament on September 12, 2002.

Today I am pleased to present our spending plans - plans which focus resources on achieving growth and opportunity in Scotland for the next 20 years.

This budget, the budget of our Labour-Liberal Democrat partnership is a budget for the long-term.

These spending plans cover the total resources available to us. Over the next 3 years these resources will rise to 25 billion pounds.

I want the focus of today's debate to be on what these plans will deliver and the impact they will have - for growth and for opportunity.

But I suspect I need to take a few minutes to put the record straight on what I am announcing today.

I am not re-announcing increases to our budget. I am setting out our plans for using that budget.

The outcome of the UK Spending Review in July confirmed the level of resources that would be available to us over the next three years - taking into account the impact of SR2000, the increases to the health budget announced in April and increases flowing from SR2002.

The announcement in July set out how much these increases are compared to this financial year.

Total Managed Expenditure by Portfolio

So from the baseline of 2002-03 the increases are as follows:

1.5 billion more next year, rising to 2.6 billion the following year rising again to over 4 billion pounds in the last year of the 3 year settlement.

I am sorry if that sounded like an introduction to government finance - but I'm afraid our friends on the opposition benches need that introduction - never having been in government.

Today's announcement is about our spending plans. They cover the total resources available to us. They reflect the significant increases to our budget as a result of the increase in public expenditure across the UK.

By 2005-06 these resources will rise to 25 billion pounds - an annual average real terms increase of 4.6%. Over the next three years we will be investing over £70 billion pounds in Scotland.

The significant increases in our spending over the next 3 years present a major opportunity to continue our drive to build a better Scotland. We have seized that opportunity.

This is a budget for growth and opportunity.

Growth secured

• by investing in Scotland's infrastructure to ensure we have more competitive businesses, better public services and an early impact on jobs
• by prioritising investment in skills and enterprise to open up opportunities and create the foundation for Scotland's future
• by investing in our children and Scotland's young people to give them the best start in life, more choices and the opportunity and confidence to build their future
• by taking action to radically improve the quality of life in communities across Scotland

We are concerned less with how we divide up what we have and much more about how we use all that we have to secure growth and prosperity for Scotland.

Growth to promote and sustain improvement in the daily quality of life in towns, cities and villages across Scotland. Growth which will protect the environment of our land and improve the environment of our streets.

This is what devolution is about. This is how devolution delivers. Real debate and real choices on how we use the resources we have to generate more, to improve lives and to build a better Scotland.

The level of investment I outline today is made possible by the sound economic management of the UK Government.

Devolution - our partnership with the United Kingdom - guarantees Scotland a fair share of those resources. The agreed formula delivers for each person in Scotland, pound for pound, person for person, the same increase as in England. That comes as a right.

Every extra pound for the people of Gateshead, matched by an extra pound for the people of Glasgow.

Over the first 6 years of devolution our resources for Scotland will have grown by over 25%.

Resources that the nationalists could never match from their constitutional wrangling and their drive for separation and divorce from the UK.

Resources the conservatives would neither raise nor use for the good of Scotland's people.

In every speech I have made as Finance Minister in this chamber, I have said that the money we spend is the people's money, money raised from business and hard working families. Every day they try to get the best from the money they have.

And like them, we must make sure that every pound of their money we spend is a pound that brings direct benefit and produces the right result.

So today we are setting out a new approach:

• Written agreements to delivery
• Targets we set and will publish
• Expertise we will harness

The drive to secure best value and increase performance across the public sector.

My job as Minister for Finance is not finished today. My job is to secure best value from every pound of public money.

And the proposals we set out today confirm our commitment to delivering on the promises we have already made.

The scare mongers said that we wouldn't be able to afford our ambitious agenda. We can.

We were told there wouldn't be enough money to deliver on student support, to modernise the teaching profession or to provide free personal care. There is.

The plans we set out today confirm the funding for our key policy commitments. But they go further, much further.

They provide resources to:

• Unlock the potential of Scotland's people

• Provide support when it's needed; and

• Offer life choices and chances at every stage.

This is a budget for every man, woman and child in Scotland.

For children, building on our delivery of a free nursery place for every 3 and 4 year old, we will deliver:

• the largest ever school building programme to start a step change in the quality of our schools. A £1.15 billion investment package to build or refurbish 300 schools across Scotland by 2008-09, benefiting over 80,000 children
• improvement in the quality of school life - additional resources to increase the nutritional value of school meals, to tackle behaviour issues, to improve the school environment
• healthy and active children through new resources for the Active Primary Schools Programme
• implementation of the next phase of the 21 ^st Century teaching agreement, meeting our commitments in full

We are investing in opportunities for young people . By 2005-06 we will invest an additional £300 million a year in their opportunities and their future.

• With a new £40 million package of investment over the next 3 years in vocational training and enterprise education in our schools
• Increasing the number of Modern Apprenticeships to over 25,000.

The pilot on Education Maintenance Allowances has been one of the most successful. Members have asked when it will be extended. Today I can confirm new money to extend Education Maintenance Allowances across Scotland.

Making sure that every young person can continue their learning and improve their prospects. This will directly benefit around 40,000 young people across the country.

For families we will invest £40m over the next three years in integrated children's services and an additional £110m for early years' intervention. This will deliver:

• an integrated package of support from local authorities, voluntary organisations and health services to at least 15,000 vulnerable children under five
• increased resources for Sure Start Scotland - an increase of over 150% by year 3
• Resources for outreach services, family centres, nurseries and playgroups, childminding and support for parents

Along with thousands of pensioners across Scotland, we are looking forward to the introduction of free off peak travel in only 19 days time.

We are delivering on our commitments to improve the lives of our older citizens - not least our commitment to free personal care , benefiting 75,000 older people in Scotland.

And I am delighted to announce today that we will make additional investment in the central heating programme, benefiting the over 80s and improving an additional 4,000 homes.

We are using our resources for all of Scotland.

For rural communities we will deliver additional support for our forestry strategy and support for our fishing industry.

And our investment in infrastructure and public services will bring direct benefits for rural communities.

Our cities are central to the quality of life and well-being of Scotland. We are committed to ensuring that our cities are able to fully exploit their economic potential.

Our spending plans will benefit cities through:

• Investment in the infrastructure and transport priorities required to support successful and dynamic city regions
• Resources to tackle the economic, social and environmental blight of vacant and derelict land
• Investing further in public housing

Investing in Scotland's health is an investment in Scotland's future and is one of our key priorities.

This budget delivers for health. Record levels of investment, rising as we have said by the end of the Spending Review period to over £8 billion pounds.

Delivering much needed improvements direct to front-line services to:

• Improve the treatment of coronary heart disease, stroke, cancer and mental illness
• Provide 1,000 community places for people leaving hospital
• Train more nurses and midwives
• Increase the number of NHS consultants

As I said earlier these spending plans are targeted to make a difference now and make a difference for a lifetime.

We are making a major investment in our National Health Service. But our commitment also extends to making a major investment in the national health of Scotland.

We will use this step change in health expenditure to deliver a step change in health improvement. Our objective is nothing less than a major change in life expectancy for people across Scotland.

• A 20% reduction in deaths from cancer
• A 50% reduction in deaths from strokes
• A 50% reduction in deaths from heart disease

We will double the money we spend on health improvement - injecting over £170 million into our new health improvement plan. This will be different from what's gone before. New resources and a new approach.

Better support for families and children - giving them the best possible start in life. More nutritious school meals. Opportunities to get involved in sport. Healthier, fitter, more active children.

Investment now that will bring benefits for a lifetime. Fundamental to a good quality of life is freedom from the fear of crime.

We will continue to invest in the fight against crime.

• £270 million over 3 years to maintain frontline police effort
• making policing more effective by investing £25 million in a modern communication system.

We have made good progress - overall crime is going down and detection rates are going up. But we need to do more to tackle violent crime and drugs and to make our streets safer.

And we are matching our investment in frontline police services with significant new investment to improve our prosecution and court services. Detecting crime, catching criminals and speeding up prosecution and punishment.

We will invest an additional £33 million over the next 3 years to deliver our agenda on youth crime. Action on youth courts and secure accommodation. Investment to secure to a reduction in the number of persistent young offenders by 10%.

And we will invest an additional £30 million pounds over the next three years to tackle anti-social behaviour

We will create more opportunities for people of all ages to take part in sport - encouraging a more active lifestyle, improving the quality of people's lives. We will double our spending on sport over the Spending Review period - with money for school sport and a major new sporting facility.

Our commitment to improving quality of life means taking decisive action on the environment.

For too long we have consigned most of our waste to landfill. Our position at the bottom of the recycling league tables is unacceptable. Our firm commitment is to change that. And we will. But doing so needs significant investment and a change of culture.

As part of our commitment to sustainable development and environmental justice we have provided for an unprecedented increase in spending on waste management. We will invest an additional £170m to implement the national waste strategy over the next 3 years.

And we will do even more to improve the quality of everyday life.

We recently provided additional resources to make a major impact on the local environment - additional resources that were warmly welcomed by communities up and down the country.

Local Authorities responded to the opportunity magnificently. Our partnership with them proved itself in action.

• Action to improve the local environment
• Action to increase local opportunities for our children and young people
• Action to improve lives today and bring benefits for years to come

We were asked whether this would continue or was it just a one off. I can confirm today that we will invest an additional £180m over the next three years to make our streets safer and cleaner, to reclaim our parks and open spaces, to tackle vandalism, graffiti and dog fouling - improving the quality of life of our people and our communities.

These may not be considered by some to be matters of high politics - but they do matter in the daily lives of the people. Their priorities are our priorities.

We know that central to achieving our ambitions for Scotland is the strength and growth of the Scottish economy.

That means investing in skills. It means increasing access to opportunities for learning.

We are making that investment.

• an additional £120m for Further Education over the next years three years
• in Higher Education alone an additional £60 million over the next 3 years for science and research

And we are supporting our key industries. Over the next three years we will provide an additional £23m for tourism - an industry that employs nearly 200,000 people - including investment in a Major Events Strategy to make Scotland one of the top events destinations in the world.

An effective transport system is central to a thriving economy and strong communities.

We will increase the level of investment in transport to over £1 billion per annum by 2005-06.

With this massive investment we will:

• let a new 15 year Scottish Passenger Rail Franchise and deliver our top priority rail projects
• invest in new rail lines across the country including the development of connections to Glasgow and Edinburgh Airports
• begin construction of the final part of the M74 into Glasgow
• deliver public transport improvements across Central Scotland - easing congestion promoting more sustainable transport
• begin preparation on the A8 and A80 motorway upgrades, completing the motorway network in central Scotland
• continue to improve the existing trunk road network; and
• tackle the congestion problems in Aberdeen.

Over the next three years we will see a massive investment in Scotland's infrastructure.

In transport, in schools, in hospitals, in housing, in our water industry, in waste, in prisons. Investment that not only improves the service - but investment that creates opportunities and supports thousands of jobs.

Scottish business will benefit from our investment in skills and learning; from our investment in science and research; and from our investment in modern transport links.

There has been much debate about business rates. Let me be clear about this. Since devolution we have:

• Frozen rates at the 1995 level in real terms
• Kept the rates burden at the same level as England

This is a good deal for business in Scotland.

But we want to do even better.

For next year, we will freeze the business rate poundage at the current level.

This will reduce rates by £35 million a year in real terms.

For the rest of the Spending Review, we will stick to our commitment to limit rate increases to the rate of inflation, with - as previously stated - the obvious caveat that there are no dramatic changes in economic circumstances.

This means that the rates responsibility for Scottish business for the next three years will be:

• Lower in real terms than it is now
• Lower than it has been since the early 1990s.

We are therefore using the levers of government to create the conditions for growth and the opportunities for enterprise.

Our proposals today will create

• A healthier Scotland
• A wealthier Scotland
• A safer Scotland
• A growing Scotland
• A Scotland of opportunity for all.

Presiding Officer, we believe in:

• better public services not constitutional wrangling
• stability in devolution not risk from separation
• investment in growth, schools and hospitals not tax increases to fund divorce

The results that will count will be:

• the growth in Scotland's economy
• the growth in Scotland's ambition
• the growth in Scotland's future.