The Scottish 17/18 budget - main points

Scottish Parliament - Anita Gould

Outlining his draft 2017/18 budget to the Scottish Parliament, Finance Secretary Derek Mackay said the Scottish Government would use its new powers responsibly.

“This Budget provides support for the economy, for jobs and for household incomes, through a fair and balanced set of tax and spending proposals," he said.

He will keep the rates and bands of Scottish income tax aligned with those in the rest of the UK with the exception of the higher 40 per cent rate, for which the threshold will increase in the rest of the UK to £45,000 next year and £50,000 by 2020. In Scotland it will be frozen in real terms at £43,430.

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This is in keeping with plans laid out in the SNP manifesto, despite calls for "a more progressive" approach from Scottish Labour and the Scottish Greens.

New powers over business rates were exercised however. Business rates were reduced, with the poundage cut by 3.7 per cent to 46.6p, but the large business supplement remains higher than in England. 

Small businesses got a boost, with an expansion of the Small Business Bonus scheme lifting 100,000 out of rates altogether, Mackay said. They will also be supported with a new £500 million growth scheme.

Mackay promised capital funding of around £470m for affordable housing in 2017-18.

Higher council tax bills for people living in more expensive homes are on the way, and discretion for councils to raise the levy by a maximum of 3 per cent a year. This was expected to be used on schools, but Mackay said that funding would now be provided centrally, meaning councils would get to use the extra cash.

In total, councils would have £240m of additional spending power to support local government services, he said.

The £120m attainment fund will now go straight to headteachers to close the attainment gap, in the form of a "pupil equity scheme" where funding is allocated per child.

The planned expansion of free childcare will begin with an initial £60m investment.

Police resource budget is maintained, while NHS resources will increase by £300m. The funding for social care via health spend, which last year was £250m, will be boosted by £107m.

There will be no rail fare freeze, but a package of "targeted rail fare reductions" worth £3m.

£47m will be spent to mitigate the impact of the "bedroom tax".