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by Andrew Learmonth
09 December 2021
Kate Forbes sets out first SNP-Green government budget

Kate Forbes sets out first SNP-Green government budget

Income tax rates in Scotland have been frozen in this year’s budget, with Kate Forbes saying the move would mean most Scots paying less than taxpayers in the rest of the UK.

The finance secretary said it was a budget of choices. 

However, the Tories described the spending plans as “tired” while Labour said it was “managed decline under the SNP”. 

It is the first budget of SNP - Green partnership government, which means, unlike in the previous years of minority government, there’ll be no protracted negotiations to get it through the parliament. 

Forbes told MSPs: “If my last two Budgets have been shaped by our immediate experiences of Covid, today’s Budget aims to lift our eyes to the future, while of course remaining vigilant to the effects of new variants.

“This is a transitional Budget, as people, businesses and services get back on their feet.”

Forbes had more than £40bn to spend, with the largest share, around £18bn, going to cover health and social care costs. 

The minister confirmed plans to double the Scottish Child Payment to £20 from April.

She also pledged to phase the return of rates liabilities, with rates relief for the retail, hospitality and leisure sectors continuing at 50 per cent for the first three months of 2022-23, capped at £27,500 per ratepayer. 

Land and Buildings Transaction Tax will also remain the same for the next year, while Scottish Landfill Tax, standard and lower rates will increase from April. 

Included in the £18bn for health and social care was an additional £200m to deliver a £10.50 minimum wage for all adult social care staff in commissioned services, a rise from £10.02.

There was also £110 million to provide free bus travel for young people from January,  and over £72 million for the continued expansion of free school lunches.

There was no council tax freeze, and no offer to local authorities to offset the cost of keeping levels where they are - prompting suggestions householders could be in for a hefty increase.

Forbes said the budget would “lay the groundwork to protect and restore our natural environment, decarbonise our homes, industries and transport, and position ourselves as a global leader in renewable energy, and green and digital technology.”

Forbes was critical of the UK government, accusing the Treasury of cutting Covid-related funding, by not passing on consequentials for pandemic spending in the rest of the UK. 

She told MSPs: “In practice, with Covid funding having been removed, our day-to-day funding next year is significantly less compared to the current year, at a time when we undeniably need to invest in the economy and help public services recover.

“That means the Budget cannot deliver the resources that all of our partners will want and, let me be clear, there are areas where I would have wished to go further.”

Forbes shared analysis from the independent Scottish Fiscal Commission which predicts long-term economic damage to the Scottish economy from Covid-19 of around negative 2 per cent, similar to the OBR’s forecast for the UK economy.

However, the commission now forecast Scotland’s economy will recover to pre-pandemic levels by April–June 2022, almost two years earlier than forecast at the previous Scottish Budget in January.

Although they are expecting a peak unemployment rate of 4.9% at the end of this year, that’s far below the 7.6% forecast at the time of the previous Scottish Budget.

Responding for the Scottish Conservative, Liz Smith said she was “absolutely astonished” that Forbes had “not been able to at least acknowledge that she has at her disposal record block grant funding from Rishi Sunak and the UK Government."

She said it was up by 10.6 per cent and proved "the benefits of Scotland being part of a strong United Kingdom".

Labour’s Daniel Johnson said: “The real question, the people of Scotland are wondering, it's not just when will we get back to normal but when will we move beyond the crisis? But unfortunately, this budget fails to answer that question. 

“Challenging times require bold action. But rather than rising to this challenge this budget is just more managed decline under the SNP.”

He said the 48p pay rise for social care workers was derisory, calling it for to be hiked up to £15.

Andrew McRae, FSB’s Scotland policy chair, said the budget would "put a little fuel into the tank of Scotland’s small business community."

"But with another lap of the covid crisis looking likely, policymakers in Edinburgh and London might need to look at other means of helping firms over the line," he added.

“We know that the covid crisis made many traditional Scottish businesses turn to digital technologies, but today we didn’t hear new commitments from the Cabinet Secretary to help firms realise their ambitions on this front.

"And, spending to reduce carbon emissions could also boost the resilience of local economies, but only if contracts flow to the independent businesses rooted in our communities.

“On rates, the Scottish Government has done the right thing by retaining their vital Small Business Bonus scheme. And retail and hospitality businesses outside the scope of this help will recognise that ongoing, though reduced, support for their sectors is better than a cliff-edge withdrawal.

"However, there’s a compelling case to further extend the duration and level of this relief for independent operators especially if we’re not out of the woods by the spring.”

Claire Telfer from Save the Children’s welcomed the doubling of the Scottish Child Payment. 

She said: "Even after the Scottish Child Payment increases and is extended to under 16’s, too many children will be living in poverty and we will remain some way off achieving Scotland’s statutory child poverty targets. 

"Today’s priorities are very welcome. We will need a continued focus on children and tackling child poverty by putting money directly into parent’s pockets next year and beyond”.

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