The 2018-19 Draft Budget will protect the NHS and public services, support low earners and unlock Scotland’s economic potential, according to Finance Secretary Derek Mackay – but opposition parties beg to differ. Conservative finance spokesman said the government is “putting their hands into the pockets of hard-working Scots to bail them out of the mess they have made of public finances.”
As expected, the Scottish government has announced income tax changes that will see higher earners pay more than elsewhere in the UK – but lower earners will pay less with a starter rate of 19p in the £ being proposed.
Finance secretary Derek Mackay announced a new tax band of 21p for those earning more than £24,000. The higher rate of tax will be increased from 40p to 41p and the top rate from 45p to 46p. He said the tax changes would mean no one earning less than £33,000 in Scotland would pay more tax. The current average salary in Scotland is £24,000.
Setting out plans to invest an additional £400 million in Scotland’s health service, protect public services, lift the public sector pay cap and provide a package of investment in growing the economy and supporting small businesses, Mr Mackay said the budget would “invest in our public services and support business to thrive”.
The Draft Budget proposes the introduction of a more progressive income tax policy that will protect low and middle income taxpayers, resulting in the majority of taxpayers paying less income tax than they do now with those on the highest incomes paying proportionately more.
Publishing the Draft Budget to parliament, Mr Mackay set out a programme that will:
- Increase spending on the health service by over £400 million – £200 million more than inflation.
- Provide £120 million – over and above core education funding – direct to head teachers to help ensure all young people can fulfil their potential
- Lift the one per cent public sector pay cap and provide for up to a three per cent pay rise for NHS staff, police, teachers and others earning up £30,000
- Invest £243 million towards the expansion of free nursery education and childcare
- Protect funding for Police and Fire services including retaining VAT refunds in full
- Deliver a local government finance settlement worth more than £10.5 billion
- Contribute £756 million towards investment of more than £3 billion by 2021 to deliver 50,000 affordable homes
- Allocate over £4 billion of funding for infrastructure
- Deliver £600 million to ensure every home and business will have access to superfast broadband by 2021
- Deliver the first £70 million of a new £150 million Building Scotland Fund
- Set aside £340 million for initial capitalisation of the Scottish National Investment Bank
- Invest nearly £2.4 billion in our colleges, universities, enterprise and skills bodies – including a real terms increase for both college and Higher Education budgets
Mr Mackay said: “This is a budget for a stronger economy and a fairer society, with increased funding for the NHS and protection for low and middle income earners. We are investing in our public services and supporting business to develop and thrive. This budget mitigates against the UK Government’s cuts to our block grant.
“It delivers an additional £400 million to the health service, it invests in expanding childcare, delivering broadband, building 50,000 new homes and supporting our police and fire services. It provides the investment we need to meet the challenges and seize the opportunities of tomorrow.”
Opposition parties united to condemn the draft budget, however.
Tory Finance Spokesman Murdo Fraser said: “The SNP are putting their hands into the pockets of hard-working Scots to bail them out of the mess they have made of public finances”, while Labour’s new Scottish leader Richard Leonard said the budget will mean yet more cuts to local government funding. “Councils say they need £545m to stand still, the SNP budget means a real terms day to day spending cut for them of £135m. That means lifeline services face an effective cut of almost £700m”, he said.
Yesterday the STUC called on all political parties to deliver a budget that best serves the interests of the people of Scotland, urging them to bring forward meaningful taxation and spending proposals to the budget debate, and deliver the additional revenue needed to fund the “first-class” public services that we all need and deserve.
STUC General Secretary Grahame Smith said: ‘We regret that the Chancellor chose to continue with austerity, ignoring the pressures on living standards and the signs of weakness in the economy.
‘We call on the Scottish Parliament to not make the same short-sighted mistakes as Westminster. Our Parliament does have the capacity to halt the real terms decline in public sector wages and to begin to restore pay to acceptable levels.
‘We welcome the First Minister’s engagement with trade unions on pay and its willingness to use revenue raising powers. This is in stark contrast to the approach of the UK Government. However, we are also on record as believing that the revenue raising options being considered are not radical enough. It is time for our Parliament to be bold.’
Has Scotland’s Parliament been bold enough?
For more information on the Draft Budget 2018-19 visit www.gov.scot/budget.
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