Scottish Budget faces difficult choices in challenging circumstances, says Finance Committee

The Scottish Government’s budget for 2024/25 has been set amidst a context of persistently high inflation, low growth and high interest rates amidst deep cuts to capital funding.

In its budget report published on Wednesday, Holyrood’s Finance and Public Administration Committee looks at the choices the Scottish Government has made, including on taxation.

Finance and Public Administration Committee Convener Kenneth Gibson said: “Significant pressure on Scotland’s public finances have presented difficult tax and spending decisions in the budget. Everybody recognises that.

“The Scottish Government priorities are based on delivering its three ‘missions’ of equality, opportunity and community.  However, there was a great divergence in views from witnesses on what those priorities should be, with the focus understandably in areas where budgets will be reduced rather than increased.

“The committee is unclear how spending has been prioritised towards a fair, green and growing economy.

“Regarding taxation, there is uncertainty about the behavioural impact on taxpayers earning more than £75,000 per year and when there will be a fundamental review of the council tax.

“The Scottish Government needs to deliver long-term financial planning. At present it gives the impression that it’s procrastinating on important decision-making that would help the sustainability of Scotland’s public finances, albeit in the medium and longer-term.

“The Committee is also disappointed at continuing cuts to the capital budget by the UK Government which restricts the Scottish Government’s ability to invest in capital projects, achieving net zero and growing the economy.”

On public service reform Mr Gibson added: “The Scottish Government’s public service reform programme is critical to the sustainability of the Budget and ensuring effective delivery of public services.

“While the government has set out principles and objectives for its reform programme there are few other signs of progress. This is disappointing given the urgent need for reform.

“We need to see the government develop and deliver its reform programme at a quicker pace in the months and years to come.”

The report also says that the Scottish Government must explain why it has delayed:

• the public sector pay policy 2024-25
• an updated infrastructure project pipeline and
• a financial strategy for public service reform.