Mixed response to draft Budget

Responses to Scotland’s draft Budget have been mixed. Will the proposals take Scotland forward? As ever, opinion is sharply divided …

Convention of Scottish Local Authorities (COSLA):

Local Government has faced really difficult times over the last few years and these will remain into the future despite a more measured approach by the Scottish Government in delivering the local government settlement for next year.
However, this is not a flat cash settlement.

Councillor Gail Macgregor, COSLA’s Resources Spokesperson said: “I would like to start by putting on record the engagement the Cabinet Secretary has had with us to meet the pressures that we have presented, particularly in relation to our shared priorities.

“That said, the reality is that this is not a flat cash revenue settlement for local government.  It is a cut of £153m for essential local government services. In addition to this, while COSLA is fully supportive of wider capital investment we are disappointed that there is a cut of £60m to local capital funding.

“There are serious financial challenges that lie ahead in several areas and there is no doubt that these will have an impact on the essential services that councils deliver.  A particular issue is public sector pay if this is not fully funded. 

“Whilst councils have the ability to raise council tax in their local area that is a decision they will take based on local needs and circumstances and is subject to a 3 per cent cap which has been imposed on councils by the Scottish Government.

“The current Spending Review process makes it extremely difficult for councils to set medium and long term financial plans due to short term funding and annual settlements.” 

Councillor Macgregor concluded: “The discussions in relation to this year’s settlement between COSLA and Scottish Government have been both positive and constructive.”

COSLA President Councillor Alison Evison added: “COSLA has been engaging with all political parties across the Parliament throughout this process and, as this is a draft budget, we will continue to defend essential services over the coming weeks.”

Employers organisation CBI Scotland: 

Hugh Aitken, CBI Scotland Director, said:  “The Finance Secretary promised that today’s draft Scottish Budget would be a boost for business and he delivered on a number of fronts. 

“On business rates, we’re delighted to see that our call for full implementation of the Barclay Review recommendations and the linking of rate increases to CPI instead of RPI will largely be taken forward. We look forward to seeing further clarity on how this will be achieved in the implementation plan published today.

“Companies across Scotland will also benefit from additional investments in business R&D, transport, digital connectivity, education and city deals. Support for the Scottish National Investment Bank and the introduction of the new Building Scotland Fund should also be applauded.

“By putting productivity at the heart of the Budget it’s clear that Derek Mackay has listened to organisations like the CBI that have said consistently that boosting productivity is the only sure-fire way to grow our economy, generate the revenues we need for quality, sustainable public services and raise living standards. This is a step in the right direction and evidence of the value of business and government working together. 

“But things aren’t all rosy – the prospect of income tax rises and added complexity in Scotland’s tax code will be a bitter pill to swallow. At a time when our economy is stuck in a cycle of weak growth and we face unprecedented levels of uncertainty, the last thing we need is to make it harder for companies to attract talent or make Scotland appear a less attractive place to do business.”

Scottish Council of Voluntary Organisations (SCVO):

John Downie, Director of Public Affairs for the Scottish Council for Voluntary Organisations (SCVO) said: “Today’s Scottish Government Budget was a landmark one, with the Scottish Government quite radically overhauling the tax system. We welcome the introduction of a more progressive system and the raising of additional revenue – although there is room to go further in the future. However, we must be careful that this divergence from the UK wide system does not have negative implications for Gift Aid, which is a valuable source of income for so many charities across the country.

“We welcome the decision to remove the public sector pay cap, which will help people whose living standards have been squeezed over the past decade. However the budget fails to recognise the many third sector workers delivering public services who are not even being paid the living wage. We hope between now and passing the budget, the Cabinet Secretary will ensure third sector workers will also benefit from a similar commitment.

“The Government’s flagship commitment to delivering 100% superfast broadband coverage is highly ambitious, but the full benefits of this will not be realised unless broadband packages are made more affordable and the most marginalised in our society have the skills to realise the benefits it can bring, in terms of reducing poverty, improving health and social exclusion.”

Federation of Small Businesses Scotland (FSB):

Andy Willox, FSB’s Scottish policy convenor, said: “We wanted to see a Scottish Government budget which offered firms a little ballast in choppy market and political conditions. Instead the Scottish Government has chosen to steer us into uncharted economic waters. 

“A majority of those in business in Scotland were against changes to the income tax regime. However, the Cabinet Secretary underlined that his tax changes were designed to cause minimum economic disruption. Only time will tell what the wider impact will be, but our members have a real concern about the effect of these changes on household spending power. 

“On rates, we’re pleased to see Ministers seize upon the most sensible recommendations of the Barclay review. Moving to a different inflation measure will mean a smaller increase to many firms’ bills. Further, the introduction of a new business accelerator relief is a clever move that deserves plaudits. By far the most valuable commitment in the budget for Scottish smaller firms is the retention of the Small Business Bonus rate relief. 

“It is great to see the Scottish Government allocate funding to fulfil their manifesto commitment to address Scotland’s patchy digital infrastructure. We need to see governments in Edinburgh and London work together to address broadband and mobile issues north of the border.  

“Other initiatives – like cash for the Scottish National Investment Bank and support for the enterprise and skills agencies – won’t mean a lot to many ordinary businesses. Ministers have to ensure that these bodies and initiatives deliver for local economies and the wider business community.”

UNISON Trade Union:

Dave Watson, UNISON Scottish organiser said: “Any relief from Tory austerity is welcome, but the very modest use of tax powers, particularly for the highest earners, means that public services will be under considerable pressure next year. Yet again it is councils who will bear the brunt of austerity with another real term cut in revenue allocations.

“A real terms increase for workers below £30k in the pay policy is a move in the right direction, but for many others a 2% increase is another real terms cut in pay. However, an unfunded pay policy is of no value for council workers.”

David Watt, Chief Executive of Arts & Business Scotland:

“On behalf of all of our stakeholders and members at Arts & Business Scotland, we strongly welcome the Scottish Government’s commitment of an additional £6.6 million to Creative Scotland’s regular funding programme next year. It’s a real lifeline for Scotland’s cultural sector, helping to offset the recent downturn in Lottery funding and an important recognition of the crucial contribution culture makes to the wider economy in Scotland.”

Hew Edgar, RICS (Royal Institute of Chartered Surveyers) Policy Manager:

Following in the footsteps of Philip Hammond and scrapping LBTT for first time buyers to the value of £175,000 is not the answer to stimulate activity in the Scottish housing market, making today’s announcement disappointing .

Whilst this change has potential to stimulate activity in the short term, it comes at a time when the market is subdued, and does not tackle the overarching problem of housing shortage supply across all tenures.

This Government must realise that prioritising demand side measures is not conducive to market fluidity and will do little to solve the chronic shortage of suitable accommodation across Scotland’s housing options.

Once again, we call on Scottish Government to review the current LBTT as a priority going forward as this current framework is not only limiting market activity, but could ultimately bring the market to a standstill.   That said, we hope that the “Building Scotland” fund will provide the required support for alternative models of housing delivery.

On a more positive note, the £600m investment in providing superfast broadband – ensuring the last 5% of Scotland’s ‘non-spot’ dwellings – will be connected to the fourth utility by 2021, will be greatly received.

As part of £4bn investment in this budget – £1.2bn of which will be directed towards transport – tackling the infrastructure deficit is always welcome. But Mackay held back and gave little away as to where the funding will be directed. He also missed an opportunity to attract and retain top talent to Scotland by not building on Scotland’s infrastructure success of the Queensferry Crossing, with no addition of noteworthy projects to the infrastructure pipeline.