Tag: budget

Spending review for ‘whole UK’ will deliver for Scotland

Chancellor Rishi Sunak has unveiled a Spending Review ‘for the whole of the UK’ as he laid out plans to help every corner of Scotland to build back better and fight coronavirus.

The Chancellor announced that Scotland will receive £2.4bn of new funding from the UK Government in 2021/22 through the Barnett formula for devolved areas such as health and social care, education and housing.

This is double the £1.2bn new funding provided for 2020/21 at the 2019 Spending Round.

It is also in addition to the £8.2bn guaranteed to the Scottish Government in 2020/21, above the funding allocated at the Spring Budget earlier this year, in the face of the coronavirus and its impact on the economy.

Scotland will also receive a significant boost from more than £100bn of capital investment across the UK in 2021/22, improving connectivity and productivity.

Chancellor of the Exchequer Rishi Sunak said: This Spending Review will help people in every corner of Scotland. It will provide billions of pounds to fight coronavirus, deliver the peoples’ priorities and drive the UK’s recovery.

“The Treasury is, has been, and will always be the Treasury for the whole of the United Kingdom. And this is a Spending Review for the whole of the United Kingdom”.

Speaking after the Chancellor delivered the UK Government’s Spending Review, Scottish Secretary Alister Jack said: “The UK Government’s Spending Review delivers for all parts of the UK at this challenging time. Never before has the strength of the Union, and the role of the UK Treasury, been more important.

“The UK Government pledged to bring funding decisions back from Brussels, and our plans for a new UK Shared Prosperity Fund will deliver on this promise. Communities across the UK have been hit hard by Covid, so I welcome the Chancellor’s announcement today of £220 million in additional funding in the coming financial year. This will be delivered by the UK Government across the UK, working in partnership with local authorities and communities.

“We made a commitment to maintain funding for our vital rural and coastal communities and are fulfilling that through £570 million to support farmers and our rural economy, and £14 million to support Scottish fisheries. Additional funding for broadband will help boost the economies of some of Scotland’s most remote communities.

“Accelerating the Tay, Moray, Borderlands and Islands growth deals is great news. It will help support jobs and drive economic recovery across swathes of Scotland.

“The new UK Infrastructure Bank will help support our post-covid economic recovery. A billion pounds for our net zero climate change target will ensure the UK remains a world leader in climate action, ahead of us bringing the world to Glasgow for COP26 next year. And the new counter-terrorism operations centre will help keep people in all parts of the UK safe from global threats.

“The Scottish Government will receive an additional £2.4 billion in Barnett Consequentials. This is over and above the £8.2 billion they have already been allocated since March this year. This additional funding will help support jobs and public services in Scotland while we fight the pandemic.

“The UK Government will continue to do all it can to support people in all parts of the United Kingdom.”

The Chancellor used the Spending Review to reaffirm his commitment to growth across Scotland – announcing an £11m acceleration of City and Growth Deal funding over each year remaining in four Scotland Deals.

Tay Cities, Borderlands (Scotland), Moray and the Scottish Islands will be funded over 10 years, rather than 15 years, releasing funding more quickly to enable projects to come online sooner.

By bringing forward the investment, Tay Cities will receive an additional £6.3m each year, Borderlands (Scotland) an extra £2.1m, Moray an extra £1.1m and the Scottish Islands an additional £1.7m.

Projects announced today include the Gigabit and Shared Rural Network programmes for better mobile coverage.

The Gigabit programme subsidises the rollout of gigabit-capable broadband in the most difficult to reach 20% of the UK, while the Shared Rural Network programme is a partnership with industry that will deliver high-quality 4G mobile coverage across 95% of the UK by 2025.

Investment in new green industries will support green growth clusters, offshore wind capacity, port infrastructure, Carbon Capture and Storage and low carbon hydrogen.

The global underwater hub, funded by £1.3m announced at today’s Spending Review, will eventually comprise of physical presences in the existing underwater engineering cluster in North East Scotland.

Separately, institutions and companies in Scotland will also be able to access a £14.6bn UK-wide research and development fund.

The Government today confirmed funding for the next stage of the Plan for Jobs – including £1.6bn for the landmark Kickstart scheme in 2021/22, which will see the creation of up to 250,000 government-subsidised jobs for young people.

The apprenticeship hiring incentive that launched in August will also be extended to 31 March 2021, offering employers up to £2,000 for every new apprentice they hire.

Investment from EU Structural Funds is increasing in each of England, Scotland, Wales and Northern Ireland in 21-22 compared to this financial year.

The Spending Review provides additional UK funding to help local areas prepare over 2021-22 for the introduction of the UK Shared Prosperity Fund.

Further details will be published in the New Year.

The UK Government has delivered on its manifesto commitment to maintain funding by providing £570m to support farmers, land managers and the rural economy, and £14m to support fisheries in Scotland.

The Government committed to boost local economies by establishing at least one Freeport in each of Scotland, Wales and Northern Ireland, with locations to be jointly decided by the UK Government and the devolved administrations.

And on the cultural front the Government announced £29.1m for Festival UK with projects expected across Scotland, Wales and Northern Ireland.

The UK Government’s recent announcement of record spending on defence will also directly benefit Scotland as it finances the UK’s order of 8 Type 26 and 5 Type 31 frigates, which are currently being constructed on the Clyde, creating thousands of jobs.

At this Spending Review Scotland, Wales and Northern Ireland will benefit from UK-wide coronavirus support in health, including £15bn for Test and Trace with Barnett funding provided for England-only elements of the programme.

RESPONSES

Responding to Rishi Sunak’s Spending Review, Roz Foyer, STUC General Secretary, said: “This Spending Review is a kick in the teeth to those very same workers Rishi Sunak was clapping months ago.

“Despite thousands of workers in the private sector surviving on furlough pay at 80%, Rishi Sunak choose to attack public sector pay. This is a levelling down agenda, not a levelling up one.

“Very few people will be fooled by his attempts to pit care workers against shop workers or low paid council workers against low paid cleaners. All need a decent pay increase, and they all need it now. If the Chancellor wants to equalise public sector and private sector pay, he should have ensured that workers cannot be furloughed on less than the minimum wage and increased the minimum wage to at least £10 per hour. 18 pence on the minimum wage is pennies, when we need pounds.

“£250 for lower paid public sector workers is the exact same policy introduced by George Osborne in 2010 and still amounts to a pay cut for many.”

Ms Foyer also criticised other funding announcements: “This was the moment to announce a massive fiscal stimulus to drive a green recovery and the Chancellor totally missed it.

“While we await details for the new National Infrastructure Bank and funding for the devolved administrations, the figures announced come nowhere near the amount needed.

“Moreover, instead of devolving funding and power to local communities, the Levelling Up Fund centralises control in Whitehall and enables the Treasury to pick and choose which pet projects it will support.

“Cutting international development funding to 0.5% of GDP shows that for all its talk of global Britain, this Government doesn’t really care for world’s most vulnerable.

“The Chancellor’s statement also did nothing to address the gaping holes in our social safety net. With unemployment likely to rise to 7.6% next year, the Government must commit, as a minimum, to continuing the £20 uplift in Universal Credit so people can weather that storm while they look for work.

“Workers in Scotland know that key workers deserve a pay rise. They will see through Rishi Sunak’s con trick.”

Jonathan Carr-West, Chief Executive of Local Government Information Unit Scotland, said: “Scotland now knows the amount of the block grant that it will receive. Those parts of the Spending Review that apply to Scotland show that the UK Government is not learning the lessons of the pandemic and that they remain wedded to an over-centralised approach. 

“Many will be struck by what was absent from Mr Sunak’s statement. For Scottish local government, it’s the big picture that matters as they wait to hear what Scottish Government allocations will be as each council decides on their budget priorities. How will the Shared Prosperity Fund be allocated? How will the impact of Brexit on local economies be mitigated? On these issues we have learnt nothing. 

“When it comes to infrastructure, the centralising tendency of the British state was on full display today. The £4 bn levelling up fund is to be administered by the Treasury, MHCLG and Department for Transport. Local areas will bid against each other and Whitehall will pick the winners. Proposals must have the support of their MP, but local government once again doesn’t seem to be part of the picture.”

Unite assistant general secretary Gail Cartmail said: “The chancellor Rishi Sunak has delivered a body blow to the public sector workers he has targeted to bear the brunt of the costs of the pandemic with a pay freeze – his so-called ‘pause’.

“It is doubly disappointing that the chancellor has adopted ‘divide and rule’ tactics over public sector pay with an award for NHS staff, but a freeze on pay for millions of others, such as teaching assistants, who are already low paid.

“The sop of £250 to the two million public sector workers earning under £24,000-a-year is insulting and compares badly with the inflated sums that the government has wasted on PPE contracts for those with links to the Tory establishment.

“This mainly female workforce already juggle work commitments, childcare responsibilities and care for elderly relatives yet kept vital services running throughout the pandemic, at times due to government failures in PPE provision, risking their own health in the service of others.

“It is also a blow to local economies and high streets where public sector workers spend a large proportion of their wages.

“The prime minister’s ‘levelling up’ agenda is in tatters as a result of the chancellor’s divisive pay announcement which does nothing to restore the ‘lost’ pay in real terms from a decade of austerity.”

Andrew Carter, Chief Executive of Centre for Cities said: “The Chancellor’s ambition to level up the country is welcome, as is the clarity on infrastructure in the national strategy.

“But for levelling up to succeed, it needs to be about more than infrastructure and one-off funds. We need to see sustained, multi-year investment and decisions like those announced by the Chancellor today – on skills, transport and housing – devolved and joined up at a local level.”

Chancellor delivers Coronavirus Budget

The Chancellor yesterday set out a £12 billion action plan in response to the economic impact of the coronavirus (COVID-19) outbreak, as part of a Budget that ‘delivers historic levels of public investment, levels up the country and lays the foundations for a decade of growth’.

Chancellor of the Exchequer Rishi Sunak said Britain will rise to the challenge of COVID-19, with a package of measures to support public services, individuals and businesses that may be affected by the outbreak.

In addition to responding to the immediate impact of COVID-19, the Chancellor pledged to put hardworking people first, put more money in their pocket, invest a record amount in infrastructure, boost public services, back business and set out a vision for a greener future.

A record half a trillion pounds (£640 billion) will be invested in Britain’s roads, railways and digital networks to give us the infrastructure that will support economic growth.

The Budget also provides billions of pounds to support our world-class public services; with funding for 50,000 more nurses and 50 million more GP surgery appointments a year.

Millions of families will have more cash to spend thanks to tax cuts through an increase in National Insurance thresholds and a cash boost to the National Living Wage (NLW). The Budget also takes action to support businesses of all sizes and accelerates the UK’s progress towards a greener economy. The Comprehensive Spending Review, which will set out the government’s detailed spending plans for this Parliament, was also launched today and will conclude in July.

Delivering the budget in Parliament Chancellor of the Exchequer Rishi Sunak said: “This Budget responds, at scale, to the immediate threat of Coronavirus and it reports on an economy whose foundations are strong. It is a Budget that provides for security today.

“This is a Budget that will deliver on our promises to the British people and it is the budget of a government that gets things done.

“We’re at the beginning of a new era in this country. We have the freedom and the resource to decide our own future.”

COVID-19

The Chancellor pledged to do ‘whatever it takes’ to support the economy through the disruption caused by COVID-19 with a £12 billion package of targeted measures. It included a £5 billion emergency response fund to support the NHS and other public services, £40 million of new funding for rapid research into COVID-19 and a commitment of up to £150 million to the International Monetary Fund’s Catastrophe Containment and Relief Trust.

To support people affected, the Chancellor announced the government would be extending Statutory Sick Pay (SSP) for all those who are advised to self-isolate and their carers – even if they haven’t yet presented with symptoms. Statutory Sick Pay costs for businesses with fewer than 250 employees will be met by the government in full for up to 14 days.

Rishi Sunak also set out plans to support the self-employed, those earning below the Lower Earnings Limit of £118 per week and a new £500 million Hardship Fund to directly support vulnerable people. The government will also increase the Business Rates retail discount to 100% for one year and expand it to the leisure and hospitality sectors.

Public services

By the end of the Parliament, day to day spending on public services will be £100 billion higher in cash terms than it is today. This Budget commits more than £6 billion of new funding in this Parliament to support the NHS, including to create 50m more GP surgery appointments, ensure there are 50,000 more nurses. The NHS Settlement provided the largest cash increase in public services since the Second World War – an additional £33.9 billion per year by 2024.

Levelling up and getting Britain Building

Billions of investment will be provided across the length and breadth of the country to support communities poorly served by old roads, communications and housing:

  • more than £27 billion will be spent on upgrading strategic roads and £2.5 billion will be spent on fixing potholes
  • £5 billion will go towards the rollout of gigabit-capable broadband in the hardest to reach areas
  • following the recent floods, which devastated parts of the UK, the Chancellor has pledged a record £5.2 billion over six years for flood defences

Cost of living

The Chancellor also put more money into the pockets of 31 million working people thanks to National Insurance Contribution thresholds increasing to £9,500, saving the typical employee around £104 a year from April, while the National Living Wage will increase to £8.72. This is on top a freeze in Fuel Duty, for the tenth consecutive year, and a freeze in duty rates for beer, cider and spirits, while the ‘Tampon Tax’ will be scrapped.

Backing Business

From April, small businesses will benefit from an increase to the Employment Allowance, reducing their employer National Insurance bills by £850 on average and there will be fundamental review of business rates.

Greener economy

To accelerate the UK’s progress towards net zero carbon emissions by 2050 and protect the environment for future generations, the Chancellor announced £500 million for electric car charging infrastructure, to ensure drivers are never further than 30 miles away from a rapid charger. Tree planting in England will increase by 600% and to tackle the scourge of single-use plastics, a consultation will be launched on introducing a Plastic Packaging Tax.

Support for the regions and nations

The Chancellor has also pledged to level up all parts of the UK, with measures to spread opportunity and ensuring everyone benefits from growth. He announced the West Yorkshire Devolution Deal, which will help the region boom through the creation of a Mayoral Combined Authority, while a government economic decision-making hub will be created in the North of England.

As a result of the budget:

  • the Scottish Government will benefit from a £640 million funding boost
  • the Welsh Government a £360 million funding boost
  • the Northern Ireland Executive a £210m funding boost

Scottish Secretary Alister Jack said: “This is a great budget for Scotland. Decisions taken by the UK Government over the last year will deliver an almost £2 billion funding boost for the Scottish Government.

“People and businesses right across Scotland will see the benefits – more than £5 billion for broadband and 4G connectivity, an increase in the national living wage, £22 billion for research and development across the UK, and a freeze in fuel duty.

“The Scotch whisky industry gets a welcome boost, with a freeze on spirits and a review of alcohol duty, and £10 million help to develop green technology. We will also invest £1 million in promoting Scottish produce to overseas markets.

“We will continue our extensive investment in growth deals across Scotland, now at almost £1.5 billion, with confirmation of £25 million UK Government funding for Argyll and Bute. Every part of Scotland will be covered by growth deals, with investment to be announced soon for Falkirk and the Scottish islands.”

Following decisions taken at this Budget, notably on funding for health business rates relief and roads, the Scottish Government’s resource and capital budgets in 2020-2021 will increase by over £220m and £410m respectively with a total increase of more than £640m.

The additional funding, when combined with the £1.3bn funding in 2020-21 provided at the Spending Round 2019, results in the largest year-on-year real-terms funding increase for the Scottish Government in a decade.

Further measures announced by the Chancellor can be found in this factsheet.

BUDGET REACTION

Rapid joint engagement is needed on funding for the COVID-19 response in Scotland following the UK Government’s Budget, Holyrood Finance Secretary Kate Forbes said.

Responding to the UK Budget, Ms Forbes said: “While I’m pleased to see the UK Government’s economic response to coronavirus following my calls for this at the UK Treasury yesterday, we need confirmation on what this will mean for Scotland.

“We require urgent clarification on what funding Scotland will receive from the announcements made by the UK Government, at a time when the prospects for the economy and public finances remain very uncertain as the short term impacts of COVID-19 unfold.

“It is vital that our businesses, employees, health service and the most economically vulnerable in our society are all protected through this time, and this additional funding will help us in our response.

“I will ensure that businesses in Scotland are supported and will work with the business community to identify the most effective measures available to us, when we have more clarity on the funding available.

“We expect full consequentials from this additional funding and need urgent clarification to provide clarity for Scottish businesses and NHS Scotland to ensure we can respond effectively.

“The Barnett consequentials announced today are in line with the assumptions that underpinned the Scottish Budget and Budget Bill passed by the Scottish Parliament last week. While this funding is welcome, our resource budget is still lower in real terms than it was in 2010/11.”

Rebecca Long-Bailey, Labour’s Shadow Business Secretary, commenting on the failure to tackle the climate crisis in the Budget, said: “By ducking the bold measures needed to tackle the climate emergency, the Chancellor has blown the biggest opportunity for national renewal since the post-war era, betraying current and future generations.

“This Budget piles investment into new motorways without bringing down the cost of public transport, and offers only derisory support for electric vehicles. There is no sign of the Tory manifesto commitment to invest £9.2 billion to lower energy bills, and the proposal to load the costs of carbon capture and storage onto consumer bills is particularly concerning.

“Elsewhere the Budget sets out a series of measures that seem designed to let our biggest emitters off the hook.

“The Chancellor says people in this country voted for change, but nobody voted for catastrophic climate change.”

Dame Carolyn Fairbairn, CBI Director-General, said: “In deeply challenging times the Chancellor has worked against the clock to deliver two budgets in one: a first for national resilience today and a second for economic ambition tomorrow. It’s a bold Budget at scale, coordinated with the Bank of England, which will help people and business through tough times.

“As the UK responds to the immediate challenge, people are the first priority. So the measures to expand and ease access to sick pay and benefits are vital to protect people’s health and livelihoods.

“The Chancellor’s actions on business rates, emergency funds and loans will help ensure firms can weather the storm, especially smaller firms. Larger firms may also need support as the situation develops.

“Covid19 will bring new challenges daily which will need to be resolved, at speed. “Today’s impressive economic response should now evolve with business insight to become as agile as our approach to public health.

“While the response to Covid19 is urgent, it is very good to see this Budget’s focus on innovation and infrastructure. The Chancellor has listened to many calls from CBI members, with decisive action on vital long-term issues.

“The significant uplift in R&D funding, creation of a UK version of ARPA, a fundamental review of business rates and spending promises on infrastructure will all bring real benefits to people, business and communities.

“The Chancellor has set out some powerful incentives to get businesses investing, increasing the R&D tax credit and the Structures and Buildings Allowance. The £5bn of new export loans will encourage the best of UK business to look to new global markets.

“The next few months will bring opportunities for the Government to make major decisions that they have understandably had to put to one side today. Some gaps still need to be filled in around skills, energy efficiency and powering the UK’s low carbon future.

“Overall, today’s budget is a powerful signal to firms at home and abroad that the UK can and will manage the immediate challenges and long-term opportunities in parallel.”

TUC General Secretary Frances O’Grady said: “The government’s coronavirus plans will leave millions of workers behind. Without urgent action, too many will be plunged into poverty and debt.

“Today’s announcements won’t help the nearly 2 million people who miss out on sick pay because they don’t earn enough. Telling them to turn to the broken benefits system isn’t good enough. We need decent sick pay for all.

“Ministers must now urgently bring together unions and employers to talk about how to support jobs, including through wage subsidies for short time working schemes, and further help for public services – especially social care.”

On investment announcements, she added: “This spending u-turn is badly overdue. The priority now must be to repair the damage of ten years of Tory devastation.

“Helping working families and rebuilding public services must come first. And we need to see concrete action on the challenges of the future.

“This means banning zero hours contracts, sorting social care, ending the UK’s dire regional inequalities, setting out a credible plan to achieve net zero, and getting an EU trade deal that supports jobs and workers across the UK.”

Fraser Sime, regional director for Scotland at Bank of Scotland, said: “The announcement of £1m support towards Scottish food and drink exports is extremely encouraging.

“We have a team of relationship managers that work specifically with this industry across Scotland to support growth, both at home and overseas, and today’s development will further help local firms capitalise on new opportunities.

“With 120 active distilleries in Scotland, the investment of £10m into the research and development of more sustainable practices will assist the industry in reducing the environmental impact of our national tipple. To support this, our Clean Growth Financing Initiative also offers discounted lending to introduce measures to create more renewable energy sources for businesses.”

Jonathan Carr-West, Chief Executive of LGiU, said: “Understandably, this budget was dominated by the Government’s response to coronavirus. No one could argue with that, but for councils across Scotland it provides more questions than answers.

“Social care has been all but absent in the response to Covid-19. Hospitals will not be able to cope if large numbers of older sufferers cannot be discharged because of a lack of social care provision and social care providers will not be able to cope if a fifth of their already stretched workforce is off sick. This could create a dangerous and vicious circle. Mr Sunak promised “whatever it takes” for the NHS, but once again, risks forgetting the symbiotic relationship between health and social care.

“The Growth Deal in Argyll and Bute, help for whisky distillers and support for a campaign to promote Scottish food and drink will be welcomed by local government across Scotland, but many will be concerned that these are only small steps being taken to reverse the decade of funding cuts experienced in Scotland.

“Elsewhere in the budget, announcements on infrastructure, science, further education and research and innovation all look to a longer term future. Local government must have a role to play in making these happen but there remain questions about its capacity to do so after a decade of contraction.

“So, we had a budget designed to cope with an immediate crisis whilst also setting out significant spending and a vision for a long term economic transformation. Councils will be at the front line of our response to coronavirus and will be a crucial player in this transformation. However, local government may feel that it has dropped through the middle somewhat as the Government attempts to get so many other things done.”

Commenting on the UK Government’s Budget yesterday, Scotland Director for CAMRA Sarah Crawford said: “CAMRA welcomes the freeze in beer duty – which is a UK-wide tax – but we want to make sure brewers and pub companies pass on any savings on to pub-goers. 

“In the upcoming review of alcohol taxation we will be arguing for a cut in beer duty for beer served on tap, which would be the best way to support community pubs.

“Yesterday’s Budget also sees cuts and reliefs to the burden of Business Rates for pubs in England. CAMRA is calling on the Scottish Government to introduce further support and pub-specific rate relief schemes here to help our pubs cope not only with the short-term impacts of coronavirus, but also with the year-round effect that business rates have on the ability of our locals to stay open and thrive. We’d also like to see fundamental changes to the Business Rates system to make sure it is fairer to pubs.

“Cutting duty for draught beer in pubs and changing the Business Rates system are both vital steps to saving community pubs across Scotland from closure.”

Nimesh Shah is a Partner at leading accounting and tax advisory firm Blick Rothenberg. He summed the Budget:

“Today marked the first Budget for the new Government, the first for a new Chancellor who has only been in the job a few weeks and the first for almost 18 months. It could, however, be the first of several budgets in 2020.

“In a Budget overshadowed by COVID-19, the Chancellor started by announcing a package of measures aimed at easing the burden for individuals and businesses, including extending Statutory Sick Pay, offering a reduction to Business Rates for small businesses and allowing more time to pay taxes.

“The Chancellor’s hands seemed to be slightly tied, and the only notable change for workers was an increase to the National Insurance threshold to £9,500 providing a £100 annual saving.

“For the first time in 10 years, there was no increase to the personal allowance, which remained at £12,500. In fact, there were no changes to the majority of the personal tax thresholds with the basic rate band, inheritance tax nil rate band and the high-income child benefit threshold all untouched.

“In a measure aimed at appeasing NHS doctors and consultants, the pensions annual allowance will only begin to reduce for individuals with income above £240,000 (currently £150,000). However, at the other end of the spectrum, the minimum pensions annual allowance will be reduced to £4,000 (currently £10,000), affecting individuals with income above £300,000.

“The Chancellor wielded an axe on Entrepreneurs’ Relief without going as far as abolishing it completely. In an overnight move (which has its own complexities), the Entrepreneurs’ Relief lifetime allowance was slashed from £10 million to £1 million, reducing the tax saving to £100,000. Apparently, the reduced limit should only affect 20% of entrepreneurs while raising £6.3 billion for the Treasury in the process over the next five years.

“Entrepreneurs’ Relief has gone full circle, as the limit was £1 million when first introduced in 2008 and worth £80,000. At a time when all UK businesses are facing hugely uncertain futures, it was disappointing that the Chancellor, only a few weeks into the job, decided to make the move without any review or consultation.

“For the first time in many years, there were few changes to property taxes, with the Government moving ahead with a 2% SDLT surcharge for overseas buyers, which will take effect from April 2021 (presumably to encourage overseas buyers to transact before a higher SDLT cost applies).

“However, it’s worth noting that several property tax changes are due to take effect from 6 April 2020, including a reduction to main residence relief, the mortgage interest relief restriction taking full effect and reducing the timeframe in which capital gains tax should be paid to 30-days when selling a residential property.

“The only giveaway for savers was an increase to the Junior ISA limit to £9,000. At a time when the stock markets have tumbled and interest rates cut, pensioners and savers may have been looking to the Government for some help.”

This year’s winners and losers: who will be better off?

George Parker and Harriet James are Assistant Managers at leading accounting and tax advisory firm Blick Rothenberg

Winners

All earners

An increase in National Insurance Contribution (NIC) thresholds is a welcome move for all employees and the self-employed. The threshold will increase from £8,628 to £9,500, resulting in an annual NIC saving of £104 for employees and £78 for the self-employed.

Saving for retirement

From 2020-21, the thresholds used to calculate the tapering of the annual allowance will be increased so that workers with ‘adjusted net income’ of below £240,000 are not affected by the reduced limits.

The annual allowance is the total amount an individual and employer can contribute into their pension fund without incurring a tax charge.

Children under 18 years old

Junior ISA and Child Trust Fund annual subscription limits will increase by £4,632 from £4,368 to £9,000 – a massive uplift.

Losers

Entrepreneurs

Entrepreneurs Relief (ER) Lifetime Allowance will be reduced from £10m to £1m affecting an estimated 20% of business owners. Going forward, only the first £1m of capital gains arising on the sale of an individual’s business will be taxed at 10%, with the remaining gain being taxed at 20%. Harsh anti-avoidance rules have also been introduced, backdated from April 2019.

Top earners

Currently individuals with an ‘adjusted net income’ in excess of £210,000 have their annual allowance tapered to £10,000. From April 2020, the allowance will be tapered to £4,000 for individuals with total income above £300,000. Any excess contributions over the new tapered annual allowance will be subject to tax at 45%.

Companies investment in plant and machinery

The favourable – yet temporary – Annual Investment Allowance (AIA) of £1million will come to an end on 31 December 2020, reducing by 80% to £200,000 per year.

Pensioners

The forgotten in this Budget are pensioners. With no reforms or simplification to Inheritance Tax announced, with the personal allowance and income tax thresholds remaining unchanged, and as they do not pay NIC, inflation will drag more pensioners into higher taxes. Based on forecasted inflation at 2%, many pensioners will be worse off in real terms.

Capital Coalition votes to slash services

Edinburgh’s ruling SNP-Labour ‘Capital Coalition’ voted though cuts of £35 million to public services last night – and agreed to raise Council Tax by almost 4.8%. Labour councillor Gordon Munro abstained.

And if you think the cuts will end after next year, think again: the Council set a three year budget and plans to make cuts of £87 million over the next three years.

Council leaders say the budget will protect vital services, but opposition parties argue that the scale of the cuts will damage communities.

SNP Cllr Adam McVey, Council Leader, said: “We’ve agreed a bold budget which protects the most vulnerable in society and guarantees a fairer quality of life for future generations. It prioritises those Council services which work to help those who are most in need of our support – protecting our young people, our communities and our planet in the process.

“In the face of growth and a global climate emergency, we’ve outlined plans for the biggest investment ever to be made into new, sustainable and affordable homes in Edinburgh.

“The people of Edinburgh have told us they want their city to be sustainable, to be fair and for frontline services to be protected. That is what we are delivering with a budget which invests in the services our city needs. I’d like to thank fellow Councillors for standing up for a plan which is fair and sustainable.”

Labour Cllr Cammy Day, Depute Leader, said: “The plans passed today support new schools, sustainability and the regeneration of this city and I’m pleased we’ve been able to – yet again – agree a balanced budget, despite the ongoing financial uncertainty we and all local authorities face.

“This forward-thinking approach will provide much greater certainty to residents, to workers and to partners right across the city and will help us tackle poverty in all its forms.

“Under today’s budget, this Council is committing to do all that we can with the resources we have to improve residents’ lives and protect those services which are vital to our most vulnerable citizens. This will be supported by the thousands of new, affordable homes we’ll help to build and the community regeneration we’ve pledged to deliver.

“For too long we’ve turned our back on our fantastic waterfronts and this budget plan will allow us to move forward with our plans to regenerate Granton, providing new homes and a fantastic community for people to work and visit.”

Far from moving forward, Lib Dem councillors Kevin Lang and Louise Young believe the budget is a backwards step.

Commenting last night, the brother and sister councillors for Almond ward said: “We are sorry to say the SNP’s Council budget was passed tonight. We argued strongly for our alternative which avoided the worst of the service cuts but the votes weren’t there.

This means:

❌ an end to all Council funding for community policing, putting dozens of officer posts at risk.
❌ removing all 130 teachers from our nurseries.
❌ a big cut to headteacher school budgets.
❌ slashing the funding for local sports and leisure centres.
❌ opening the door to library cuts.

“The SNP also refused to accept our fully costed plan to put more money into road and pavement repairs or into new park playground equipment.

“We always try to be optimistic but there’s no getting away from the fact this is a bad budget for our constituents.”

Earlier this week the Convention of Scottish Local Authorities warned that the Scottish Government’s Budget will hit vulnerable communities the hardest.

COSLA said the Government has not considered successive years of cuts, or rising inflation and demand and have therefore put council services at risk.

Councils have said they believe the budget will have a major impact on the Government’s ability to address the four priorities of inclusive growth, tackling child poverty, wellbeing and climate change, and puts Scottish Government commitments at risk if no further funding is found as part of the Budget Scrutiny process.

COSLA’s view is that taken on its own, the Scottish Government’s announcement of an additional £495m for councils is misleading to communities.

Councils are required to deliver an additional £590m worth of new Scottish Government policy commitments, resulting in a cut to council budgets of £95m. It is vital to note that this doesn’t account for inflation and therefore the real terms cut to the Local Government revenue budget is nearer £300m.

The draft capital budget is equally as devastating. Whilst £54m of new capital money has been announced this is negated by £171m worth of Scottish Government commitments. This leaves a £117m cut to core capital budgets of 17%. Again, if we include inflation the real terms cut to capital budgets is £130m.

This settlement does not address any of the restoration called for in light of many years of cuts.

Speaking ahead of an evidence session at the Scottish Parliament’s Local Government and Communities Committee on Wednesday, COSLA Resources Spokesperson Councillor Gail Macgregor said: “COSLA has campaigned hard in recent months for the Scottish Government to address falling Local Government budgets.

“We called for Scottish Government commitments to be funded, inflation to be accounted for and restoration to the budget to reflect successive years of cuts to Local Government. It is unfortunate that a sphere of government in this country has not been listened to. 

“This draft budget will impact on jobs, frontline services and Local Government’s ability to address inclusive economic growth, child poverty, wellbeing and climate change and does not address the growing demand most councils are facing in relation to services.”

COSLA President Councillor Alison Evison added: “Recent benchmarking statistics have shown that 10,000 FTE jobs have been lost in Local Government since 2010/11. The impact of this on communities is real and cannot continue. 

“We are calling on Scottish Government and the Parliament to address these concerns, listen to our asks and prevent the loss of essential council services which communities rely upon.

“Make no mistake, councils and the services which communities rely upon will be at risk as a result of this budget.”

Councillors voyed to raise Edinburgh’s Council Tax by 4.79%. The tax band levels for Edinburgh in 2020/21 will come into effect on 1 April 2020 and will be:

A – £892.39

B – £1,041.13

C – £1,189.86

D – £1,338.59

E – £1,758.76

F – £2,175.21

G – £2,621.41

H – £3,279.55

Enough is enough!

Councillors will meet tomorrow to discuss six steps for boosting sustainability, tackling poverty and improving residents’ wellbeing over the course of the next decade. The meeting comes a week before the city council sets it’s budget – a budget which UNISON says will slash council services with another £33 million in CUTS in the year ahead.

Designed to secure Edinburgh’s spending priorities, in the context of increasingly challenging financial circumstances, the six programmes of work are contained within a report detailing the next phase of the Council’s Change Strategy.

Members of the Finance and Resources Committee will consider the suggestions alongside detailed proposals for agreeing the city’s annual budget next week (20 February) and planned savings of £87.3m over the next three years.

One year into a four-year plan, the Change Strategy has already achieved savings of over £30m for the Council, while delivering improvements to frontline services across the city and major investment towards health and social care, the building of new schools and thousands of affordable homes.

Since last year’s budget, the Council has made significant progress against its target to deliver 10,000 new affordable homes by 2022, with 2,000 homes currently under construction across 35 sites.

A £153m improvement is making upgrades to nearly 600 buildings, with £67m spent building new or refurbishing schools, while an additional £15.7m has been put towards health and social care.

The start of the tram to Newhaven extension is underway – we’ll have to wait and see what the final cost of that particular project will be – and more than £7.4m has been invested into active travel and cycling around the city, alongside an £11m street lighting upgrade to LED.

The next phase of the council strategy builds on this work, identifying six programmes with practical steps for continuing to achieve Edinburgh’s spending priorities in this year’s Council budget and beyond.

The six programmes are:

  • Prioritising poverty and wellbeing

Developing a long-term Prevention Strategy based on the results of the Edinburgh Poverty Commission and the findings of the Homelessness Taskforce, and redesigning Council services which maximise residents’ wellbeing.

  • Working to reach net zero carbon

Co-sponsoring the establishment of the Edinburgh Commission for Climate Action – an independent body that will advise and support the whole city to play its part in protecting our environment for future generations – and building on the city’s Net Zero short-term improvement plan with a City Sustainability Strategy.

  • Building an inclusive city

Finalising and actioning a new City Plan and City Centre Transformation strategy to guide the future shape of the city and fulfilling the ambitions of Edinburgh’s 10-year City Mobility plan to change the way that people move around the city.

  • Operating a 21st Century estate

Launching a new Land and Property Commission to better identify sites for new housing, release depots and yards for redevelopment and capital for investment, reduce costs and carbon emissions – complemented by a new Estate Strategy examining all aspects of how the Council runs and maintains buildings and land.

  • Being an efficient and modern Council

Paying the baseline Living Wage to all employees, working to close the gender pay gap and improve diversity, and breaking down stigma associated with mental health conditions. We will also be reviewing senior management structures and costs.

  • Empowering citizens and empowering colleagues

By introducing new standards for consultation and co-designing services across the Council and fulfilling our commitment of 1% of council budgets being invested through participatory budgeting by 2021.

Council Leader Adam McVey said: “We need to think big and be bold to become the type of city people have told us they want to live and work in – an inclusive, sustainable and progressive city which prioritises frontline services and its most vulnerable citizens, puts an end to poverty and acts now against climate change – and we shouldn’t be afraid to make challenging decisions in order to get there.

“That’s why we’re changing the way we do things, committing to a longer term, three-year budget plan, paving the way for record capital investment in areas like new schools, new affordable new homes and sustainable transport. The six steps outlined in this report will make sure we remain focused on our key aims while providing the best services possible for the people of Edinburgh.”

The SNP can’t run the city on their own, of course, and they are supported by Labour in a ‘Capital Coalition’ which has been coming in for increasing criticism.

Capital Coalition Depute Leader, Labour’s Cllr Cammy Day, said: “Like all Councils, we’re facing unprecedented levels of financial uncertainty and we’ll need to make tough choices in order to prioritise the big changes Edinburgh wants and needs.

“The six areas have been shaped by many years of feedback, through our budget consultations with tens of thousands of Edinburgh residents. This is about focusing on frontline services which lift people out of poverty and support Edinburgh’s ambitious sustainability goals.

“Most councils will currently be considering how to set a one-year budget. We’re going further by looking at how we will balance our budgets over the next three years. We’ll do this while also continuing to push for the powers we need to introduce innovative new funding mechanisms for Edinburgh, such as the tourist tax and workplace parking levy.”

ENOUGH IS ENOUGH

Local government trade union UNISON is urging it’s members and the general public to say ENOUGH IS ENOUGH and stand up for our local jobs and services.

The union is holding a Council Budget Day Lobby from 08.30 – 10:00 at the City Chambers on the High Street

  • Stress levels at breakdown point
  • Further £33m in cuts.
  • Health & Social Care Funding Crisis
  • Hundreds of jobs to go
  • Outsourcing back

Budget overshadowed by Mackay scandal

Investing in vital public services and ending Scotland’s contribution to climate change are at the heart of the Scottish Government’s tax and spending plans for the year ahead, according to the Scottish government – but critics say the budget is another wasted opportunity and will mean yet more cuts to public services.

Yesterday’s budget was completely overshadowed by the shock resignation of Finance Secretary Derek Mackay, who left office just hours before the budget was due to be presented following a newspaper expose.

Public Finance Minister Kate Forbes stepped in to deliver the budget.

Setting out the Scottish Budget 2020-21, Ms Forbes announced a package of funding to accelerate Scotland’s transition to a net-zero economy, including £1.8 billion of investment in low carbon infrastructure which will help reduce emissions.

She also announced a record investment of £15 billion in health and care services and £645 million for the expansion of early learning and childcare.

The Scottish Budget 2020-21 also proposes:

  • £117 million investment in mental health for all ages and stages of life
  • £180 million to raise attainment in schools
  • an above real-terms increase of £37 million to the police budget and an additional £6.5 million to support community justice to reduce re-offending
  • £220 million of seed funding for the Scottish National Investment Bank to support its mission to drive the transition to a net-zero economy
  • increased investment of £270 million in rail services and an additional £16 million in concessionary travel and bus services, taking total investment in rail and bus services to around £1.55 billion
  • increased investment of £5.5 million in active travel
  • £20 million for peatland restoration with a commitment to invest more than £250 million over 10 years
  • Investment of more than £64 million to support the commitment to plant 12,000 hectares of forestry, with the aim to reach 15,000 hectares by the mid-2020s
  • a new £120 million Heat Transition Deal and a total investment of £151 million in energy efficiency
  • £40 million for an Agricultural Transformation Programme
  • a 3% pay uplift for public sector workers earning up to £80,000

Ms Forbes said: “The global climate emergency is at the centre of our Programme for Government and we have already put in place the most ambitious climate legislation and targets of any country. This Budget will help deliver on that world-leading ambition.

“From increased investment in low carbon transport to funding for peatland restoration and forestry, this Budget sets out our spending plans to help us deliver the transformation we need across society to transition to net-zero.

“We have also put wellbeing firmly at the heart of this Budget to benefit as many people as possible across the country. We will do this through prioritising inclusive economic growth with the creation of high quality jobs, supporting our public services and tackling inequalities head on.

“We estimate that we are investing at least £1.4 billion to support low-income households, mitigating the worst effects of the UK Government’s benefit cuts which are hitting the poorest in society and our Scottish Child Payment will help lift 30,000 children out of poverty when it is fully rolled out in 2022.

“I urge the Parliament to work constructively with us to pass this Budget in the national interest.”

The budget has come in for criticism, however.

STUC General Secretary Grahame Smith said: “This budget is long on promise but falls short on delivery. Positioning the budget as building the well-being economy is to be welcomed but far more was required to make that a reality.

“There is no doubt that the UK Government’s approach to Budget setting has left the Scottish Government in a difficult position. But to tackle the ‘crippling reality of austerity’ requires investment in decent local services. At best the budget provides only half of what local councils say they desperately need.

“We welcome the freezing of the higher rate tax threshold but much more is needed on redistributive taxation if the well-being economy is to be achieved.

“The Scottish government has missed an opportunity to commit to building the homes for social rent desperately needed in Scotland. By the next budget, it will be too late and local authorities and housing associations will have downed tools, without the funding to continue to build more homes for social rent. It is also disappointing that there are minimal new financial commitments in social security.

“On pay we are pleased that the government has listened to unions and extended the 3% pay increase to those earning over £40k per year, however we are a long way short of the much-needed restoration on public service pay to pre-austerity levels.

“While there are some new measures to tackle climate change, the funding levels proposed are still not sufficient to tackle the climate emergency.

“Given the failure over a number of years to create the new green jobs once promised, it is crucial that new funding comes with new jobs and does not simply provide cash handouts to big business and landowners.

“To be worthy of the name of a Green New Deal would require a publicly led and planned approach to decarbonisation involving publicly-owned companies, something this Budget fails to do.”

Jim McCormack, Associate Director of Joseph Rowntree Foundation Scotland, said: “This Budget was an opportunity to show the Scottish Government’s ambition to deliver on tackling poverty, yet today’s statement falls short of the mark.

“It cannot be right that one in four children in Scotland have their lives restricted by poverty. At the start of the decade in which all parties have pledged to solve child poverty, we welcome the financial commitment to introduce the Scottish Child Payment. But we know this won’t be enough to turn the tide: Scotland is not on track to meet the ambitious targets set for 2023-24.

“Scotland’s lower levels of child poverty compared with the rest of the UK are due to lower housing costs. If this advantage is to be maintained then the affordable homes programme needs to be continued beyond 2021. Now is the time to commit to further investment in secure, affordable homes for those facing rising rents and stuck in temporary accommodation.

“In-work poverty is a pressing economic challenge for families. Two-thirds of children in poverty are in families where an adult is working. The new Parental Employment Support Fund is too small to meet the scale of the challenge and only runs for two years. Investment should be increased and extended to benefit more families for longer.”

COSLA said it was disappointed that once again the Scottish Government has presented a Budget for Local Government that looks much better than the reality behind the figures.

Speaking this afternoon following the Scottish Government’s (Thursday) Budget announcement, COSLA’s Resources Spokesperson Councillor Gail Macgregor said: “On the face of it this looks like a good Budget for Local Government with a cash increase of £495million and whilst we acknowledge this money, the reality behind this figure unfortunately is quite different.

“What we are left with when you factor in the Scottish Government commitments of £590million – is a cut to Local Government core budgets of £95 million. This is £95 million in hard cash that will need to be taken out of front line services for communities. We campaigned hard to ensure that this position did not happen – it is disappointing our message has not been listened to.

“When you add in a £117million cut to capital funding (which equates to a 17% cash cut) – a hit to both communities and growing the economy you are left with a crisis for Local Government which is a long way from the picture being painted. This is even worse when seen in the context of an increasing Budget for the Scottish Government.

COSLA President Councillor Alison Evison added: “Local Government’s core budget which provides our essential services has been cut as a result of today’s budget. A cut of a significant proportion is the Budget Reality that our Communities now face – a cut to services, a cut to local jobs, a cut to the work councils do to tackle child poverty and respond to climate change.”

“In addition to the cuts – it is also extremely disappointing that we have seen no money for inflation or any other of the significant pressures we face, such as restoration for cuts to our funding in previous years. COSLA will be raising these issues with the Scottish Government and all parties across the Parliament at the earliest opportunity to ensure this picture is rectified as part of the budget scrutiny process. It is our communities and the priorities of tacking child poverty, wellbeing, climate change and inclusive growth that will suffer.

“Things cannot go on in this manner. I am really concerned that more and more of what Local Government does is directed by the centre. As a result of the Scottish Government commitments that Local Government has to deliver we are no longer able to respond to local priorities.”

The Scottish Government argues that the budget offers a real terms increase for local government, hower. Cabinet Secretary for Local Government Aileen Campbell said: “This budget provides a fair settlement for our partners in local government and supports vital public services across Scotland.

“Taken together with the flexibility to increase council tax, this local government settlement gives councils an increase of revenue spending of up to 4.3% in real terms to deliver local services.

“The settlement will deliver on our joint key commitment to expand the funded hours of early learning and childcare this year, funds a fair pay deal for our teachers, and invests more than £120 million targeted at closing the attainment gap through the Pupil Equity Fund.

“This increased settlement will ensure fair, sustainable funding for local authorities.”

 

Mackay to deliver ‘Green Budget’

Scottish Budget to prioritise the climate emergency

Tackling the global climate emergency will be at the heart of the Scottish Budget this week. Speaking ahead of the budget, Finance Secretary Derek Mackay said: “This week I will set out the Scottish Government’s spending plans for the year ahead.

“The global climate emergency was at the centre of our Programme for Government and will be a priority theme in the budget this week.

“We have already put in place the most ambitious climate legislation and targets of any country including decarbonising Scotland’s railways by 2035 and making the Highlands and Islands the world’s first net zero aviation region by 2040.

“This budget will set out how our spending plans and investments will help us achieve these ambitions.

“We will also provide certainty for local government and vital public services. Despite the delay to the UK Government announcing its budget, we will confirm individual local authority funding allocations, having already announced that we are giving them the flexibility to increase their council tax levels by up to 3% in real terms.

“We will not stand by while the UK Government’s benefit cuts are hitting the poorest in Scotland so we will continue to mitigate the worst effects of these cuts to support low income households and tackle child poverty head on.

“I am focused on delivering a budget that promotes inclusive economic growth and puts wellbeing at the heart of our economic strategy to ensure as many people as possible across the country benefit.

“However, as we set out our spending priorities for the year, Brexit remains the biggest threat to our economy and the risk of a ‘no deal’ Brexit is still on the table with the UK Government ruling out any extension to the transition period.

“In a period of great uncertainty caused by Brexit, the national interest demands that the Scottish Parliament passes this budget in good order, and I urge all parties to work constructively to ensure that happens.”

Council will set budget on 20 February

The city council has announced a new timetable to enable councillors to agree a three-year budget on 20 February.

Following confirmation from the Scottish Government that the Cabinet Secretary for Finance, Economy and Fair Work intends to outline his spending plans on 6 February, a special Finance & Resources Committee has been added to the council diary on 14 February, where proposals for spending and investing will be considered in more detail.

A series of proposals developed by Council officers, which have been shared with all political groups in the City Chambers, will be developed into Coalition proposals and published on 10 February.

No decisions have yet been made and officers continue to explore a number of options based on previous feedback from residents and council employees.

However whether the budget is for one year or three, one thing is inevitable: communites face yet more cuts to services.

Council Leader Adam McVey said: “Despite the uncertainty brought about by delays to the UK Government’s budget announcement, we’re committed to setting a balanced three-year budget for Edinburgh – paving the way for record capital investment in our schools and transport over the next 10 years.

“We’ve already started outlining our long-term plans for making the city more sustainable and accessible while managing our city’s growth more fairly and effectively. But to reach these goals, we need to act now and make the smartest use of the resources we have available.

“Yes, there will be some difficult decisions we’ll need to make – that’s no secret. But it’s extremely disappointing that budget information, much of it inaccurate, has found its way into the public domain, causing unnecessary alarm in our communities.

“We won’t let this cloud the process or stand in the way of our priority, which is to agree the best budget for the people of Edinburgh; one that supports people out of poverty, responds to the climate crisis and allows our residents to share in our city’s success.”

The ciy council is currently run by a SNP – Labour ‘Capital Coalition’ – the majority SNP group supported by Labour’s twelve  councillors.

Council Depute Leader, Labour’s Cammy Day, added: “While many Councils across the country will be meeting next month or even later to set a one-year budget, we’re going further, outlining our spending plans until March 2023.

“Despite challenging budgets and continued pressure on local government finance, we will set a three year budget to allow the Council, partner organisations and our residents some certainty for the next few years.

“We will prioritise and invest in the areas our citizens have told us really matter to them, with a focus on poverty and sustainability. I’m confident that our future planning will see the capital city with a positive and progressive outlook for the future.”

Decade of Renewal? Chancellor launches Budget process

  • Chancellor says Budget will set out ambitious plans to unleash Britain’s potential, level up across the UK and usher in a decade of renewal
  • Budget will start a new chapter for the economy, seizing the opportunities that come from getting Brexit done

Continue reading Decade of Renewal? Chancellor launches Budget process

Battling poverty is the focus for plans to change Capital, says Finance Convener

Councillor Alasdair Rankin, the city council’s Finance and Resources Convener, highlights how the Council is “embracing opportunities despite budget constraints“:

budget

All over the country, in support of Climate Week Scotland and Challenge Poverty Week, citizens, agencies and other groups are raising their voices and speaking out about the very real impact of poverty and climate change. How fitting, then, that we’re taking action in Edinburgh to prioritise poverty and sustainability in all of the budget decisions we make. Continue reading Battling poverty is the focus for plans to change Capital, says Finance Convener