£500 million in savings to ease ‘enormous’ pressure on public finances
Holyrood’s Finance Secretary Shona Robison has outlined the urgent action being taken to balance the 2024-25 Scottish Budget in the face of “enormous and growing pressure on the public finances”.
Highlighting the continuing effects of Brexit, the COVID-19 pandemic, the war in Ukraine and the cost of living crisis, alongside UK Government spending decisions, Ms Robison said difficult decisions were required.
The total savings, worth up to £500 million, include:
Implementing emergency spending controls across the public sector, particularly targeting recruitment, overtime, travel and marketing
Ending the ScotRail Peak Fares pilot
Mirroring the UK Government’s policy to means test Winter Fuel Payment
Making additional savings across portfolios, including in sustainable and active travel and in health and social care
The Finance Secretary said she was also currently planning to use up to £460 million of additional ScotWind revenue to address in-year pressures in 2024-25.
Ms Robison said: “This Government has consistently warned of the significance of the financial challenge ahead.
Prolonged Westminster austerity, the economic damage of Brexit, a global pandemic, the war in Ukraine, and the cost of living crisis have all placed enormous and growing pressure on the public finances.
“In the last three years alone cumulative CPI inflation has seen prices increase by 18.9%, diminishing how far money will go for households and governments alike.
“In the face of these challenges, the Scottish Government has stepped in to support people and services where it has been needed most: on social security, health and public services. But we have done so without equivalent action from the UK Government, which has repeatedly failed to properly review the adequacy of funding settlements.
“We cannot ignore the severe financial pressures we face. We will continue to be a fiscally responsible government and balance the budget each year, as we have done every year for 17 years and as we will do again this year. But this will mean we must unfortunately take difficult decisions along the way.”
Responding to today’s statement by Scottish Government Finance Secretary Shona Robison, Poverty Alliance chief executive Peter Kelly said: “People in Scotland believe in justice and compassion. They know that we need a strong social foundation so we can look out for each other and help people build a life beyond the injustice of poverty.
“But we’re now being left with holes in the fabric of Scottish society that will likely make life even harder for people on low incomes who are already being pushed towards debt, hunger, homelessness, and destitution. That is completely unjust, irresponsible and unnecessary.
“We are a rich country, and our collective wealth has grown massively over the decades. Past generations used that wealth to plan and budget for the public good, and MSPs and Ministers must now urgently use their powers over tax and investment to build a better, fairer future for all of us – and especially those in poverty. Economic growth will not fix the holes in society, unless it comes along with increased social investment.
“We are very concerned about the effect of cuts to mental health support and adult social care. We know that people in poverty are more likely to need that support, and data shows a growing risk of poverty for disabled people.
“We are deeply disappointed that plans to expand concessionary bus travel to people in the asylum system have been scrapped, along with a return to peak fares on ScotRail. We all need the freedom to travel, but too many of us simply can’t afford the fares.
“Organisations like the STUC and IPPR Scotland have published concrete plans that show how the Scottish Government can use powers over tax to invest billions of pounds every year in our shared society.
“We can build better budgets that give people the means to build a better future, to create a true wellbeing economy that supports fair work, and a just transition to the net zero future that we urgently need.”
Reacting to the Scottish Government’s Pre-Budget Fiscal Statement, STUC General Secretary Roz Foyer:“With every cut announced by the Scottish Government today, workers and communities across Scotland will be scarred for generations to come.
“For over two years now, we’ve told the Scottish Government they had almost £3.7 billion worth of untapped revenue at their fingertips through increasing tax on the rich. They could have acted. They chose not to. We are in no doubt that brutal Tory austerity has had an undeniable impact on Scotland’s finances. But the Scottish Government must take responsibility for their own cuts. They cannot be allowed to escape scrutiny.
“Public sector workers have faced more than a decade of falling real wages, lagging far behind those in the private sector. Those workers not only have the right to demand above inflation pay rises, but, if our public services are to improve, improvements in pay are non-negotiable.
“All eyes now turn to the Chancellor but it’s a shambles that we’re awaiting some form of salvation, if any is forthcoming, from the UK Government when our government in Holyrood could have done so much more.
“The people of Scotland do not want a Scottish Government that administers cuts while annunciating the droopy mantra of ‘it wizny me’. They want politicians that choose to govern – and that means taxing the rich to invest in the services that we all rely on.”
Ms Robison also proposed that the next Scottish Budget takes place on the 4th December, subject to the agreement of FPAC and the Scottish Fiscal Commission.
A £6.3 billion investment in social security and more than £19.5 billion for health and social care form the heart of the Scottish Budget for next year, alongside record funding for local authorities and frontline police and fire services.
With targeted funding to invest in public services and protect the most vulnerable, the Budget underpins the social contract with the people of Scotland, Deputy First Minister and Finance Secretary Shona Robison told Parliament. She also outlined policies to grow the economy and progress the commitment to deliver a just transition to net zero.
Difficult decisions have been required to prioritise funding for the services people rely on in the face of a deeply challenging financial situation, Ms Robison added.
The 2024-25 Scottish Budget includes:
£6.3 billion for social security benefits, which will all be increased in line with inflation. This is £1.1 billion more than the funding received from the UK Government for devolved benefits in 2024-25
£13.2 billion for frontline NHS boards, with additional investment of more than half a billion – an uplift of over 4%
record funding of more than £14 billion for local government, including £144 million to enable local authorities to freeze Council Tax rates at their current levels
more than £1.5 billion for policing to support frontline services and key priorities such as body-worn cameras
almost £400 million to support the fire service
£200 million to help tackle the poverty-related attainment gap, almost £390 million to protect teacher numbers and fund the teacher pay deal, and up to £1.5 million to cancel school meal debt
almost £2.5 billion for public transport to provide viable alternatives to car use, and increased investment of £220 million in active travel to promote walking, wheeling and cycling
The Finance Secretary said: “It is an enormous privilege to present my first Budget. A Budget setting out, in tough times, to protect people, sustain public services, support a growing, sustainable economy, and address the climate and nature emergencies.
“At its heart is our social contract with the people of Scotland, where those with the broadest shoulders are asked to contribute a little more. Where everyone can have access to universal services and entitlements, and those in need of an extra helping hand will receive targeted additional support.
“This Budget is set in turbulent circumstances. At the global level the impacts of inflation, the war in Ukraine, and the after-effects of the pandemic continue to create instability. In the UK the combined effects of Brexit and disastrous Westminster policies mean that we are uniquely vulnerable to these international shocks.
“We cannot mitigate every cut made by the UK Government. But through the choices we have made, we have been true to our values and rigorous in prioritising our investment where it will have the most impact.
“We choose investment in our people and public services. This is a Budget that reflects our shared values as a nation and speaks to the kind of Scotland that we want to be.”
RESPONSES:
Responding to the Scottish Budget, STUC General Secretary Roz Foyer said: “With Westminster induced pressure on public spending in Scotland, we’re pleased that the Scottish Government has listened to the STUC and introduced a higher rate of tax for those on higher incomes.
“This represents a markedly positive approach which should be recognised. Equally, taking a more proportionate approach to rebates for business speaks to a Government which recognises the importance of the public sector to growing the economy.
“However, the Scottish Government’s Council Tax freeze and its unwillingness to countenance more ambitious tax reform has left a hole it was never going to be able to fill. High-quality, fully funded public services must be at the heart of a well-being economy and we cannot countenance any cuts – spun and packaged up as ‘reforms’ – which act as a barrier to that goal. Government should be under no illusions on this. The continuation of the regressive council tax simply damages our ability to support local government and those most in need.
“It is disappointing to see opposition parties failing to make any demands of government save for calling, impossibly, for more services but lower taxes. To this extent the whole of the Parliament is letting people down. We have to start of using the full powers of our Parliament to deliver tax reforms aimed at wealth and property, reforms which if implemented could raise £3.7 billion tax.”
Responding to the 2024/25 draft Budget, SCVO Chief Executive Anna Fowlie. said: “The draft Budget represents a missed opportunity to set out vital support for Scotland’s voluntary sector – at a time when it is being squeezed by the cost-of-living and running costs crises.
“While we welcome the Scottish Government’s commitments to move towards Fair Funding for Scotland’s voluntary sector by 2026, there was little evidence of that today.
“The UK Government delivered a modest but welcome package of running costs support for voluntary organisations in England – as part of the Spring Statement. Today, at the very least, the Scottish Government could have committed to doing the same here in Scotland. The sector is still waiting on any such commitment.
“While we recognise the challenging financial environment, the sector needs more than warm words and missed opportunities. Just last month the First Minister told assembled voluntary organisations at the Gathering that he’ll move beyond warm words and put money where his mouth is. Today we didn’t see that.
“We need to see meaningful support for the sector, with urgent progress on Fair Funding to safeguard essential services. We stand ready to support the Scottish Government to deliver that progress.”
Joanna Elson CBE, Chief Executive at Independent Age: “We welcome the Scottish Government’s greater focus on older people in poverty in today’s Budget. The news that all devolved social security payments, including the Winter Heating Payment, have been uprated by inflation and that the fund for Discretionary Housing Payment has been increased will be a welcome relief to those struggling financially in later life.
“However, these measures do not go far enough for the 150,000 older people now living in poverty in Scotland, a figure that has risen by a quarter in the last decade alone, now affecting 1 in 7. Today they really needed the Scottish Government to announce a clear, long-term strategy with legally binding targets and ambitions action to tackle pensioner poverty and reverse this frightening trend.
“Older people in Scotland, including those in financial hardship, urgently need greater representation. We were disappointed that the Scottish Government didn’t use today’s announcement as an opportunity to announce funding for an Older People’s Commissioner.
“A Commissioner would give better representation across policy making and provide a crucial independent voice for people in later life. With 1 in 4 of us projected to be over 65 by 2040, there’s no time to waste.
“While we welcome the measures announced today that will improve life for older people on low incomes, the Scottish Government need to go further and faster to address rising pensioner poverty in Scotland. Both a long-term solution to financial hardship in later life and an end to older people feeling ignored by those in power is needed. The time is now for Scotland to have a pensioner poverty strategy and an Older People’s Commissioner.”
Jonathan Carr-West, Chief Executive, LGIU Scotland,said: “With one in four Scottish councils warning that they may be unable to balance their books next year, today’s budget will not offer much reassurance.
“The Verity House Agreement promised early budget engagement, and it promised ‘no surprises.’ This financial settlement does not meet either of those promises or provide councils with the funding they have told us they need.
“A council tax freeze funded as though council tax were increased by 5% is equivalent to the rises that councils were planning for this year, but it denies them the increase in their tax base and thus undermines their finances next year and for years to come.
“The “additional support” promised all appears to be ring fenced to Scottish Government priorities rather than enabling democratically elected councils to make decisions about priorities in their areas. Again, this goes against the Verity House agreement.
“Before the budget, every council told us they were planning cuts to services, 97% that they were planning to increase charges, and 89% that they would have to spend their reserves. The funding announced in the settlement will not alleviate the need for these biting budget measures.
“The council tax freeze this year will not help residents affected by councils’ inevitable spending cuts and it will not help residents next year, when councils’ spending power is reduced further because their council tax base can’t increase in line with the amount they need.
“Our recent survey shows just how strong the concerns are across local government. Only one respondent to our survey said they were confident in the sustainability of council finances. Not a single person said they were happy with the progress that had been made on delivering a sustainable finance system.
“Senior council figures widely condemned how limited their involvement in the pre-budget process was, and this funding settlement confirms the suspicions that led to only 8% of respondents believing the Scottish Government considers local government in wider policy decisions.
Most worryingly, 8 separate councils (25% of all local authorities) warned us that they could be unable to fund their statutory services – the services they have to provide by law. The funding announced today will be no comfort to these struggling councils, who will now have to make even more difficult choices to make up for their funding shortfall.
For the average resident, this means their life will get more expensive and their services will get worse. For some of the most vulnerable members of society, as councils warned us, it may mean that if nothing changes then there is not enough money to fund the services they rely on.
“The funding settlement is not enough for councils to provide the services that millions of people across Scotland rely on. More than that though, it demonstrates that annual funding settlements of this type are not the right way to fund councils or to empower councils to tackle their long-term challenges.
“Councils should be given more powers over how they raise and spend their own money. This means ring-fencing and directed spending need to be reduced, as agreed at Verity House, and councils need to be free to set their own council tax.”
Commenting on the budget, UNISON’s Scottish Secretary Lilian Macer, said: “Today’s budget is a bad day for local services and deals a further financial blow to local councils who are already struggling to balance the books and to deliver the vital services our communities rely on.
“Our public services are on their knees due to years of underinvestment and the Scottish government’s council tax freeze will be a disaster for local services. We need to see investment in public services and a council tax freeze stops investment in public services, in schools and in the NHS.
“The Scottish government had the chance to make big choices to raise more money for Scotland’s public services but while the measures on income tax are welcome, much more could and should have been done. We still have a government boasting of low business taxes at the same time that they are delaying urgent improvements to public services.
“The Deputy First Minister spoke of cutting the public service workforce – people need to be aware that job cuts mean service cuts. What communities across Scotland need is investment, not abandonment.
“While we welcome investment in the NHS, the Scottish government failed to say how this would be targeted to tackling the staffing crisis and ensuring proper funding so the safe staffing act can make the improvements the NHS so desperately needs.
“Given the Scottish government’s commitment to become a fair work nation by 2025, it’s concerning that there was no mention of fair work anywhere in the budget statement, particularly in social care, a sector in crisis.”
Responding to the Scottish Government’s Budget Stuart McMahon, Scotland Director of consumer group CAMRA whose members had been lobbying MSPs asking for a 75% business rates discount to help save pubs and breweries, said:
“Pubgoers will be deeply disappointed by the lack of help for most of our locals today. Whilst 100% rates relief for hospitality businesses in island communities will be welcomed, failing to pass on extra money from the UK Government to help with business rates for the rest of our hospitality businesses is undoubtedly a blow and puts many of our pubs at risk of permanent closure.
“Yet again it seems that the Scottish Government just doesn’t understand the importance of our pubs, social clubs and breweries as a vital part of our social fabric – bringing communities together and providing a safe, regulated environment to enjoy a drink with friends and family. Our locals are community hubs that need and deserve help to make sure that they survive and thrive.
“With reports that pubs are closing at a faster rate here than elsewhere in the UK, Scottish Government ministers urgently need to re-think the decision not to give our locals the 75% discount with business rates bills that pubs south of the border are receiving. The Scottish Government also needs to support consumers, pubs and breweries in the new year by ditching any plans to bring back restrictive bans on alcohol advertising.”
In response to the Scottish Budget, Stephen Montgomery, Director of the Scottish Hospitality Group said: “We are sorely disappointed that the Scottish Government has not delivered new emergency support for Scottish hospitality.
“Unless a hospitality business is located on the islands, this Budget offers no new support to Scottish hospitality to survive the unprecedented challenge of rising costs, inflation, and the legacy of the pandemic.
“The very real implication is that many Scottish hospitality businesses will struggle to survive, and customers will see prices increase. This will be a bitter pill to swallow for thousands of Scottish hospitality businesses, given English hospitality businesses will be benefitting from a 75% business rates discount for the next year. Our attention will now be focused on helping those hospitality businesses survive what will be a very challenging year to come.
“However, we welcome the Scottish Government’s commitment to exploring a long-term, fairer deal for hospitality on business rates. It is a ray of hope in an otherwise disappointing day for Scottish hospitality.
“This is a golden opportunity to deliver a fairer deal for Scottish hospitality once and for all. We have been engaged with the New Deal for Business Group for a number of months and it is time that the Scottish Government’s actions matched their words.
“The Finance Secretary has committed to introducing a long-term, fairer deal for Scottish hospitality at next year’s Budget. We will hold her feet to the fire to make sure she delivers on this promise.”
The 2024-25 Scottish Budget will set out targeted funding for the Government’s key missions of equality, community and opportunity amid a profoundly challenging financial situation, Deputy First Minister and Finance Secretary Shona Robison has said.
Next week Ms Robison, who is also Finance Secretary, will outline the Scottish Government’s financial priorities for 2024-25, including the difficult choices that have had to be made as a result of last month’s Autumn Statement.
The Deputy First Minister has described that Statement as a “worst case scenario” for Scotland, telling Parliament that it failed to provide the investment needed in services and infrastructure, reflecting the UK’s economic circumstances after Brexit.
Tuesday’s Budget will provide the funding to protect people and public services from the worst effects of these economic circumstances, Ms Robison said.
The Finance Secretary added: “In the face of a deeply challenging financial situation, this Budget will reaffirm our social contract with the people of Scotland.
“The Autumn Statement was devastating for Scottish finances. The Institute for Fiscal Studies has acknowledged that it will lead to planned real terms cuts in public service spending. Scotland is facing a 9.8% cut to our capital budget for infrastructure between this year and 2027-28.
“The £10.8 million additional health consequentials we received from the Autumn Statement for next year are enough to run NHS Scotland for just five hours, and UK Government funding for justice, housing and communities, net zero, energy, and environment are all being cut in real terms. All this comes on top of more than a decade of UK Government underinvestment that has left our public services with very little resilience.
“We refuse to follow UK Government spending decisions – indeed, we are doing all we can to mitigate them. We are proud that Scotland has a social contract which ensures people are protected by a safety net should they fall on hard times. And this contract underpins this Budget, with targeted funding to protect people and public services.
“We are unashamedly targeting resources at those most in need to support them through the cost of living crisis. We are providing funding to deliver the services that people rely on most, along with a ten-year programme of public service reform. And we are using all the powers we have to create a thriving economy while providing funding to achieve our ambitious net zero targets.”
Plan to grow economy, target spending and deliver progressive tax system
Economic growth, progressive taxation and spending plans that unapologetically target those in greatest need are at the heart of a financial strategy announced by Deputy First Minister Shona Robison.
The Medium-Term Financial Strategy outlines the approach to ensuring Scotland’s finances are on a sustainable footing and delivering high-quality public services in the face of high inflation. This includes:
growing the economy, including by delivering on ambitious commitments on childcare, seizing opportunities in areas where Scotland has a competitive advantage and supporting entrepreneurs, start-ups and scale-ups
taking tough decisions around spending, focusing on what is needed to achieve the missions of equality, opportunity and community
updating the tax strategy, with a new advisory group to be established this summer and chaired by the Deputy First Minister
The strategy details the tough choices required in challenging financial circumstances. Scottish Government estimates indicate that due to inflation, pay increases and the lack of further funding from the UK Government, current resource spending requirements could exceed funding by £1 billion in the next financial year, and by £1.9 billion in 2027-28.
The gap between capital spending commitments and funding could rise to 16% in 2025-26.
Ms Robison said: “We are steadfast in our commitment to tackling poverty, building a fair, green and growing economy, and improving our public services to make them fit for the needs of future generations.
“But we must recognise that our current financial situation is among the most challenging since devolution, driven by the Covid pandemic, the war in Ukraine and the recent period of high inflation.
“Our funding remains largely based on decisions made by the UK Government, but they have failed to take the steps required to inflation-proof our budgets, and their decisions from Brexit to the disastrous mini-budget have made matters worse. This is creating substantial pressure on our public services, which we have no choice but to address.
“Today I have outlined our strategy for managing these challenges, doing all we can within our powers to ensure public finances are on a sustainable path. We will have a laser-like focus on spending, ensuring it targets equality, opportunity and community.
“We will generate economic growth, supporting businesses to invest and create new jobs while increasing tax revenues to invest in better public services. And we will continue to build the most progressive tax system in the UK, ensuring the burden of taxation is placed on those with the broadest shoulders.
“There can be no escaping the difficult choices ahead, but by following the plan outlined today we can provide a more prosperous and fairer future for the people of Scotland.”
Responding to the statement, STUC General Secretary Roz Foyer said: “The Cabinet Secretary for Finance is in a slightly better budgetary position than was predicted this time last year. However, she rightly points out that UK Government austerity and its manufactured cost-of-living crisis continue to hit Scotland hard.
“However, this is not an excuse for inaction. There is a worrying lack of ambition from the government ministers which cannot be condoned.
“Tax reform cannot be kicked down the road for another year. To protect services and pay, the Scottish Government must make good on the First Minister’s pledge to leave no stone unturned in seeking to raise additional income by rebalancing wealth. This means committing now to the policy changes required to introduce wealth and property taxes as the STUC has advocated.”
