Details of how £11.6 billion of funding from the Scottish Government will be distributed to individual local authorities in 2021-22 have been published.
The settlement provides councils with an increase in day to day revenue spending of £335.6 million, including £90 million to compensate local authorities which choose to freeze council tax and a further £259 million will be added in one-off funding to support ongoing COVID-19 pressures.
In total, councils will receive additional revenue funding of almost £600 million to support vital local government services in 2021-22.
The Scottish Government will also increase a scheme which compensates councils for the loss of income from sales, fees and charges due to the pandemic from £90 million to £200 million in 2020-21.
Finance Secretary Kate Forbes said: “This budget is being delivered in exceptional circumstances as we continue to battle a pandemic that has shaken our society and economy to the core.
“The local government settlement will help to fund those vital public services that are much valued and needed.
“It includes additional funding of £59 million to complete the expansion of early learning and childcare to 1,140 hours a year, £72.6 million for investment in health and social care and £7.7 million to support the inter-island ferries in Shetland, Orkney and Argyll and Bute.
“Just as we have chosen not to increase tax rates, ensuring people pay no more than last year, I have taken the significant step of offering funding equivalent to a council tax increase of around 3% to councils who choose to freeze council tax. I look to local government to join with me in providing the much needed financial reassurance to those who are struggling.
“We need to focus on how we rebuild and renew our country, and the funding I am providing to local authorities reflects the key role that they will continue to play in that journey.”
LOCAL GOVERNMENT FINANCE 2021-22: TOTAL REVENUE SUPPORT
Local Authority
2020-21
2021-22
Change
Change.
£m
£m
£m
%
Aberdeen City
364.6
376.0
11.4
3.1
Aberdeenshire
460.2
479.2
19.0
4.1
Angus
220.2
226.9
6.7
3.1
Argyll & Bute
208.8
213.3
4.6
2.2
Clackmannanshire
103.0
105.7
2.7
2.6
Dumfries & Galloway
306.8
314.6
7.9
2.6
Dundee City
320.1
327.7
7.7
2.4
East Ayrshire
249.9
256.9
7.0
2.8
East Dunbartonshire
202.1
208.0
5.9
2.9
East Lothian
189.2
194.7
5.5
2.9
East Renfrewshire
191.3
196.1
4.8
2.5
Edinburgh, City of
799.6
831.9
32.3
4.0
Eilean Siar
99.8
101.6
1.8
1.8
Falkirk
308.2
315.7
7.5
2.4
Fife
702.4
725.3
22.9
3.3
Glasgow City
1,333.1
1,362.9
29.8
2.2
Highland
493.0
506.3
13.3
2.7
Inverclyde
177.6
181.9
4.3
2.4
Midlothian
178.9
183.7
4.8
2.7
Moray
173.6
180.2
6.6
3.8
North Ayrshire
296.7
303.9
7.2
2.4
North Lanarkshire
673.1
691.2
18.1
2.7
Orkney Islands
78.2
82.7
4.5
5.7
Perth & Kinross
271.0
281.3
10.3
3.8
Renfrewshire
341.9
351.2
9.3
2.7
Scottish Borders
224.0
233.2
9.2
4.1
Shetland Islands
90.0
97.3
7.3
8.1
South Ayrshire
217.4
223.7
6.3
2.9
South Lanarkshire
610.4
625.8
15.5
2.5
Stirling
183.5
188.7
5.2
2.9
West Dunbartonshire
203.0
207.4
4.4
2.2
West Lothian
344.5
353.3
8.8
2.6
Undistributed
51.9
75.1
23.2
44.8
SCOTLAND
10,667.8
11,003.4
335.6
3.1
Speaking after last week’s Budget announcement, COSLA’s Resources Spokesperson, Councillor Gail Macgregor, said: “Given the context this year, perhaps it is not overly surprising that the Budget is very much a mixed bag for Local Government –the main issue is that the overall allocation adds very little into our core financial settlement which has been eroded over the years.
“The Cabinet Secretary, in her speech, recognised Councils’ role as deliverers of vital services and yes on the face of it there is more money but that is predominantly for Government priorities.
“The addition of £259 million flexible funding for 2021/22 will help councils address Covid related costs next year, including providing the support that the most vulnerable in our communities will require but we need solid assurances that if this figure falls short, as is expected, that further funding will be forthcoming.
“To deal with pressures this year, the announcement of an additional £110 million to help compensate Councils for loss of income, which when added to the money we have already had, makes £200 million, is to be welcomed.
“However, for many councils this won’t be enough – income loss will leave a very large hole in their finances for years to come. We welcome that the Cabinet Secretary for Finance has listened to Leaders requests for further funding to cover loss of income but there is still work to do where there is a shortfall.
“We welcome elements of today’s announcement but overall this budget falls short of what we would consider a fair settlement for Local Government. We would anticipate further constructive discussions with the Cabinet Secretary in the next few weeks.”
Significant new investment to drive economic recovery, bolster public services and support families underpins the Scottish Government’s spending and taxation plans for the coming year.
Presenting the Scottish Budget 2021-22 yesterday, Finance Secretary Kate Forbes announced support for jobs and skills totalling around £1.1 billion.
Job creation is a priority, with measures including a commitment to launch a new Green Workforce Academy to help people secure work in the low carbon economy, a £100 million Green Jobs Fund over the next parliament, £7 million towards making Scotland a world class hub for digital business and an additional £125 million for the Young Person’s Guarantee, employability and skills.
Health receives record funding of over £16 billion, an increase of 5.3% on 2020-21, along with a further £869 million to continue tackling coronavirus (COVID-19), including funding for the vaccination and test and trace programmes. This means that, over the course of this parliament, investment in health has increased by £1.8 billion in real terms – more than tripling the commitment to increase health funding by £500 million more than inflation.
To support family budgets, £90 million is being made available for local authorities to freeze council tax.
Public sector workers earning up to £25,000 can receive at least a 3% pay increase via a £750 cash underpin, while there is a 1% rise for those earning above that amount, capped at £800 above £80,000.
Economic recovery, supporting public services and helping families are at the heart of this year’s Scottish Budget.
£11.6 billion for local government, which represents a £335.6 million increase in core revenue funding, including the £90 million to compensate local authorities which choose to freeze Council Tax, plus £259 million in one-off funding
£1.9 billion for primary health care to help deliver more services in the community. A further £550 million is earmarked to build new Elective Care Centres and the Baird Family Hospital and Anchor Centre in Aberdeen
£98.2 million to improve Scotland’s digital infrastructure and deliver access to high quality broadband and mobile coverage.
£711.6 million for affordable housing and £68 million for the first full year of the Scottish Child Payment, tackling child poverty
a new £55 million programme to support town centres and community-led regeneration projects
more than £3.1 billion in resource and capital investment for education and skills, and £567 million to provide 1,140 hours of early learning and childcare, supporting implementation of the UK’s most ambitious childcare programme
£1.3 billion for the Scottish Police Authority, including a £60 million increase in Police Scotland’s revenue budget – exceeding an earlier pledge of a £100 million boost over five years
£1.6 billion for rail and bus services and £100.5 million for active travel to consolidate changes to healthy, green travel options seen during the pandemic
doubling the Rural Tourism Infrastructure Fund, helping tourist attractions and local communities make improvements to cope with increased visitors
an additional £27 million to expand woodland creation and the associated infrastructure, supporting green jobs
Business support remains a priority and the Finance Secretary confirmed that the Local Authority Discretionary Fund will be doubled to £60 million in this financial year to allow councils to respond to local needs. In addition, businesses eligible for the Strategic Framework Business Fund will receive full Level 4 payments on 22 February, regardless of any future changes to local restrictions.
The Scottish Government will also increase a scheme which compensates councils for the loss of income from sales, fees and charges due to the pandemic from £90 million to £200 million in 2020-21.
Ms Forbes said: “This budget is being delivered in exceptional circumstances as we continue to battle a pandemic that has shaken our society and economy to the core, and as we face the harmful impacts of Brexit.
“It promotes innovation and reform, new beginnings, new directions. And while it continues to target support in the immediate term, it also tracks a course over the next year to build a fairer, stronger and greener country.
“To help drive our green economic recovery I am providing the stability and certainty that businesses have asked for through the most competitive reliefs packages in the UK. There are innovative measures to promote sustainable growth and we are investing more than £1 billion in jobs and training.
“The budget sets out a distinctive Scottish pay policy that again supports the lowest paid, charting a different course to the ill-judged pay freeze announced by the UK Government. It also bolsters our health service, delivers more affordable homes, provides additional childcare places and helps young people into work.
“Throughout these dark times we have never given up hope. This budget seeks to build on that hope and, by focusing on how we rebuild and renew our country, make the light at the end of the tunnel shine that bit brighter.”
Our budget helps to deliver stability now, but it also looks forward to the future.
Watch Finance Secretary @KateForbesMSP explain our priorities for the coming year ⬇
The STUC has expressed its disappointment at what effectively amounts to a real-terms pay freeze for thousands of public sector workers as the Budget offers 1% for those earning pay above £25,000 per year including most teaching staff, firefighter and civil servants.
The STUC General Secretary, Roz Foyer pointed to the real terms increase in the Scottish Budget of nearly 4% and contrasted that with today’s pay offer.
“Whilst it is right and proper that the pay of low paid workers should be underpinned, for most workers this increase is still below the budget uplift received by Holyrood from Westminster. Far too many of our key workers have been left out in the cold.
While supporting Scottish Government calls for greater borrowing powers, Foyer also questioned whether tax cuts for high earners were the right priority and whether funding for Local Government was sufficient.
“We strongly support the Scottish Government’s calls for greater borrowing powers. However, the Cabinet Secretary has managed to find wiggle room to provide £125 million in blanket tax cuts. She has also reduced income taxes for high earners – a policy that raised £51 million last year. Given this, it is deeply disappointing that she hasn’t been able to better reward key workers.
“While the Cabinet Secretary spoke about an increase in funding for Local Government, it appears this amounts to less than a 1% increase, a level that is nowhere near sufficient to cover gaping cuts to services from years of austerity.”
Responding to the Budget announcement, Dr Liz Cameron, Chief Executive of the Scottish Chambers of Commerce, said:“The position of Scottish businesses has never been so precarious. The Scottish Government’s announcements today are welcome but do not go nearly as far enough to avoid risk of widespread business collapse and job losses.
“Yes, there is light at the end of the tunnel with the vaccination programme but restrictions to prevent the spread of the virus have been devastating. We understand that the Cabinet Secretary for Finance faces difficult choices in setting the budget particularly ahead of that of the UK, in a time when the country faces extraordinary challenges.
“Business will be disappointed that further details on an economic route map on how we will exit this crisis aligned with the roll out of the vaccine were not provided today. This is a critical component if businesses are to unleash the investment our country so desperately needs.”
On Non-Domestic Rates:
“The Cabinet Secretary has listened to us and has delivered a reduction in the Non-Domestic Rate (NDR) poundage rate. However, longer-term, we believe the system is unfair and needs significant reform.
“Plans for a three months extension of rates relief is a too short a reprieve. We need commitment to a 12-month reliefs package to provide the certainty business needs. Clearly there is more to do, and we await further announcements from the Chancellor to see what further support can be made available and expect Scottish Government to pass on the equivalent consequential funding to businesses.”
On Business Support:
“The doubling of the discretionary fund is good news particularly for those businesses who have fallen through the gaps of other support packages. However, it is imperative that the process for businesses is clear, transparent and quick across all local authorities to ensure funding is available for businesses quickly and immediately.
“Now is the time to pull out the stops and redouble efforts to ensure business support comes through. We need to see a significant ramping up to get those funds that have been promised out the door and to businesses.”
On Infrastructure:
“The Scottish Government’s commitment to infrastructure investment is absolutely necessary for Scotland and the UK to be in a position to build back better and meet net zero ambitions. Now is the time for a vision driven by ambition and a willingness to collaborate like never before. This must be put first and foremost ahead of any political point scoring this year.”
On skills and training:
“SCC welcomes these important steps to support jobs, employment and training. We called for training academies and we are pleased to see the Cabinet Secretary has acted on our recommendations, particularly the focus on green jobs. It is now critical that the government and academia works in partnership with the private sector to ensure benefits are fully realised.”
On Protecting Jobs:
“We maintain our call to the Chancellor of the Exchequer to extend the furlough scheme beyond April 2021 and outline further initiatives to protect business and jobs at the UK Budget in March.”
On mental health support:
“Business will welcome this as we understand the toll the pandemic has taken on our customers, employees and communities.
“Recovery of our wellbeing is just as important as economic recovery, with many employers investing in their own employee support programmes. This commitment from the Scottish Government will enhance these efforts.”
Responding to Kate Forbes’ announcement that public sector workers on salaries up to £25,000 a year will receive a 3 per cent increase, GMB Scotland Senior Organiser Drew Duffy said: “This will be met with fury among the lowest paid in Scotland’s public sector.
“Kate Forbes was among the many politicians applauding our frontline heroes, now she is saying ‘thank you’ with a rise that won’t amount to more than a tenner a week for most.
“There is no value here, and it’s an insulting response from the Scottish Government to the ongoing struggles of our key workers in this pandemic.”
Tracy Black, CBI Scotland Director, said:“The Finance Secretary is right to put business support and economic recovery front and centre of this year’s draft Budget. With jobs, firms and livelihoods still hanging by a thread, Scotland can’t afford to wait until the pandemic is over before initiating plans for a sustained recovery.
“Health must come first and lowering transmission rates remains the priority. Yet with so many struggling companies across Scotland, it’s only right that proper consideration is given to reopening the economy when it is safe to do so. This should be driven by data and done in dialogue with business.
“The private sector is critical to a successful recovery and moves to protect firms’ immediate futures are welcome. Continuing rates reliefs for the hard-hit hospitality, retail and tourism sectors is welcome, however a three-month window remains a challenging timetable for firms under real pressure. Companies will also be relieved to see a continued commitment to Covid business support and no further changes on income tax.
“The UK and Scottish governments must now work together to provide certainty over business support, ensuring that the firms we need to drive economic recovery survive the tough weeks and months ahead.
“Longer term, the figures from the Scottish Fiscal Commission paint a worrying picture and highlight the scale of the challenge ahead. Maintaining a laser focus on boosting productivity and protecting competitiveness are key.”
Responding to the Scottish Government’s Budget statement delivered today by Finance Secretary Kate Forbes MSP, Director of CAMRA Scotland Joe Crawford said: “Extending the business rates holiday for pubs and social clubs for a further three months into the next financial year is a desperately-needed lifeline for pubs who have struggled for almost a year now.
“But three months won’t be enough. CAMRA will be joining the Scottish Government in calling on the Chancellor to use his Budget on 3rd March to give the Scottish Government enough money to extend this Business Rates holiday for the entire 2021/22 financial year.
“Pub-goers and licensees will now want to see the Scottish and UK Governments work together to make sure pubs and breweries get enough long-term financial support to thrive when they can reopen. This must include grants, furlough support as long as there are restrictions on trading, extending the VAT cut on beer to help pubs that don’t serve food, and cutting tax on beer served in pubs to help them compete with supermarket booze.
“Pubs and social clubs are a force for good in our communities, bringing people together and tackling loneliness and social isolation. They will be a crucial part of our national healing process after COVID and deserve to be supported until they can trade again.”
SLTA Managing Director, Colin Wilkinson said:“The Scottish Licensed Trade Association welcomes today’s announcement by Finance Secretary Kate Forbes that the Scottish Government will extend 100% non-domestic rates relief for retail, hospitality and leisure for at least the first three months of the new financial year. However, it doesn’t go far enough.
“Today’s announcement is good news, as is the promise of further ongoing business support and it gives us a much-needed stay of execution. The reduction in the poundage rate, from 49.8 pence to 49 pence, is also very welcomed.
“Further support from the Westminster Government is crucial and our hope is that UK Chancellor, Rishi Sunak, steps up to the mark by extending the current furlough scheme, committing to retain the Commercial Rates Relief and the temporary 5% reduced rate of VAT for hospitality beyond March 31 and well in to 2022.
“Our sector is battered and bruised and the sooner both the Scottish and UK Governments can provide clarity on support and an indication of an exit strategy out of this pandemic the better.”
Chief Constable Iain Livingstone has welcomed the Scottish Government’s Budget announcement.
Mr Livingstone said: “I welcome the announcement to eliminate the structural deficit in policing’s funding.
“The reform of policing in Scotland has brought many benefits to all communities across the country, while £200m has been returned to the public purse every year compared to legacy arrangements.
“The last 12 months have demonstrated the relentless nature of policing. Our mission to prevent harm, support communities and keep people safe has been evident throughout the pandemic.
“We will continue to enhance capacity and capability to protect the people of Scotland in the public, private and virtual spaces.
“Responsive and accessible local policing is deeply valued by our fellow citizens and will always lie at the heart of Police Scotland’s purpose and approach.”
Measures promoting recovery and renewal will be at the heart of the Scottish Budget tomorrow.
New initiatives to drive economic growth, create jobs and tackle inequality will be included alongside further support for business, public services and families.
https://twitter.com/i/status/1354006419763302402
Finance Secretary Kate Forbes said: “The budget on Thursday will create the conditions for Scotland to recover and renew.
“We remain in the grip of a pandemic which continues to put pressure on our economy, health services and each of us as individuals. But the vaccine is providing a route back to normality and we must now sharpen our focus on rebuilding for the future.
“The budget will include innovative, targeted measures to help businesses and families get back on their feet and bolster our vital public services. I have already ruled out following the UK Government’s public sector pay freeze and will set out details of a pay settlement that is both fair and affordable.
“It is vital that we rebuild our economy in a way that provides equal opportunities for all, delivers on our green commitments and creates the kind of Scotland we all want to see.”
“This process has already started. For instance we have established a National Transition Training Fund providing targeted support for up to 10,000 people, set out our £60 million Young Person’s Guarantee and committed £2 billion in low carbon funding. The budget will set out how we intend to further these ambitions.
“Ahead of the budget we sought views on the role of Scotland’s devolved taxes and our fiscal framework in supporting the recovery. There was clear feedback regarding the need for stability and targeted support and that has also been a particularly strong message in my meetings with businesses and their representative organisations. The budget will deliver on those priorities
“Despite the UK Government’s budget being delayed until March, and the uncertainty that causes, the Scottish Budget 2021-22 will confirm funding allocations for local government. It will also detail how, within our limited resources, we will go as far as we can to support businesses in receipt of non-domestic rates relief.
“The global pandemic and the problems arising from Brexit combine to make these uniquely challenging times. This budget will help Scotland emerge as a globally competitive, fairer and greener country and I urge all parties to work in the national interest to ensure it is passed by the Scottish Parliament.”
Yorkshire Building Society has launched six online lessons of its financial education programme Money Minds, to support parents, carers, teachers and all Key Stage 1 and Key Stage 2 primary school pupils as well as Key Stage 3 secondary pupils through the coronavirus pandemic.
Due to new national lockdown measures leading to the closure of schools, the Society has released two Key Stage 1 (aged 5-7) digital Money Minds lessons on the topics of ‘Keeping Money Safe’ and ‘Wants and Needs’ and two Key Stage 2 (aged 8-11) lessons on the topics of ‘Vacation Venture’ and ‘Project Party’ to teach them about the importance of budgeting.
The Society has also launched two new Key Stage 3 (aged 11-14) digital lessons for students on the topics of ‘Bills and Budgets’ and ‘Project Profit’ to teach them about the importance of budgeting and being financially resilient.
The video lessons should take between 25-40 minutes to complete and are presented by colleagues from the Society.
Money Minds is a free programme consisting of a series of activities and projects designed to promote discussion and learning amongst children and young people and is usually delivered in schools by colleagues from the Society as part of its volunteering programme.
Society colleagues working in branches are key workers and are supporting customers with essential financial services through the Covid-19 outbreak and new lockdowns.
Sharon Stirling, manager at Yorkshire Building Society’s Edinburgh branch filmed the ‘Keeping Money Safe’ and ‘Project Party’ lesson which teaches children how to budget whilst planning a party.
She said: “We know that there have been really hard times over the last nine months for children, teachers, parents and guardians. Now with schools closing again I hope that our digital Money Minds lessons will help in any small way in making their lives a little easier by providing some quality ‘go to’ content available to use for home-schooling or in classrooms for vulnerable children and those of key workers.
“I’ve delivered numerous face-to-face Money Minds lessons for the Society to pupils in the past and know from experience how impactful they are. The feedback we have received so far on our online sessions has been really positive so we are really pleased they are being well received.”
Louise Neill, Community Manager at Yorkshire Building Society has developed the financial education lessons. She said: “We’re committed to supporting children and young people in teaching financial education through our Money Minds programme. As we usually have our colleagues volunteering in schools we have had to adapt the way we deliver these.
“It’s incredible that our branch colleagues, classed as key workers supporting customers with essential financial services through the lockdowns, have been able to extend the help they can offer by providing these lessons which will continue to improve financial capability in the next generation in the UK.”
More than 25,000 pupils across the UK have now received a Money Minds lesson since the programme launched in 2015.
When children have completed the lesson their parents or guardians can e-mail the Society and they will be emailed a certificate.
The High Pay Centre’s ‘High Pay Day’ research, published this week, is evidence that the government must rebalance the economy after Covid-19 to make it fair, says the TUC.
High Pay Day is the day in 2021 on which the typical FTSE 100 chief executive has already earned the same as the average wage for a whole year.
The research finds that top bosses earn around 120 times the annual pay of the average worker.
High Pay Centre’s research suggests that the median FTSE 100 CEOs earnings for 2021 surpassed the median annual wage for a full-time worker in the UK at around 5:30 pm on Wednesday 6 January.
The calculations are based on our previous analysis of CEO pay disclosures in companies annual reports, combined with government statistics showing pay levels across the UK economy.
HPC estimate that with CEO pay levels remaining essentially flat in their analysis, while pay for UK workers had increased slightly, it means that CEOs have to work 34 hours of the year to surpass median earnings, rather than just 33 hours in 2020.
However, the most recent figures on CEO pay and UK full time workers’ annual earnings is still too dated to fully account for the impact of the coronavirus – therefore it remains to be seen how this has affected pay gaps across the UK, both over the duration of the pandemic and in the longer term.
Pay for top CEOs today is about 120 times that of the typical UK worker. Estimates suggest it was around 50 times at the turn of the millennium or 20 times in the early 1980s.
Factors such as the increasing role played by the finance industry in the economy, the outsourcing of low-paid work and the decline of trade union membership have widened the gaps between those at the top and everybody else over recent decades.
These figures will raise concern about the governance of big businesses and whether major employers are distributing pay in a way that rewards the contribution of different workers fairly. They should also prompt debate about the effects that high levels of inequality can have on social cohesion, crime, and public health and wellbeing.
TUC General Secretary Frances O’Grady said: “This tells you everything you need to know about how unfair our economy is.
“Our army of minimum wage workers – carers, shop assistants and delivery drivers – have kept the country going through the pandemic. Not these CEO’s at the top raking in far more than their share.
“We must make the economy fair. If the government is serious about levelling up Britain, it needs to start by levelling up pay and conditions for those we most rely on, and stop the threat to freeze key workers’ pay.
“Ministers must bring forward the long-awaited employment bill to end expoitative working practices like zero hours contracts, and boost rights and pay.”
New funding of £800 million is being guaranteed for the devolved administrations in Scotland, Wales and Northern Ireland to support people, businesses and public services with the ongoing impact of Covid-19.
Yesterday’s announcement increases the UK Government’s unprecedented upfront guarantee this year to at least £16.8 billion on top of funding outlined in Spring Budget 2020.
This funding can be spent on priorities such as the NHS and business support.
This means a further £400 million for the Scottish Government, £200 million for the Welsh Government and £200 million for the Northern Ireland Executive.
Any changes to devolved funding are normally confirmed towards the end of the financial year – but in July the UK Government introduced an unprecedented guarantee to provide them with funding certainty to respond to Covid-19.
Wednesday’s announcement ensures that all parts of the UK can continue their response to Covid-19 through the winter months.
The Chief Secretary to the Treasury Steve Barclay MP said: “We’ve already committed unprecedented levels of support to Scotland, Wales and Northern Ireland.
“This extra funding will provide the nations with the certainty they need to plan through these difficult months.
“We remain committed to an economic recovery for the whole of the United Kingdom and will continue to work closely with the devolved administrations to support people and businesses.”
Scottish Secretary, Alister Jack said: The UK Government is committed to supporting people in all parts of the UK during this difficult time which is why today we have given £400 million extra to the Scottish Government for their Covid-19 response. This brings our total additional Covid-19 support to Scotland to £8.6 billion since Spring Budget 2020.
“This is on top of direct UK Government Covid-19 support to people and businesses in Scotland, including the furlough and self-employment schemes, business loans, VAT cuts for the hardest hit sectors and investing billions in our Plan for Jobs and our welfare safety net.
“The UK Government is also providing the bulk of Covid-19 testing in Scotland and we invested £6 billion to ensure we were the first country in the world to roll out the first vaccine.
“The strength of the Union and support offered by the UK Treasury has never been more important. Together, we will continue to get through these challenging times.”
People and businesses in Scotland, Wales and Northern Ireland will also continue to benefit from the UK Government’s unprecedented £280 billion UK-wide economic response package.
This includes schemes such as the Coronavirus Business Interruption Loan Scheme and the Bounce Back Loan Scheme providing billions in support to businesses across the three regions.
Alongside this, millions of jobs in the three regions continue to be supported through the Coronavirus Job Retention Scheme and the Self-Employment Income Support Scheme.
More than £1.8 billion of extra funding has been allocated to tackling the impact of coronavirus (COVID-19) in Scotland.
It covers areas including health, transport and business support, accounting for all but £330 million of the latest consequentials generated by UK Government spending. The remainder will be used to meet further urgent demands relating to both COVID-19 and Brexit up to the end of March 2021.
The funding is detailed in a letter from Finance Secretary Kate Forbes to the Scottish Parliament’s Finance and Constitution Committee.
Ms Forbes said: “From the outset, I have ensured that the money we receive is distributed as quickly as possible to where it is needed most. Our decisions have provided vital additional resources to our NHS, schools and other public services, they have kept our transport system running and provided much needed financial support for businesses impacted by the pandemic.
“To provide full transparency, I detailed earlier allocations in the summer and autumn budget revisions. This latest round will deliver measures such as the COVID-19 vaccination programme, local business support packages and free school meals over the holidays.
“The UK Treasury has indicated that this funding covers the period up to March 2021, so I have allocated £330 million as a contingency to ensure we are in a position to provide further support to health and businesses, including for issues arising from Brexit, as it is required over the coming months.
“Our limited borrowing powers mean we do not have flexibility to increase spending to meet demand and therefore must manage our expenditure – much of which is demand led so cannot be accurately calculated in advance – within the consequentials provided.”
The latest allocations include:
around £600 million for health and social care, wider public health initiatives and welfare support. This includes the COVID-19 vaccination programme, test and trace and the £500 bonus for health and social care workers.
support for business and the wider economy totalling £570 million, including funding for the strategic framework, local business support packages, the newly self-employed hardship fund and local authority discretionary business funding
an estimated £139 million of previously announced funding for government, bringing the overall support package to councils to more than £1 billion
around £500 million to support transport services and cover pandemic-related income shortfalls within organisations such as Police Scotland, the Scottish Funding Council and the Scottish Courts and Tribunals Service
The latest COVID-19 consequentials bring the total received by the Scottish Government to £8.2 billion.
A further update on COVID-19 spending will be provided through the Spring Budget Revision in the New Year.
A copy of Ms Forbes’ letter to the Finance and Constitution Committee Convener Bruce Crawford is below:
Dear Bruce,
I am writing to update the Finance and Constitution Committee on usage and allocations to date of consequential funding received during 2020-21 as a result of the Covid-19 outbreak.
We have drawn down and allocated this funding over the course of the year in response to what has been an exceptional and dynamic set of circumstances. I have updated Parliament on several occasions and, although a further update will be provided through the Spring Budget Revision in the New Year, I thought it would be helpful to provide further information in advance of that.
Around £6 billion of consequentials were allocated in the unprecedented Summer Budget Revision and as part of the Autumn Budget Revisions. Since then, consequentials provided have been increased to £8.2 billion.
I can confirm that thus far, further allocations have been provided as follows:
Around £600 million has been provided to health and social care, wider public health initiatives and welfare support. This funding supports the public health response to Covid including: vaccinations and test and trace; the £500 non-consolidated payment for health and social care staff; and the Winter Plan for Social Protection, which helps people pay for food, heating, warm clothing and shelter as well as free school meals over the school holidays and the self-isolation support grant.
Support for business and the wider economy of £570 million, including grants via the Strategic Framework, funding for local support packages, the newly self-employed hardship fund, digital support, Local Authority Discretionary Business Funding and remaining allocations from the £97 million support for culture and heritage.
Previously announced support for Local Government, relating to the estimated £90 million Lost Income Scheme as well as £49 million of additional funding confirmed to councils in September. Added to additional funding already committed, this brings the value of the overall support package to councils to more than £1 billion.
Around £500 million of funding to support continued provision of transport and funding for income shortfalls within our partner bodies including Police Scotland, the Scottish Funding Council, Registers of Scotland and the Scottish Courts and Tribunals Service in order to ensure that they can continue to deliver vital services, as well as mitigating shortfalls in devolved tax as a direct result of Covid-19.
Due to the nature of the Covid-19 outbreak, the potential asks for further demand led spend with regards strategic framework support for business in Scotland and additional demands on health, and the requirement that the funding provided to date will cover all costs until the end of March 2021, I have allocated £330 million of funding in order to support these asks. This is consistent with the terms of the funding guarantee provided by HM Treasury to the devolved administrations, which specified the funding was to cover the period until March 2021. This contingency is also required in order to support any additional funding requirements as a result of the end of the EU transition period.
The Scottish Government’s limited borrowing powers means we do not have flexibility to increase spending and therefore must manage demand-led expenditure risks within the consequentials provided.
The figures above remain a snapshot of a dynamic funding position. I will formally advise of final allocations as part of Spring Budget Revision, the last formal opportunity in the financial year to transfer budgets.
KATE FORBES
https://twitter.com/i/status/1337006754421501952
Businesses across Scotland will benefit from a new £185 million package of targeted coronavirus support.
The announcement follows discussions with business groups and sees a wide range of sectors benefiting, from taxi drivers and arts venues to travel agents and hospitality.
In addition, there will be additional one-off payments to hospitality businesses in January to help them deal with the traditional post-Christmas dip in demand. These will be of £2,000 or £3,000, depending on rateable value.
The package was announced by Finance Secretary Kate Forbes, who also said she had written to the Treasury calling for Scotland to receive its share of rates relief reimbursed by supermarkets “to ensure this is spent on those areas hardest hit as part of Scotland’s recovery from COVID-19”.
Ms Forbes said: “Today I am pleased to confirm an allocation of £185 million for new and additional business support in the new year. We have listened to businesses and this assistance will be provided on a sector-by-sector basis, targeted at those who need it most.
“We are developing grant schemes for hospitality, for the events sector, live music and cultural venues, for the arts, indoor football centres and for the food and drink sector, including £1.8 million for brewers.
“We will give £1.5 million to travelling show people ineligible for other support, while a new £19 million fund, plus a one-off grant, will help taxi drivers.
“I can also announce that further support of £60 million will be provided to the tourism sector, details of which will be developed in consultation with the industry.
“I am listening to the needs of business and we will continue to review and refine our COVID-19 support offer within the available resources.”
Specific support detailed in Wednesday’s announcement includes:
£15 million for the wedding sector and its supply chain, including photographers
one-off grants totalling £15 million for mobile close contact services, such as hairdressers
a £19 million fund and one-off grants for taxi drivers
£5 million for travel agents
almost £6 million for coach companies and tour operators
£1.5 million for visitor attractions.
More detail on the package will be announced in the coming days and businesses can expect to apply for all the new grant schemes in January.
COVID-19 is having a massive impact on household finances, with personal debts increasing. But some people are seeing their savings rise as their incomes remain unaffected and their spending has been curtailed, says a new financial inclusion monitor from the University of Birmingham and the University of Lincoln.
The research also shows that the impact of COVID-19 comes on top of poor economic performance in 2019 (a likely result of Brexit uncertainties). Economic growth was negative and in the fourth quarter of 2019 it was zero. Furthermore, unemployment, under-employment and zero-hour contracts had all increased in 2019, while wages had started to fall in real terms towards the end of that year and into early 2020.
The 2020 briefing, now in its eighth year, highlighted that even though strains on family budgets were there prior to the pandemic, the impact of COVID-19 on top of this situation looks set to be monumental.
From just March to May 2020, between one quarter and one third of jobs were furloughed, and from March to April that year there were 2 million more claims for Universal Credit than there had been in the same period in 2019. By the end of May 2020, 28 per cent of the population said that COVID-19 had had a direct negative effect on their income.
For some households the Job Retention (furlough) Scheme and the boost to Universal Credit have been incredibly important interventions to support people’s incomes. However, those on ‘legacy’ benefits, are not seeing the same level of income protection, leading to a two-tier benefit system.
Karen Rowlingson, Professor of Social Policy and a member of the Centre on Household Assets and Savings Management (CHASM) at the University of Birmingham, and co-author of the report said: “COVID-19 has had, and is likely to continue for some time to have, a devastating impact on UK household finances.
“But it is important to note that, even prior to the pandemic, family budgets and the UK’s economy more generally were already faltering in many ways, possibly as a result of Brexit-related uncertainties during 2019.”
“Our research shows these are extremely difficult times for the country and many within it. Some statistics reveal, however, that a significant minority of the population is unaffected, financially, by COVID-19 or, indeed, are somewhat better off financially as their incomes remain the same but their expenditure drops. Inequality is rising still further as a result.”
Other key findings of the report show:
Unemployment had started to increase even before the COVID-19 crisis, possibly due to Brexit-related uncertainties.
Underemployment was similarly trending slightly upwards again to 2.5 million in December 2019. And the number of zero hour contracts also began increasing again in 2019 to a record high of 974,000.
The Trussell Trust has seen a doubling of emergency food parcels going to children in April 2020 compared to April 2019.
Prior to the COVID-19 crisis, nearly 2 million families (6 per cent) said that they could not keep up with bills and regular debt payments according to 2018/19 data. Levels of problem debt were highest among renters, particularly council and housing association renters with Council Tax debt being the most common type of debt in 2018/19.
There has been an increase in the last year from 1,590 mortgage possessions in the third quarter of 2018 to 2,130 in the third quarter of 2019.
There is slightly more positive news in relation to financial inclusion with the number of people ‘unbanked’ reaching an all-time low in 2018/19. But there is growing concern about access to cash as bank branch closures escalate and free cash machines continue to disappear from local high streets.
Steve McKay, Distinguished Professor in Social Research from the University of Lincoln and a co-author of the report says: “COVID-19 has led to an increase in already high levels of anxiety about finances with an estimated 4.6 million people now in arrears on household commitments totalling around £6 billion.
“As the furlough scheme finishes at the end of October and the eviction ban on tenants has already ended we will see a further rise in personal debt and people losing their homes”
VIRGIN MONEY INVESTS IN NEW FLAGSHIP STORE IN SCOTLAND’S CAPITAL
New store first of its kind in Scotland
55 Clydesdale Bank branches will rebrand to Virgin Money Stores
Entire nationwide network of stores will operate under the new Virgin Money brand by spring 2021
Virgin Money has opened its state-of-the-art flagship Store in Edinburgh as part of its UK wide store rebrand programme.
The new flagship store located at 83 George Street, is the latest example of Virgin Money’s innovative approach to what a bank branch can offer. Once Covid-19 restrictions have been lifted, customers will be able to experience the full range of the new store’s features, including a space for entrepreneurs to co-work and create, a venue for events and much more as Virgin Money invests in UK high streets as part of its nation-wide rebrand.
The multi-million-pound rebranding of its national network of Clydesdale Bank, Yorkshire Bank and Virgin Money sites to the new Virgin Money branding will be completed by spring 2021, bringing all stores under a single brand.
Each rebranded store will offer full banking services to all 6.6 million customers in the Virgin Money Group, vastly increasing the network of available stores to existing Clydesdale Bank, Yorkshire Bank and Virgin Money customers. Over the coming months customers will also begin to see credit cards, banking apps and account statements change to Virgin Money as part of its wider rebrand activity.
Customers will continue to benefit from the same friendly and knowledgeable teams, providing excellent customer service and access to a wide range of Virgin Money products and services from current account to mortgages and credit cards. Customers will also have access to exclusive products and services from the wider Virgin Group of businesses.
Paul Titterton, Head of Personal Distribution at Virgin Money said: “These are exciting times for Virgin Money as we invest in our stores and move to a single brand for all customers.
“The new George Street store brings together the very best of digital banking with a unique offering on the high street. It’s a new chapter for our history, and our new approach to stores proves that a bank branch can be a buzzing creative space where businesses and people can come together.
“We can’t wait for the Covid restrictions to lift so customers can enjoy the full Virgin experience in our new Edinburgh store.”
As part of the programme 55 Clydesdale Bank branches will be rebranded to Virgin Money Stores across Scotland.
Virgin Money are in communication with its customers in advance of their own branch being rebranded to let them know about when they can expect the changes to be made.
The number of people missing a credit card or loan payment in the UK is estimated to have almost doubled in just a month, new Which? research has revealed.
The consumer champion warns scaled back financial support measures may not be sufficient to protect consumers in financial difficulty.
The latest findings from Which?’s consumer insight tracker reveal that approximately 370,000 more people defaulted on a credit card or loan in October than in September, with the estimated number rising from 410,000 to 780,000. This is the sharpest rise in missed payments of this type since the start of the pandemic.
Overall, 5.8 per cent of respondents to the Which? survey reported that their household had defaulted on at least one housing, credit card, loan or bill payment in October. This was a significant increase from September’s figure of 3.8 per cent, and was driven by the increase in defaults on credit cards and loan repayments.
A missed payment is an indicator of significant financial difficulty, and the large spike is highly concerning as it comes as the financial regulator reduces the level of support given to people who are in financial difficulty on 31 October – the same date that the government’s Job Retention Scheme also finishes.
With the Bank of England predicting that unemployment is expected to rise to around 7.5 per cent by the end of the year, and debt advice charity StepChange seeing 13,000 people seeking debt advice for the first time in August alone, Which? is concerned that the Financial Conduct Authority’s scaled back measures will not be enough to tackle the looming challenge to the financial wellbeing of huge numbers of people.
The FCA initially responded rapidly to the coronavirus outbreak, working with the banking industry to introduce a range of financial assistance measures – including payment holidays for mortgages and other forms of credit for those who are struggling financially as a result of the pandemic.
Which? has been warning since August about the need to prepare robust plans to help people through the winter months, after its research indicated that furloughed workers are three times more likely to have defaulted on at least one payment in the previous month. The consumer champion subsequently called for an extension of existing support measures until the start of next year.
However, the FCA has since announced that, from 1 November, lenders will be required to carry out assessments of individual circumstances in order to provide support, rather than consumers being able to self-report their financial difficulty.
Which? has serious concerns about the industry’s capacity to handle a potential deluge of requests for urgent assistance.
Recent research from the consumer champion found that 22 per cent of mortgage holders had contacted, or attempted to contact, their lender since the start of the pandemic and 61 per cent of those requested a payment holiday.
Worryingly, more than half (56%) reported having a problem doing this – with issues including long call wait times, and no responses to email or phone messages.
While it will always be better for a customer who can afford to continue to make payments towards their credit card or loan payments to do so, these figures suggest many people are struggling financially and will need support from their lender.
The consumer champion fears that the additional requirement to assess people’s personal circumstances could create a significant backlog with firms who are having to deal with consumers needing financial support as their payment holidays come to an end, and an additional influx of people seeking help after the government’s job retention scheme finishes on 31 October.
Which? does not want to see consumers denied support altogether, or facing delays that mean they are unable to access help before missing a payment. It believes the regulator should be prepared to move quickly to reintroduce measures similar to the original support if the industry struggles to cope with demand.
Which? is also opposed to a return of normal reporting of financial support on consumer credit files, as this risks pushing large numbers of people facing temporary financial hardship into long-term difficulties.
Currently, payment holidays are not marked on credit files as it has been acknowledged that these are exceptional circumstances. However after 31 October, if a lender offers a payment holiday or agrees an arrangement with a consumer to make reduced payments, these will be reported as missed payments.
Which? believes it is not fair to penalise customers who fall into financial difficulty at this stage of the pandemic through no fault of their own, when people who needed help at the start were able to take payment holidays without facing the same consequences.
Gareth Shaw, Head of Money at Which?, said: “This significant increase in missed payments is a warning sign that large numbers of people could be on the brink of really struggling financially, and it reinforces our concerns about the impact of the government, regulators and industry rolling back vital support.
“There is a real risk that the additional hurdles customers face could mean help is delayed, or impossible to access at all – which could leave many facing serious debt problems.
“Firms need to be proactive and flexible with people who need urgent help, and if there is evidence that customers can’t get the support they need quickly enough, the regulator must be prepared to introduce stronger measures.”
