A COSLA Spokesperson said: “Following an emergency meeting of Leaders today (Friday) Council Leaders have agreed that COSLA approach the Scottish Government seeking urgent further discussions around their expectations for education. There was agreement that Scottish Government expectations cannot be met unless additional necessary resources are provided.
“Council Leaders re-emphasised their great disappointment with the approach taken by Scottish Government on this matter which is neither in the spirit of partnership working nor recognises councils’ legitimate authority to make decisions on the services they deliver on behalf of their local communities.”
“A mandate has been provided to open discussions to consider how the government’s priorities might be delivered, including considerations on the flexibilities and the overall quantum of funding in the Local Government settlement and establish a shared understanding of the best path forward, to achieve our shared objective of closing the attainment gap and maintaining other vital local services.”
“Leaders remain committed to improving attainment and closing the poverty related attainment gap and achieving the best outcomes possible for all young people. Local Government has made good progress in the last few years and have seen the biggest ever decrease in the gap.
Leaders acknowledge this is down to the partnership working between local and central government pulling together for a shared outcome, which always provides the best opportunity to achieve our ambitions in difficult circumstances.”
The Salaries Committee of the EIS has highlighted that the First Minister has it within her power to bring an end to the current dispute over teacher pay.
This follows a question at First Minister’s Questions in Parliament, where the First Minister said that she “very much hoped” that a resolution to the pay dispute could be reached “soon”.
Commenting following a meeting of the EIS Salaries Committee on Thursday afternoon, where the ongoing dispute over pay dominated the agenda, EIS Salaries Convener Des Morris said, “While the EIS Salaries Committee very much shares the First Minister’s ‘hope’ that a resolution to the pay dispute can be reached ‘soon’, we would also point out that the ability to settle the dispute is very much within the First Minister’s power.
“The only thing that will settle this dispute is an improved offer to Scotland’s teachers, one that is both fair and affordable to them, which will involve additional new money from the Scottish Government.
“This is what was done to settle disputes with other local government workers. It is the First Minister who has ultimate control over the purse strings so, if she wishes this dispute to be settled soon, the First Minister should authorise the Cabinet Secretary and her officials to release the comparatively modest additional funding needed to end this dispute.”
Mr Morris continued, “The truth is, that little or no progress has been made towards an agreement for several months. There are currently no further pay negotiations scheduled within the Scottish Negotiating Committee for Teachers (SNCT).
“Negotiating meetings through the SNCT have become profoundly frustrating affairs, as Scottish Government negotiators are coming into talks with their hands effectively tied and with no additional money to offer. We have been extremely clear that the current 5% offer on the table – which was itself simply a repackaging of a previously rejected 5% offer – will not be accepted by Scotland’s teachers.
“We have now rejected sub-inflationary 5% offers twice, and underlined this rejection through three days of strike action by most EIS members, so only a fresh offer which is good enough to put to our members for consideration can hope to halt strike action in our schools.”
Mr Morris added, “As ever, the EIS remains ready and willing to re-enter discussions with the Scottish Government and Scottish local authorities to discuss a new pay offer for teachers.
“We are not, however, willing to continue discussing the same offer that has now been rejected by teachers twice. The Scottish Government and COSLA must come up with an improved offer to allow pay discussions to progress towards an agreement that genuinely reflects both the soaring cost of living and the value of Scotland’s teachers.”
New analysis by IFS researchers shows the stark funding challenges facing the Scottish Government, and the public services it is responsible for, over the next five years and beyond.
In the next two financial years, the budget for day-to-day non-benefit spending looks very tight:
After taking account of in-year funding top-ups this financial year, which under current plans will not be available in 2023–24, funding will fall by 1.6% in real terms in 2023–24 compared with this year. Even after adjusting for major one-off costs this year, such as council tax rebates, the reduction will still be 0.8%.
Official projections imply that funding will fall by a further 1.6% in real terms in 2024–25, and then grow only modestly over the next three years. This means that funding is set to be almost 2% lower in 2027–28 than in 2022–23.
Such cuts would imply difficult trade-offs for the Scottish Government. Increasing spending on health to meet rising costs and demand, and boosting spending on net zero policies could require cuts of around 13% to other public service spending between 2023 and 2027.
These are among the key findings of two pre-released chapters from the inaugural IFS Scottish Budget Report, focusing on the Scottish Government’s funding outlook and devolved income tax revenue performance. Other key findings include:
Medium-term outlook
The baseline projections above rely on Scottish Fiscal Commission (SFC) forecasts of a significant improvement in income tax revenues. This largely reflects faster expected growth in Scotland’s underlying income tax base relative to the rest of the UK, rather than the effects of tax rises announced in the Scottish Budget last month. If this faster growth doesn’t materialise, then the Scottish Government’s choices would be harder still, with funding for non-benefits spending in 2027–28 still 5% below 2022–23 levels.
The faster growth in Scotland’s tax base forecast for the next few years follows a period during which the tax base has grown more slowly than in the rest of the UK. Because of this, SFC forecasts imply that even by 2026–27, almost one-third of the yield from Scotland’s higher income tax rates will be offset by slower tax base growth since the devolution of income tax in 2016–17. This would still be a substantial improvement from this financial year though, for which the SFC estimates that revenues from Scotland’s income tax policy changes since devolution will be more than fully offset by slower underlying growth in the tax base.
Long-term outlook
While the Barnett formula used by the UK government to allocate funding is often thought to benefit Scotland, in the long term it is likely to lead to relatively smaller increases in funding for Scotland than for England. The speed of this ‘Barnett squeeze’ depends on the rate of growth in spending in England (both real-terms growth and that which merely offsets inflation), and the rate of population growth in Scotland relative to England.
Using long-term projections for inflation and GDP growth from the Office for Budget Responsibility, assuming public spending is held constant as a share of GDP, and taking into account population projections from the Office for National Statistics, we project Scottish Government funding per person would increase by an average of 1.2% per year in real terms over the 30 years between 2027–28 and 2057–58. This compares to an average of 1.4% in England over the same period. Under this scenario, spending per person in Scotland would fall from 124% of English levels in 2027–28, to 121% in 2032–33, and to 115% in 2057–58.
Faster real-terms spending growth in England to meet the rising costs of health and social care (which are expected to grow faster than GDP) would result in bigger absolute increases in funding for the Scottish Government, making it easier for it to meet these costs in Scotland. However, it would increase the Barnett squeeze on funding levels relative to England – making it harder for the Scottish Government to maintain enhanced levels of service provision over and above those in England.
Bee Boileau, a research economist at the IFS and an author of the report said: “Additional funding from the UK government and a forecast boost to devolved tax revenues mean the outlook for funding has improved a little since last May’s Resource Spending Review.
“But the picture is far from rosy. Official projections imply that funding for non-benefit spending is set to fall over the next two years and then grow only slowly over the following three years. Indeed, it would still be close to 2% below 2022–23 levels in 2027–28. And that assumes a significant improvement in the performance of Scotland’s devolved income tax revenues – without that, this funding would be close to 5% lower than this year in 2027–28.
If either of these scenarios were borne out, the Scottish Government would likely need to make significant cuts to a range of public services. Further big increases in devolved tax rates would be one way to avoid such cuts.
“The Scottish Government will instead be hoping for additional funding from the UK government – which may not be in vain as the UK government would also need to make cuts to many services if it sticks to the plans for spending it has pencilled in.’
David Phillips, an associate director at the IFS, and another author of the report said:‘The Scottish Government’s long-term funding outlook beyond 2027–28 will also be determined, to a large extent, by UK government spending decisions via the Barnett formula.
“This formula is often seen to benefit the Scottish Government, by providing it with a much higher level of funding per person than is available for comparable services in England.
But this is a misunderstanding of the nature of the formula and its purpose. Because it provides the Scottish Government with a population-based share of funding changes planned for England, and Scotland starts with a higher-than-population share of funding, it delivers a smaller percentage increase in funding for Scotland than England.
This so-called Barnett squeeze will make it more difficult for the Scottish Government to meet rising costs and the demands on public services associated with an ageing population, and to maintain enhanced service provision relative to England, such as free personal care and free university education, in the longer term.”
The British Dental Association has warned the Scottish Government must step up to prevent a wholesale exodus from the service in April, following new figures from the Scottish Liberal Democrats suggesting an 8% fall in the number of NHS dentists since lockdown.
The professional body warns that dentists have little sense of what payment system they will be working to come 1 April. On 1 October the Scottish Government cut the ‘multiplier’ designed to support the pandemic recovery, that increased NHS fees by 1.3. A lower bridging payment’ took effect uplifting NHS fees at a rate of 1.2 for the next three months, falling to 1.1 for the period up to April 2023.
While COVID emergency measures have been withdrawn, practices continue to face an historic backlog, with many patients requiring more extensive treatment having bottled up problems during the pandemic.
The BDA say that in the weeks ahead progress must be made to deliver needed change to the broken high volume/low margin model NHS dentistry is based on. Without reform it stresses we will see a further flight of dentists from the NHS that is already evident in other UK nations.
Facing surging practice running costs, the BDA says that without an adequate interim funding package several key treatments, and anything – like dentures – that requires laboratory work, risk being delivered at a financial loss.
Robert Donald, Chair of the British Dental Association’s Scottish Council said: “Ministers need to understand that Scotland can’t have NHS dentistry without NHS dentists.
“Today colleagues have little sense of what the future will bring when the last pandemic support is pulled away.
“What they do know is this service hasn’t bounced back, and that some NHS treatments are now being delivered at a loss. “The Scottish Government needs to make a serious long-term commitment to prevent a wholesale exodus from the NHS.”
R&D tax relief reform set to simplify the system and help grow the economy Clearer information about how much relief business will receive to be offered up front, helping them budget for R&D
Follows £20 billion investment in R&D from government at Autumn Statement and the Chancellor’s pledge to understand how to provide further support for R&D intensive SMEs
The Government has launched a consultation to simplify the UK’s R&D tax relief system, drive innovation and grow the economy.
The 8-week consultation, which runs from 13 January to 13 March 2023, sets out proposals on how a single scheme could be designed and implemented. This would replace the two R&D tax relief schemes currently in place – the Research and Development Expenditure Credit (RDEC) and the small and medium enterprises (SME) R&D relief.
A scheme modelled on the current RDEC for SMEs would also give decision makers in smaller companies clearer information, which will help them set budgets for R&D. In contrast, for those claiming SME tax relief in the current setup, the exact amount of money their firm will receive can only be known with certainty at the end of accounting period.
This is part of the government’s ongoing R&D tax reliefs review, and follows changes announced at Autumn Statement 2022 where the generosities of the two R&D tax schemes were broadly aligned, with the Chancellor pledging to work with industry to understand how to provide further support for R&D intensive SMEs.
The UK’s R&D tax reliefs have an important role to play in encouraging more businesses to invest in R&D, helping them to grow and create the technologies, products and services which reshape lives and livelihoods.
Government spending on R&D plays a crucial role in stimulating private sector investment which is why it is increasing investment to £20 billion a year by 2024-25 – the largest ever increase in a Spending Review period.
Victoria Atkins MP, Financial Secretary to the Treasury, said: “We are focussed on growing the economy – with thriving businesses bringing more jobs, higher pay and more tax revenue to fund our precious public services.
“Getting R&D tax relief right and fit for the future sits at the heart of making sure the UK remains a competitive location for cutting edge research – helping new firms grow.
“I welcome views on the option to simplify the scheme, especially from those who have experience of the existing tax reliefs.”
The UK is unusual in having two schemes and moving to a single measure would simplify the R&D tax system in line with the government’s overall plans for tax simplification.
The government would like to hear from a wide range of sources including individuals, companies, representative and professional bodies, and especially invites comments from research and development intensive businesses and those representing them.
The government recognises the reform to the rates creates challenges for some R&D intensive SMEs and those in the life sciences sector in particular and believes there is merit to the case for further support. Any further changes will be announced in the usual way, at a future fiscal event.
If implemented, the new scheme is expected to be in place from 1 April 2024.
Local Government spending decisions are being increasingly directed by Scottish Government, and the way Local Government finances are presented by Scottish Government is potentially confusing for the general public.
This can lead to raised expectations and lack of clarity in our communities about the reality of what is now possible to deliver on the ground, COSLA said today (Monday 16th January).
COSLA was clear that this year we needed and asked for a £1bn extra in real terms however we have ended up with £38million and that this was simply not good enough.
COSLA added that to avoid socially harmful cuts, the finances of Local Government need early and proactive discussions to avoid an annual public argument about the reality of what can and cannot be afforded by Councils.
Councils also need more freedom to address local priorities and the ability to focus on improving outcomes.
Commenting today, COSLA’s Resources Spokesperson Councillor Katie Hagmann said: “Given the significance of our council services to the lives and livelihoods of everyone across Scotland, communities deserve clear and consistent facts in relation to Local Government finance rather than a yearly debate on how much money is or is not available.
“All our communities are concerned about is the level of service they can expect that there is support for the most vulnerable and want to ensure their local environment looks and feels as good as it can – all of these things are under threat because of successive years of underfunding.
“Last week saw the publication of the Accounts Commission’s report on the health of council finances. The report makes it clear that councils are going to have to take very tough decisions over the next few years to balance the books, given the financial pressures they face.
“Responding to the Accounts Commission report, Scottish Government has quoted both real and cash terms increases of £2.2 bn between 2013-14 and 2022-23, but this is contradictory.
“We owe it to our communities to be clear, consistent and transparent about the starting point and how much less, in reality, councils have to spend year on year on the services that our communities rely on.
“In 2013-14, the Local Government funding settlement was worth £10.3 bn. Looking to 22-23 the Scottish Government provided £12.5 bn. This does equate to a £2.2 bn cash increase. However, that increase is heavily ring fenced and directed funding for core services and local priorities has stayed the same.
“The reality of having the same amount of money this year as 10 years ago for core services is a real terms cut. As well as increasing costs, this money is also now required to deliver more services than it was 10 years ago – Scotland’s population has increased, the number of households has gone up, COVID has left a legacy of support needs for the most vulnerable and as people live longer, their care needs have become more complex. This is just a snapshot of the demands being faced by councils, not to mention inflation and energy costs.
“For 2023-24, Scottish Government has stated that councils have seen a “£570m increase in their budgets” but the reality is, that only £38m of this can go towards pressures such as inflation, pay and service demand with the rest is for policy commitments that are already in the system, for example £100m to meet Real Living Wage commitments in social care.
“To put this into perspective, a 1% increase in pay across the Local Government workforces equates to around £100m. £38m will not go very far, especially when combined with energy price hikes, supporting the most vulnerable and our commitments to tackle the climate emergency.
“This year, demand for services like social care is at an all-time high but given the range of pressure facing councils, they simply don’t have the resources they need to work towards keep people out of hospital.
“Each day during winter, there is quite rightly a focus on getting people out of hospital to free up beds– currently councils support just over 97% of patients to be discharged without delay.
“The problem is not just getting people out of hospital but stopping them going in – councils simply don’t have the resources they need to provide the care packages or the interventions that prevent ill-health.
“COSLA’s key concerns are not only the socially harmful impact of cuts on our communities, but the way in which Local Government finance has been presented to them. The messaging is that there is more money for essential services each year despite this not being the case with councils asking communities about where they want to see cuts and reductions if essential services, like schools, roads, waste collection, child and adult protection, environmental health and social care are to continue to be delivered, every day of every year.”
Lloyds Bank has appointed Jamie Kemp to the role of Invoice Finance Area Director for Scotland and the North East, as it strengthens its support for businesses across the region.
Jamie has over 11 years of experience in the finance sector, with experiencing spanning across retail, private and commercial banking. Over the last 4 years, Jamie has specialised in Invoice Finance and has been recognised by UK Finance as their Top Foundation and Certificate student.
In his latest role, Jamie held the title of Business Planning Manager for the Invoice & Asset Finance Sales division where he was responsible for overseeing and supporting national delivery and performance.
Jamie Kemp commented:“I am delighted to lead a team of highly experienced Invoice Finance professionals to deliver bespoke solutions for small to medium sized enterprises. The current climate is making the cost of operating more and more challenging for businesses.
“I’m looking forward to supporting those businesses based in the North East and Scotland through these challenging times as much as possible in my new role alongside my team.”
Ben Stephenson, the Head of Specialist Client Solutions at Lloyds Bank, added:“We are pleased to welcome Jamie into the role of Invoice Finance Area Director. He brings with him a wealth of banking and finance experience, which will stand him in good stead to excel in this role and provide exceptional service for our clients.”
While starting his new role, Jamie is also hiring for an Invoice Finance Field Sales position (Associate Director level) based in and around Glasgow. The role has been designed to attract enthusiastic and talented individuals which may be new to the Invoice Finance industry.
It offers a substantial period of training, supported by a comprehensive learning plan, which includes undertaking the Invoice Finance Foundation Course, UK Finance’s entry-level qualification. This should ensure that the successful candidate has the best possible start to a career in Invoice Finance.
Bank of Scotland’s Business Barometer for December 2022 shows:
Business confidence in Scotland fell nine points during December to 15%
Scottish businesses identify top growth opportunities as evolving their offer (36%), investing in their teams (31%) and entering new markets (25%)
Overall UK business confidence rose seven points during the last month to 17%, with eight out of 11 nations and regions reporting a higher reading than November
Business confidence in Scotland fell nine points during December to 15%, according to the latest Business Barometer from Bank of Scotland Commercial Banking.
Companies in Scotland reported lower confidence in their own business prospects month-on-month, down five points at 25%. When taken alongside their optimism in the economy, down 10 points to 6% this gives a headline confidence reading of 15%.
Scottish businesses identified their top target areas for growth in the next six months as evolving their offer (36%), investing in their teams (31%) and entering new markets (25%).
The Business Barometer, which surveys 1,200 businesses monthly, provides early signals about UK economic trends both regionally and nationwide.
A net balance of 11% of businesses in the region expect to increase staff levels over the next year, up three points on last month.
Overall UK business confidence rose seven points during December to 17%. The proportion of businesses that felt positive about the wider economy was up 10 points month-on-month to 8%, while their outlook on their own future trading prospects increased by two points to 27%. Businesses also remained optimistic about job creation, with 16% of firms planning to hire more staff in the next 12 months – up two points on November.
All UK regions and nations reported a positive confidence reading in December, for the first time since July, with eight out of 11 recording a month-on-month increase in confidence. Of those, the North West (up 31 points to 40%), North East (up 24 points to 34%) and South East (up 23 points to 14%) saw the largest monthly increases, with the North West now the most optimistic overall.
Chris Lawrie, area director for Scotland at Bank of Scotland Commercial Banking, said: “Although business confidence has dipped it’s encouraging to see it remain in positive territory, which is testament to the resilience of the business community here in Scotland.
“After a turbulent few months many companies are now looking at shoring up their investment plans for the year ahead. Those planning to invest in their teams and export into new markets will do well to keep a close eye on cash flow to ensure they’re ready to capitalise on opportunities as they arise.”
The manufacturing sector reversed a six-month trend of falling confidence, with a nine-point rise to 13%. Confidence in construction and services also increased by nine points to 29% and 18% respectively. However, retail confidence fell slightly, by two points to 13%.
Paul Gordon, Managing Director for SME and Mid Corporates, Lloyds Bank Commercial Banking, said: “It’s encouraging to see the confidence of most regions and nations rallying as we end the year. This has been a tough time for businesses with rising costs and much uncertainty, but some firms are becoming more confident as we head in to 2023.
“While wage expectations start to temper, prices continue to rise and keeping a close watch on cash flow remains a priority for businesses, no matter what industry you operate in. For those who are in need of support or are looking for advice, especially into the festive season and new year, at Lloyds Bank we are by your side in times of uncertainty.”
Hann-Ju Ho, senior economist for Lloyds Bank Commercial Banking, said: “Business confidence has received a boost in the run up to Christmas as firms anticipate a better festive trading period than last year.
“While firms report being hopeful for a more successful 2023, inflation and the risk of an economic downturn remain the biggest concerns for businesses, with rising costs evidenced by the number of firms expecting to raise prices.
“Wage growth is expected to remain high for now as retaining existing staff and attracting new talent will continue to be priorities for many businesses going into next year.”
Deputy First Minister John Swinney laid out “a different, more progressive path for Scotland” as he presented the Scottish Budget 2023-24.
He promised to strengthen the social contract with the people of Scotland and pledged to do everything possible to shield families from the welfare cuts and austerity policies of the UK Government
Supporting sustainable public services through the cost of living crisis is a priority – including more than £13.7 billion for NHS boards and £2 billion to establish and improve primary healthcare services in communities, as well as £1.7 billion for social care and integration, paving the way for the National Care Service. This record investment goes well beyond any previous commitment to pass on all consequentials to health and social care, and delivers a £1 billion uplift to the health budget.
Having already increased the unique Scottish Child Payment to £25 per week as part of a drive to eradicate child poverty, the Budget invests £428 million to uprate all other devolved benefits in April 2023 by September’s Consumer Price Index inflation level of 10.1%. It commits £20 million to extend the Fuel Insecurity Fund to provide a lifeline for households, including the most vulnerable, against rising energy prices.
Scotland’s transition to net zero is boosted with increased investment to over £366 million in delivering the Heat in Buildings Strategy in 2023-24. This will help tackle fuel poverty as part of a £1.8 billion commitment over this Parliament to improve energy efficiency and decarbonise more than a million Scottish homes by 2030.
The Budget commits £50 million to the Just Transition Fund for the North East and Moray – more than double the 2022-23 allocation – to diversify the regional economy away from carbon-intensive industries and capitalise on the opportunities presented by new, green industries.
Strengthened by the agreement between the Scottish Government and the Scottish Green Party, the 2023-24 Scottish Budget also includes:
around £1 billion investment in high quality early learning and childcare provision, with a further £22 million invested in holiday food provision and expanding support for school-age childcare
£50 million for the Whole Family Wellbeing programme for preventative co-ordinated family support and a further £30 million to keep The Promise to care experienced children and young people
£80 million capital funding to support the expansion of free school meals
going beyond existing commitments with more than £550 million additional funding to Local Government
£165 million additional funding for frontline justice services and to continue with transformational reforms
a £46 million increase in resource funding to universities and colleges to ensure a highly qualified and highly skilled workforce for Scotland
Mr Swinney said: “The Scottish Government, like governments all over the world, is faced with a difficult set of choices. Through this Budget we are facing up to our responsibilities while being honest with the people of Scotland about the challenges which lie ahead.
“To govern is to choose and the Scottish Government has made its choice.
“Within the powers available to us, we will choose a different path. A path which sees the Scottish Government commit substantial resources to protect the most vulnerable people of Scotland from the impact of decisions and policies made by the UK Government. We choose to stand firmly behind the Scottish people, investing in our public services and doing everything possible to ensure that no one is left behind.
“This Budget strengthens the social contract between the Scottish Government and every citizen of Scotland for the wider benefit of society. This social contract means that people in Scotland continue to enjoy many benefits not available throughout the UK – including free prescriptions, free access to higher education and the Scottish Child Payment.
“Because we know this progressive model works, we choose the path where people are asked to pay their fair share, in the knowledge that in so doing they help to create the fairer society in which we all want to live”.
Responding to the Scottish Government Budget, STUC General Secretary Roz Foyer said: “It’s clear that Scotland’s trade union movement has made progress in winning demands from the Scottish Government.
####2Raising taxes on those most able to pay, including second homeowners, are key demands in our ‘Fairer Taxes’ report. We hope reform of the Small Business Bonus Scheme will leave it fairer and less of a drain on public resources and the piloting of scrapping peak rail fares is also a step in the right direction.
“However, we needed strides, not steps. We cannot pretend this is the radical, redistributive budget working people in Scotland needed – it isn’t. We can – and will – demand the government to go much further and deliver the substantial reforms needed to our economy including introducing wealth and further property taxes called for in our report.
“The Finance Secretary has more to do and we welcome his constructive engagement with our movement. This budget leaves the door open for public sector workers to negotiate the inflation level pay rises they so desperately need. We intend to use it.”
Responding to the Scottish Budget delivered by the Deputy First Minister, Dr Liz Cameron CBE, Chief Executive, Scottish Chambers of Commerce, said:“Whilst the backdrop for today’s statement was already set by the Chancellor Jeremy Hunt in the Autumn Statement, today’s Scottish Budget will not bring much Christmas cheer.
“Businesses and households are navigating an extremely challenging period of high energy costs, rising inflation and higher borrowing costs. The specific decision by the Scottish Government to widen the divergence on income tax rates between Scotland and the rest of the UK is exceptionally concerning.
“Many will be left pondering today as to who in the Scottish and UK Governments is standing up for the economy to help businesses survive this crisis and keep people in jobs.”
On taxation:
“The Scottish Government’s move to increase the top and higher rates of income tax will hit taxpayers in Scotland more than other parts of the UK.
“This is a clear disadvantage for Scotland’s businesses and workers and could position Scotland as a less attractive place to live and work. With over 350,000 people alone in the higher rate bracket, questions remain on the impact this will have on talent attraction, retention, consumer confidence and indeed departure of workers to other parts of the UK.
“We urge the Scottish Government to publish its economic modelling of this policy decision, specifically on the proposed impact this could have on future investment decisions by companies.”
On Business Rates:
“As a priority ask from the business community, we welcome the Scottish Government’s decision to freeze the poundage rate and align with the rest of the UK. This will provide relief to ratepayers by reducing the upfront cost burden of non-domestic rates. This was the right decision as is the incentive for businesses to invest in greener plant and machinery which supports net-zero and decarbonisation.
“Looking ahead, businesses need to see widespread reform to the business rates system ensuring it is fit for purpose and aligns with the economic reality that businesses operate in.”
On regulatory legislation:
“The scale of new and incoming regulations are piling additional cost burdens onto firms when they need them least.
“The recent move to delay the short-term lets licensing scheme was welcome and we had hoped for additional signalling from the Deputy First Minister today to delay other burdensome legislation such as the Deposit Return Scheme. This will continue to cause a great deal of frustration for affected sectors and we will therefore continue to represent sector concerns to Scottish Government through the Joint Regulatory Taskforce.”
On Net Zero:
“We welcome the Scottish Government’s intention to accelerate the move to a Net Zero economy. Businesses continue to support this agenda and a clear long-term plan for decarbonisation will support future investment and a just transition.”
Jonathan Carr-West (Chief Executive, Local Government Information Unit Scotland (LGIU) said: “Today’s budget saw Deputy First Minister John Swinney attempting to reach out to local government by promising additional funding and acceding to COSLA’s request to allow councils more freedom over council tax rates.
“Scottish councils will now be poring over the detail to see how much real additional money sits behind the headline of £550 million.
“Moreover, local government in Scotland will still be left wondering how, indeed if, it fits into the Government’s overall vision.
“While Mr Swinney was keen to position his budget in counterpoint to the UK Government, he risks repeating Westminster’s error in protecting the NHS at the expense of local government when we know that the preconditions for good health rely on effective leadership of place and an integration of services that only local democratic institutions can provide.”
The Poverty Alliance says the Scottish Government could do even more to invest in a just and compassionate Scotland:
Tax
Reacting to today’s Scottish Budget announcement, Poverty Alliance Policy and Campaigns Manager Ruth Boyle said: “We welcome the decision to use our tax powers in a progressive way to get more investment for the compassionate Scotland that people want. We hope that this will be the beginning of the Scottish Government’s efforts to use the full range of tax powers at their disposal. In the longer-term, the Scottish Government must reform the basis of our tax system, including implementing the long-awaited reform of council tax, to ensure that our tax system has justice and compassion at its heart.”
Services
“Increased support for the NHS and social care is very much welcomed. However, all of our vital public services are calling out for more investment. This budget raises a number of concerns for the future, and we fear that there will be more cuts to other public services coming down the line. We all rely on these public services, but they are a vital lifeline for people on the lowest incomes.”
Social security
“We are pleased that the Scottish Government have done the right thing and uprated benefits in line with inflation. However, we could go much further. The Finance Secretary stated that a key priority for this budget was tackling child poverty and it is therefore disappointing that the budget failed to uprate the Scottish Child Payment in line with other Scottish benefits. This will mean a real term cut in the value of the payment at a time when families on low incomes need more support to stay afloat. This decision raises particular concern for the poverty of single parents, over 90% of whom are women.”
Transport
“The decision to trial the scrapping of peak rail fares will help people to make ends meet as costs continue to rise. However, evidence shows that people on the lowest incomes are more reliant on buses. There is a need to improve access to affordable transport by extending free bus travel to people on low-income benefits and to those aged under 25.”
Spending plan ‘will protect families and public services’
The 2023-24 Scottish Budget will take a distinctive approach to creating a fairer, more equal Scotland, Deputy First Minister John Swinney said.
He stressed the three Budget priorities of eradicating child poverty, strengthening public services and moving towards a net zero economy were strongly linked and would give more people the opportunity to flourish.
Ahead of delivering the Budget to Parliament today, Mr Swinney visited a scheme in Wester Hailes, delivered by City of Edinburgh Council and part-funded by the Scottish Government, installing insulation for households at risk of fuel poverty.
He said: “I was encouraged to see the vital work being carried out to improve energy efficiency and make homes warmer for families facing significantly higher bills this winter. This scheme highlights how tackling the increased cost of living can assist our drive towards net zero, and is an example of the importance of effective public services.
“Our Budget goals are mutually beneficial and represent a distinctive approach to the economic challenges we face. The Scottish Budget will take further steps to address inequality and eradicate child poverty. It will encourage a just transition to net zero, creating wealth and opportunity across the country. And it will be the catalyst for reforms necessary to ensure our first-class public services remain sustainable in the face of the challenges to come.
“I would like to go even further but the cost of living crisis has also laid bare the fiscal constraints of devolution, as we cannot borrow to support day to day expenditure when times are hard to assist us through these difficult days. It is clear that businesses and households are paying a steep price for the economic mismanagement of the UK Government.
“The cost of living crisis requires decisive action. In setting this Budget, the Scottish Government will use its limited powers to the maximum extent that is responsible, to meet the challenges faced by the people of Scotland.”
The Scottish Budget 2023-24 will be presented to the Scottish Parliament TODAY (Thursday 15 December).
The outlook for Scotland’s budget in 2023-24 has undoubtedly been made more challenging due to factors wholly outwith the control of the Scottish Government, but there are decisions that Deputy First Minister John Swinney can make to ease the path ahead for Scotland, according to a report published yesterday by the Fraser of Allander Institute.
In its-pre Budget report, the University of Strathclyde-based Institute says that in the face of high inflation, the UK Government’s Autumn Statement provided some comfort with additional transfers that will more or less offset the impacts of inflation over the next two years.
The Scottish Government now needs to set out how it will use its significant devolved tax powers and whether to use them to generate more revenue for public services, including public sector workers.
The Resource Spending Review, published in May this year, provided a blueprint for spend over this parliament, but we have already seen deviations from planned spend in this financial year, and changing priorities may see further revisions when the draft Budget is set out on the 15 December.
The Fraser of Allander Institute’s annual pre-budget report, published today (12 December) examines the context to the budget and the key decisions facing the Scottish government in 2023-24.
Its findings include:
the economic situation has deteriorated markedly since the 2022-23 budget was presented, with high inflation set to eat away at living standards over the next two years.
the high inflation environment eroded the value of the Scottish Government’s budget in 2022-23 meaning that the present financial year’s budget is worth about £1bn less in real terms
Despite fears of cuts to the near-term budget, the announcements made by the UK Chancellor more or less offset the impacts of inflation on the Scottish budget in 2023-24 and 2024-25
the Scottish Government has significant devolved tax powers and therefore has decisions to make on Thursday about whether or not to use them to generate more revenue for public services.
Professor Mairi Spowage, Director of the Institute, said: “John Swinney is getting set to present his first budget in seven years, in what he has acknowledged is an unprecedentedly tricky time for the Scottish public finances.
“The challenges he has been dealing with for 2022-23 ease a bit for 2023-24: there was some additional money announced at the Autumn Statement which generated around a £1bn of consequentials, offsetting the inflationary pressures on the budget.
“But there are also flexibilities that the Deputy First Minister has for the next financial year that were not available to him for this year – the Scottish Government does have tax powers that could be used, if he wishes, to raise more revenue.”
Emma Congreve, Deputy Director, said: “In amongst all the headline-grabbing decisions, it will be important to take a step back to see how this Budget helps Scotland achieve its long term ambitions.
“We are expecting that the government will set out, clearly and transparently, the choices it has made and what the impact, both good and bad, will be for policy outcomes and the impacts on different groups.”
