Gordon Macdonald MSP has highlighted the record funding going to City of Edinburgh Council after the Scottish Budget was passed at Holyrood this week, providing a £1 billion increase in funding to local authorities.
After the budget received cross-party support – despite Labour and Tory MSPs sitting on their hands – City of Edinburgh Council is set to receive an increase in funding worth £60 million.
This increases funding for local priorities, teachers, and additional support for learning and to tackle the climate emergency. It also facilitates pay increases agreed for teachers, social care workers, refuse collectors and more.
Gordon Macdonald MSP said: “This year’s Scottish Budget provides record funding for Edinburgh Council which will help deliver the services people rely on and ensure our communities get the investment they need.
“After over a decade of austerity and a Labour tax hike which is set to cost councils £100 million, our local authorities have been repeatedly betrayed by Westminster parties.
“Under the SNP, we are not only investing in our local councils, but we are mitigating the impact of Westminster decisions, to the tune of £144 million for the National Insurance hike alone.
“This SNP government is delivering for the city, and I am pleased parliament has backed this budget to ensure that continues.”
First Minister writes to Scottish Labour Party Leader
Following news the UK Government will invest in Grangemouth’s future, First Minister John Swinney has written to Scottish Labour Party Leader Anas Sarwar inviting him to vote for the 2025-26 Scottish Budget in a “spirit of cooperation” and deliver investment worth almost £90 million to support jobs at the site.
I welcome the response from the Prime Minister to my call last week for the UK Government to provide support for Grangemouth.
I know you share my concern that the decision to close the Grangemouth refinery is premature and fundamentally short sighted and the UK Government’s commitment to additional investment is a step in the right direction. We all have a responsibility to work collaboratively to secure Grangemouth’s long-term future, its workforce and Scotland’s transition to net zero.
My announcement last week that the Scottish Government will make a further £25 million available to enable businesses to bring forward investable propositions for Grangemouth, will be put to Parliament as an amendment at Stage 3 of the Budget Bill tomorrow.
This funding will be made immediately available from the beginning of the next financial year without requiring match-funding.
I hope that when the UK Government provide more details on the announced £200 million being available through the National Wealth Fund that this will also be available for timely deployment on a similar basis as the funding I have set out and that these funds align to best support a just transition for Grangemouth.
In that spirit of cooperation, I trust that you and Scottish Labour colleagues will now be in a position to vote for the Budget at Stage 3 tomorrow and work constructively to deliver the nearly £90 million investment for Grangemouth, supporting the jobs, livelihoods and businesses which depend on it.
New funding agreed for bus fares, drug services and free school meals
Agreements have been reached separately with the Scottish Liberal Democrats and Scottish Green Party to support the SNP’s 2025-26 Budget.
Finance Secretary Shona Robison has announced she will table amendments to the 2025-26 Budget Bill to allocate £16.7 million funding to: • Bolster drug and alcohol services, including £1 million for specialist support for babies born addicted to drugs • Begin a £2 bus fare cap pilot in one regional transport area • Further strengthen support for hospices from £4 million to £5 million • Increase Nature Restoration by £3 million to its highest ever level • Invest in targeted support for the College sector and protect Corseford College • Extend free school meal eligibility in S1-S3 in eight local authority areas for pupils in receipt of Scottish Child Payment • Offer flexibility for Orkney Island Council in terms of capital and resource funding
Ms Robison said: “We are determined to deliver on the issues that matter most to the people of Scotland – and that is why this Budget invests in public services and in eradicating child poverty, acts in the face of the climate emergency, and supports jobs.
“The First Minister was clear that we would bring forward a budget by Scotland for Scotland, and the negotiations we have taken forward have been in that spirit. These additional initiatives demonstrate the value of a progressive approach and dialogue.
“During every stage of this process the Liberal Democrats and the Greens have engaged in our discussions in a positive and constructive manner.
“Through seeking compromise I believe we are delivering a budget that will strengthen services and support our communities. With the agreements with these two parties now in place this will secure a majority in parliament in support of the Budget Bill.”
The Scottish Greens will support the forthcoming budget, following confirmation that the Scottish Government have agreed to the party’s proposals on record climate funding, the expansion of free school meals and trialling a £2 cap on bus fares.
As a result of proposals tabled by Scottish Green negotiators, the Government’s budget will now be changed to include the roll-out of free school meals to thousands more young people and a year-long regional trial of a £2 cap on bus fares.
Other Green proposals accepted include increasing funding for nature restoration to a record £26m, more free ferry travel for young island residents, free bus travel for asylum seekers and help for first time home buyers by increasing tax on the purchase of second/holiday homes.
The Scottish Greens have confirmed they’ll be backing the Scottish Government’s budget@Ross_Greer says it follows promises on school meals, a £2 bus fare cap trial and more money for nature restoration pic.twitter.com/rvtCo7W1pv
Scottish Greens finance spokesperson Ross Greer MSP said: ““The Scottish Greens put climate action, tackling child poverty, cheaper buses and ferries and funding for schools at the heart of our budget negotiations. We have delivered progress on all of these fronts, so our MSPs will be voting for the budget.
“No young person should be sitting in school hungry. As a result of our work, thousands more pupils in S1-S3 will now receive a free school meal. This will build on the success of expanding free school meals in primary schools, a policy delivered by the Scottish Greens a few years ago.
“Our Green MSPs have also secured a year-long regional trial where bus fares will be capped at £2, because we know the cost of public transport needs to come down. This also builds on the success of free bus travel for young people, another Scottish Green policy we made a reality.
“With climate chaos all around us, we have worked to deliver record funding for nature restoration and our environment. These Green projects are creating well-paid jobs in communities across the country, particularly in rural areas.
“From schools to libraries to social care to bin collections, our councils deliver the services we all depend on. We have worked with Scottish Green councillors to ensure that this year’s budget delivers a fair deal for local councils, including an end to the Council tax freeze.
“These changes secured by Scottish Green MSPs will lift more children out of poverty, reduce the cost of public transport, create good quality jobs, tackle the climate crisis and protect local services. That’s in stark contrast to Labour, who agreed to let the SNP’s budget pass without making any attempt to improve it. If you want action to help people and planet, voting Scottish Greens is the best way to deliver it.”
As a result of Scottish Green negotiations, this budget includes:
Making public transport cheaper: A year long regional trial of capping bus fares at £2 starting 1st January 2026, free bus travel for people seeking asylum and free inter-island ferry travel for young island residents
Action to tackle child poverty: The expansion of free school meals to thousands of S1-S3 pupils who receive the Scottish Child Payment, starting with eight councils areas in August 2025.
Record climate action: A record £4.9bn of funding for climate action and nature restoration.
Progressive taxation to support public services: Increased tax on the purchase of second or holiday homes and moving forward with proposals for a Cruise Ship Levy, the consultation for which will launch in February
Protecting local services: A real-term funding increase for local councils, and progress on giving councils more direct power through a consultation on devolving Parking Charge Notices (parking fines)
Commenting on the deal, Scottish Lib Dems leader Mr Cole-Hamilton said:“We have today reached an agreement with the Scottish Government. There is a long list of policies and projects that we’ve won for our constituents, and for Scotland as a whole, and so we will be voting for the Budget.
“In a Parliament of minorities Scottish Liberal Democrats will always act responsibly and try to find common ground.
“As a result, Lib Dem priorities will now be backed by hundreds of millions worth of government investment. I am pleased that we have secured money for new drug and neonatal services. As a former youth worker I know how important it is to give children the best start in life and few have it tougher than babies who are born addicted to drugs.
“Alongside the long list of Lib Dem demands baked into the first draft of the budget, we have also secured additional money for new college programmes focused on care and offshore wind, more money for hospices, and backing for the young people attending Corseford College.
“Scottish Labour’s decision to abstain on the Scottish Budget confirmed once and for all that there would be no early election. This was always very unlikely and that’s why all along Scottish Liberal Democrats have sought to shape the budget to unpick some of the damage caused by years of SNP neglect.
“This budget shows that by backing the Liberal Democrats you get a local champion focused on the issues that matter the most.”
As there will be no early election, the budget is a means to unpick some of the damage caused by SNP neglect.
From a new Belford Hospital in Fort William to a new Eye Pavilion in Edinburgh, you can already see significant Liberal Democrat demands baked into the budget. pic.twitter.com/2cdFBlUCRI
TOM ARTHUR VISITS ‘INSPIRING’ SPARTANS TO ANNOUNCE FUNDING PLANS
A scheme helping pupils to learn in a football environment is one of a range of regeneration projects set to share £62 million from the 2025-26 draft Scottish Budget.
The funding will help Spartans Community Foundation in Pilton, complete construction of a permanent classroom. This would replace temporary cabins where students who may struggle in school receive lessons in literacy, numeracy, entrepreneurship, art and physical education.
The project also assists young people to access jobs, apprenticeships and college placements as they leave school.
Other regeneration schemes earmarked for support in the draft Budget include:
clearing three derelict sites in the Lochee area of Dundee to make way for affordable homes
restoring Arbroath’s Courthouse as a centre offering careers advice and skills training
redeveloping Glen Urquhart Public Hall into a community hub
Visiting Spartans to hear about the organisation’s work within the local community, Employment and Investment Minister Tom Arthur said: “Regeneration is a key priority for the Scottish Government – as it contributes to growing the economy and creating jobs.
“This inspiring scheme run by Spartans illustrates how local people can identify the issues they want tackled and then come up with the solution, at which point the Scottish Government is able step in with support.
“The new classroom will help more young people leave school with qualifications, find jobs and further education opportunities, as well as enjoy free football sessions. It is an example of delivering economic growth and tackling poverty at the grassroots.”
Other recent local projects to regenerate northern Edinburgh include the transformation of derelict industrial units at Granton Waterfront into communal spaces and the ongoing development of a community hub with an early years centre, library and space for North Edinburgh Arts on Pennywell Road.
Funding for local authorities to test and improve how they deliver wrap-around support for parents and families will be doubled to more than £6 million by the 2025-26 budget, helping expand work towards eradicating child poverty.
The Scottish Government’s Fairer Futures Partnerships will help test new approaches and identify lasting solutions rather than quick fixes, Social Justice Secretary Shirley-Anne Somerville said. Increased funding will allow Fairer Futures Partnerships to expand to more areas, supporting new approaches and holistic support.
On a visit to Irvine Royal Academy, Ms Somerville met parents and pupils and saw how North Ayrshire Council’s work is supporting families and informing the Fairer Futures programme to drive innovations in tackling child poverty.
At Irvine Royal Academy, where 32% of pupils are in receipt of free school meals, parents have been helped to maximise their incomes through welfare and debt advice and provided with support to find employment, while pupils run a ‘cost of the school day’ initiative to help ease the pressures on families.
Ms Somerville said: “Eradicating child poverty is the Scottish Government’s top priority and a national mission. But we can only do that by providing long-term, sustainable solutions, not quick fixes.
“The Scottish Child Payment, only available in Scotland, will this year help the families of over 330,000 children, and our five family payments could be worth more than £25,000 by the time an eligible child turns 16.
“We are extending provision of free school meals to pupils in P6 & P7 who receive the Scottish Child Payment, committing a further £14.3m to support the school clothing grant, and investing in the systems needed to end the two-child cap by April 2026.
“Through the Fairer Futures Partnerships we are working alongside local authorities, local communities and the Third Sector to test and improve how they deliver services to promote family wellbeing, maximise incomes and support people towards education and into sustained employment.
“I’m visiting Irvine Royal Academy to hear about some of the programmes and activity North Ayrshire Council has in place to tackle child poverty, support families and children in the local area with the cost of the school day and maximise incomes.
“The work with the school community is a great example of the results that can be delivered when services work together to provide wrap-around support for families. We want to explore how we can do this even better and that is why we have doubled our budget for Fairer Futures Partnerships to £6 million for the next financial year.”
North Ayrshire Council Leader Marie Burns added: “Tackling child poverty is the number one priority for our administration.
“We have the second highest rate of child poverty in Scotland and we are determined – with support from the Scottish Government and our hard-working partners in the public, private and third sectors – to improve life for families across North Ayrshire.
“We look forward to welcoming the Cabinet Secretary to Irvine to hear, first-hand, about some of the great work that is being done to support families who are struggling to make ends meet.”
An additional 15,000 unpaid carers will be supported to take short breaks away from their caring responsibilities as a result of a £5 million boost to the Voluntary Sector Short Breaks Fund.
The extra funding, set out in the draft Budget, brings the total investment to £13 million for 2025-26.
Established in 2011, the Voluntary Sector Short Breaks Fund is already supporting over 25,000 carers, including young carers, to take a break this year.
These can take a variety of forms, including short respite breaks or opportunities to pursue hobbies or learn new skills.
They can be an opportunity to have time away from caring responsibilities, or can be taken together with the person who is cared for.
Minister for Social Care, Maree Todd said: “This additional funding recognises the invaluable contribution of unpaid carers and I am pleased we can support even more unpaid carers to look after their own health and wellbeing.
“The essential care they provide for family members and loved ones cannot be understated and we want to do everything we can to alleviate the pressures many face.
“Our wider Budget sets out a record £21 billion investment in health and social care. This includes more than £2 billion for social care and integration, exceeding our target to increase funding in social care by 25% by over £350 million.”
Don Williamson, Chief Executive, Shared Care Scotland said: “We are delighted with the proposed additional £5 million investment in the Short Breaks Fund.
“This demonstrates ongoing commitment to the right to a break and is welcome recognition of the significant impact that breaks can have on unpaid carers health and wellbeing.
“It represents a significant and much-needed investment towards building a sustainable and resilient short breaks and respite sector and will further enhance the support available to unpaid carers in Scotland.”
It was a Scottish Budget where what was left unsaid was just as consequential as what Shona Robison mentioned in her 30-minute statement to the Scottish Parliament (writes the staff team at FRASER of ALLANDER INSTITUTE).
The Scottish Government will be hoping for many of the headlines to focus on the mitigation of the effect of the two-child limit from 2026-27. The Finance Secretary left this until last in the order to ensure maximum impact.
A very political announcement, then, given the timing of the election, and one that has no money attached to it (as far as we can tell) in the 2025-26 financial year – the year this Budget actually refers to. See more on this below.
There were also significant announcements on health spending, which is forecast to rise by 3.6% in real terms – significant growth, although as we have said frequently, how and where it is spent matters just as much as the envelope. There were also increases to the affordable housing supply programme, which was cut by a quarter last year but is now just only 2.5% below 2023-24 in real terms.
At this point, we must welcome the change in presentation of the Scottish Government’s plans, which are now compared with their best estimate of the position for the current financial year. This has helped us meaningfully scrutinise plans, although some wrinkles remain to be ironed out such as in-year transfers to local government, and which we hope will be baselined in future.
Two-child limit
The biggest surprise in the budget (although social media had got wind of it slightly ahead of time) was the promise to ‘mitigate, as far as possible, the impacts of the two-child limit from 2026.’
This was clearly a last-minute addition to the budget. The Scottish Fiscal Commission (SFC) stated they received it too late to add to their figures, and too late for any analysis to be included in the budget document itself or the Equality and Fairer Scotland Budget Statement. This lack of detail is troubling given the potential cost of funding this is likely to be in the region of £200m. There are far too many unknowns to say anything conclusive about impact, but there is no doubt that it would boost efforts towards the statutory child poverty targets (albeit not by nearly enough to meet them by just doing this alone).
How will the Scottish Government fund this? Well, they may be hoping that they won’t have to, and the UK Government will announce the abolition of the policy UK wide (which is widely expected to happen at some point) before the Scottish Government have to put their hands in their pocket.
Whilst early 2026 is their target date, this was heavily caveated in the statement as being dependent on the UK Government giving the Scottish Government the data to allow them to operationalise it. Given recent experience of rolling out the Scottish Child Payment, which took years, there are plenty of reasons why this may take longer than those target timescales set out. Yet in the meantime, the Scottish Government can take the moral high ground.
Relief for hospitality businesses
The Finance Secretary announced a 40% relief for small hospitality businesses that at first glance could appear very similar to the 40% relief offered by Rachel Reeves for retail, hospitality and leisure (RHL) businesses. However, it is a much more limited measure than the one offered in England – just for hospitality only, and only for those businesses who are “small” i.e. have a rateable value of less than £51,000.
To give a sense of scale, the SFC have estimated that this relief will cost £22m: far short of the Barnett funding generated by the measure in England of £147m.
ScotWind funding (partially) restored
Early in her statement, the Finance Secretary announced that some of the ScotWind funding that had been drawn down to fill gaps in spending in the statement in September has not been used for day-to-day spending, and instead will be retained for capital spending in 2025-26 – “for exactly the kind of long-term investment it should be spent on.”
ScotWind monies are revenues generated from the sale of offshore wind licences to energy companies. As they are one-off windfall payments from the exploitation of Scotland’s resources, they should really be used to invest in infrastructure to ensure that Scotland’s economy benefits on an ongoing basis from this sale. In particular, it should be focussed on capital spending that helps with the energy transition.
However, it is still the case that some of this fund has been used to plug gaps in day-to-day spending, even if some of the money has now been returned. The Scottish Government has used £160 million for resource funding in 2024-25. Now, in 2025-26, the Scottish Government plans to use ScotWind mostly to support £326 million of capital spending, with £10 million still used for resource.
This leaves a remaining balance of £219 million to support capital or resource spending in future years. Here’s hoping it is explicitly set aside for investment spending.
Lessons learned?
A surprising decision was to not account for the certain increase in employment costs due to the employer National Insurance Contributions that will come into effect on 1 April. As we mentioned in the last few days, we expect this will cost around £500m, and it will be an ongoing cost as the increase is permanent.
The Scottish Government doesn’t yet have confirmation as to how much they will receive from the Treasury in compensation, but any of the figures discussed in the media will be below that amount – perhaps around £300m. This means that the Scottish Government has a £200m shortfall in funding – perhaps more if it decides to compensate arms-length organisations providing public services.
What we have learned from the SFC’s documents, however, is that this shortfall remains unaccounted for in the Scottish Government’s budgeting. This is an extremely risky approach, and one which sets up a possible need for further emergency measures during the course of the next financial year – leaving us wondering whether any lessons have been learned from going into a new year without fully setting aside budget cover for what are known costs, as highlighted by the recent Audit Scotland report.
Beyond next year, there are some difficult news on the income tax forecast as well. The Scottish Government is looking at a £700m negative reconciliation in 2027-28, largely due to a much larger deduction to the block grant related to 2024-25 than that which was built into that year’s budget. This is still an early forecast, and much might change until then – reconciliations have changed significantly in the past. But if it comes to pass, it’ll be at a point when growth in funding for public services will be slowing– meaning that difficult decisions have been kicked into the future rather than planned for.
IMPROVING NHS, SCRAPPING TWO CHILD CAP AND DELIVERING UNIVERSAL WINTER SUPPORT
The SNP Government’s Budget will deliver progress for Scotland, by Scotland – after listening carefully to the people of Scotland and taking action on their concerns.
SNP MSP for Edinburgh Pentlands Gordon Macdonald highlighted key SNP policies which will be taken forward in the Budget which will benefit people in Edinburgh including:
· Record levels of NHS funding – throwing the weight of the government behind NHS improvement
· Reintroducing universal winter heating payments for pensioners after they were axed by the UK Labour Government
· Scrapping Labour’s Two Child Cap – lifting 15,000 children out of poverty
· Increased investment in housing, supporting the delivery of 8,000 homes
· Delivering a fair tax system – meaning the majority of people in Scotland pay less tax than in the rest of the UK
Commenting Gordon said: “I am delighted at the support John Swinney’s first Budget is offering for people in Edinburgh. It will deliver real progress on people’s priorities – and will offer hope, putting in place the investment for Scotland to in the future.
“The First Minister has listened to what people have told him on the NHS – that’s why he is investing record amounts and throwing the whole weight of the government behind improving the health service, making it easier for people in Edinburgh to see their GP, bringing down waiting times, and funding the replacement of the Eye Pavilion in Edinburgh.
“People across Edinburgh have been let down by the UK Labour Government. While the UK Government’s Budget treated Scotland as an afterthought – this is a Budget that puts the people of Scotland first.
“While they cut winter fuel payments, the SNP is introducing universal support, while they push kids in Edinburgh into poverty with the cruel two-child cap, the SNP will scrap it and give thousands of kids a better chance in life.
“All this is being achieved while delivering the fairest tax system in the UK – with the majority of people in Scotland paying less tax than south of the border.
“This SNP Government have and will continue to listen to people’s concerns and take strong, decisive action to deliver on their priorities.”
‘INVEST IN SCOTLAND: INVEST IN SCOTLAND’s WORKERS‘
The Scottish Trades Union Congress (STUC) has called on the Finance Secretary to “invest in Scotland” as the Scottish Government unveil their Budget for 2025/26 today.
Ahead of the Budget, the STUC has called upon Shona Robison to deliver a “budget for communities” by scrapping the council tax, increasing pay for social care workers, improving public transport and keeping the promise to Scotland’s school pupils on free school meals.
Evidence cited by the STUC shows local authorities in Scotland are facing a £780 million funding black hole due to successive council tax freezes. The union body are further calling for the Small Business Bonus Scheme to be scrapped with the Scottish Government making business support conditional on organisations adhering to Fair Work practices.
Despite Scottish Government commissioned research showing no evidence the policy delivers positive economic outcomes, more than £3 billion has been squandered on the scheme since it was introduced in 2008.
The call comes after the STUC lobby of the Scottish Parliament last week whereby STUC General Secretary Roz Foyer implored government ministers to “keep their promises” following the UK Chancellor’s statement and the almost £5 billion of extra resource spend allocated to the Scottish Government.
Commenting, STUC General Secretary Roz Foyer said: “Within this budget, the Scottish Government can choose to invest in Scotland. For too long, our public services have struggled under the weight of austerity, compounded by ill-judged decisions from the Scottish Government on council tax freezes and a refusal to properly use the revenue raising powers of the Parliament.
“There is no doubt the Finance Secretary is facing tough choices as a result of 14 years of Tory austerity. However, with almost £5 billion of extra resource funding being allocated to the Scottish Government, her budget could signal a clear break from the past.
“We can build a sustainable nation where public services are well resourced and public sector workers are paid fairly. We are committed to this vision and would ask the Scottish Government to join us on that journey.
“This can be a budget for the future. The Scottish Government can begin a process to scrap the council tax and replace with it a proportionate property tax to give councils a fighting chance of fair funding. They can make their commitment to end child poverty a reality by ensuring every pupil gets a free school meal and low paid social care workers, mostly women, get the pay increase they deserve.
“They can deliver on a Just Transition for Scotland’s energy workforce whilst ensuring a more sustainable, greener future for workers through better, more affordable public transport.
“These decisions rest with the Finance Secretary. We know there is a strain on government finances but that is no excuse for poor choices. Workers are desperate for investment in their futures, their public services and their communities.
“The Finance Secretary can deliver that and more within her budget and the trade union movement will be watching on with interest.”
The Royal College of Emergency Medicine has joined calls for the Scottish government to address ‘delayed hospital discharges’ in the upcoming budget announcement.
Delayed discharges are when people are considered medically fit enough to leave hospital but are unable to, often because the required social care support is not available.
This issue means that the whole system for admitting people grinds to a halt and people can end up stranded in A&Es often waiting hours and even days for a ward bed to become available.
The latest data release comes as the Auditor General of Scotland published a damning report into the state of the Scottish health system which concluded that the Scottish Government has no clear plan to reform the country’s NHS, or to address pressures on the service.
Auditors found:
commitments to reducing waiting lists and times have not been met
the number of people remaining in hospital because their discharge has been delayed is the highest on record
and NHS initiatives to improve productivity and patient outcomes have yet to have an impact and lack clear progress reporting.
The issue of delayed discharges has also been highlighted by the Royal College of Physicians Edinburgh (RCPE) which has written an open letter to the First Minister calling on him to address this ‘urgent issue’ in his Government’s budget which will be unveiled tomorrow (4 December 2024).
Dr Fiona Hunter, The Royal College of Emergency Medicine’s Vice Chair for Scotland said yesterday: “Delayed discharges are a key reason that patients get stuck in Emergency Departments, often on trolleys in corridors – often experiencing extreme waits which are dangerous.
“So we join, and fully support, the calls from RCPE, and the Auditor General to address this issue. It must be prioritised as a matter of urgency.
“Today’s data is another timely reminder of scale of the issue. Just think about what it shows. More than 2,000 people every single day stranded in in hospital when they are well enough to go home.
“People – through no fault of their own, lying in beds which could be used for other patients who need to be admitted – who themselves are probably on a trolley in the Emergency Department, waiting for that bed to become available.
“We have to be able to move patients through our hospitals and out again when they are well enough. To do that takes a functioning and resourced social care system working alongside a functioning and resourced health system. They are inextricable.
Dr. Hunter concluded:“Tomorrow’s budget is an opportunity for the Government to #ResuscitateEmergencyCare, ahead of the depths of winter which is shaping up to be a gruelling several months ahead, for both patients and staff alike. They must take it.”
Despite increases in funding for Scotland from the UK Government’s October Budget, Scottish Government Finance Minister Shona Robison has little room for manoeuvre when she presents her Budget for 2025-26 next week (write FRASER OF ALLANDER INSTITUTE’S Joao Sousa and Mairi Spowage).
This is the headline message of the Scotland’s Budget Report 2024, published yesterday by the Fraser of Allander Institute at the University of Strathclyde.
Significant Barnett Formula consequentials have been generated by UK Chancellor Rachel Reeves announcements last month – £1.5bn in 2024-25 (of which £1.4bn is resource) and £3.4billion in 2025-26 (of which £2.8bn is resource).
However, the Scottish Government has said the funding provided in the 2024-25 year is already largely committed. If this is the case, the uplift for 2025-26 is under more pressure than it would appear. On the resource side, this would mean an uplift of £1.4 bn in 2024-25 being followed by an uplift of £1.4bn in 2025-26.
Public Sector Pay makes up over half of the Scottish Government’s resource budget, and therefore the decisions made on pay will have significant bearing on the overall budget position. Wage bills recur every year, thus current and future 2024-25 pay decisions will have a big impact on the overall budgetary decisions.
The fact that public sector workers are, on average, paid more in Scotland, will mean that the challenges are even more acute, given the country’s much larger public sector. The decisions on this, and on areas like social security, have put additional pressure on the Scottish Government’s budget.
Dr João Sousa, Deputy Director of the Institute, said: “As part of our report today, we have published where we think the Scottish Government are in terms of their funding position for 2024-25.
“Figuring out the funding position for 2025-26 has been much more challenging. The lack of a Medium Term Financial Strategy this year has made calculating this near impossible, but we have set out the various pressures that the budget is likely to be under.
“Health Spending, all other pay, social security and grants to local government make up £7 in every £8 the Scottish Government spends. This seriously limits their room for manoeuvre in changing the overall shape of the Budget.”
The report includes significant analysis of how Scotland spends its money to understand more about the discretionary power the Government has to prioritise its budgetary decisions.
Also included is analysis of the impact of employer National Insurance Contribution rises on the Scottish Government’s Budget, and analysis of the cost to the Scottish Government of replicating the 40% retail, hospitality and leisure relief (RHL) announced by Rachel Reeves in Scotland.
Our analysis also that although spending on reducing child poverty – stated by successive Scottish First Ministers as one of the main, if not their utmost priority – has grown significantly since 2018-19, it would not be fair to say that it has become a large part of the Scottish Budget.
It remains under 3% of all discretionary resource funding, and capital spending on child poverty reduction through the provision of affordable housing and urban regeneration has actually fallen by 13% in real terms since 2019-20.
