Following the Scottish Government’s budget announcement last week which proposes a reduction in funding for Creative Scotland of around £7million (more than 10%) – the Board of Creative Scotland met yesterday, 19 December, to discuss the implications of this settlement.
Whilst the Board fully appreciates the challenging context in which the Scottish Government has reached its decision, and the pressures that are being felt by everyone across all parts of society, we are extremely disappointed by the settlement.
It comes at a time of significant pressures for cultural organisations due to the impact of the pandemic, rising inflation, falling income and spiralling operating costs, when the value of culture and creativity to people’s lives has never been more important.
In an effort to address this, at its meeting today, the Creative Scotland Board has agreed to use a proportion of its National Lottery reserves to maintain funding for Regularly Funded Organisations (RFOs) at 2022/23 levels.
National Lottery reserves have been accumulated and earmarked to ease the transition to the new funding framework. Using these reserves to cover the reduction in Scottish Government funding means that Creative Scotland will no longer have the flexibility of using these funds for other support, including the potential for an RFO supplementary fund previously referred to in our Future Funding for Organisations update on 3 November.
National Lottery reserves are finite and therefore can only be a time-limited solution to address Scottish Government budget reductions in 2023/24. As the Scottish Government budget does not give any indication of funding for 2024/25 and beyond, we cannot confirm RFO funding levels for 2024/25.
Creative Scotland will continue to act responsibly and pragmatically, however, if Scottish Government cuts continue beyond 2023/24, Creative Scotland will require to pass those on to the sector.
All other 2023/24 budget areas will be reviewed and published in our 2023/24 Annual Plan in Spring 2023.
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.”
Helping families and services through the cost of living crisis
Eradicating child poverty, transforming the economy to deliver net zero and creating sustainable public services will be the key aims of the Scottish Budget 2023-24.
Deputy First Minister John Swinney warned relentless prioritisation was needed to tackle the combined impact of high inflation, the ongoing economic consequences of Brexit and the UK Government’s plans to reduce expenditure in future years, which are projected to reduce the Scottish Government’s funding under the Barnett formula from 2025.
He said the Budget would channel support to where it was most needed while beginning a process of reform to help public services face the future with strength and resilience.
Mr Swinney said: “Families, businesses and our public finances are under sustained economic pressure and the Scottish Government has acted decisively to provide what support it can within its limited resources.
“We have allocated £3 billion in 2022-23 to mitigate the impact of the cost of living crisis, including targeted help such as increasing the game changing Scottish Child Payment to £25 per eligible child per week – a 150% increase within eight months.
“However, given the fiscal constraints of devolution, it is not possible to go as far as we would like and so the Budget will prioritise three areas – eradicating child poverty, transforming the economy to deliver net zero and creating sustainable public services.
“Difficult decisions are required and resources will be targeted where they are most needed and can secure maximum value from every pound spent.
“The economic challenges we face also require a fundamental change in the way we manage public spending. The Bank of England is predicting the longest recession for a century so this Budget will set in motion reforms that will place our finances and public services on a more sustainable and resilient footing for the future.
“This is a time for firm leadership and bold decision making. Steps we take now will help ensure Scotland emerges from the current crisis a stronger, fairer, greener country.”
The Scottish Budget 2023-24 will be presented to the Scottish Parliament on Thursday, 15 December.
COSLA launched its campaign last week in advance of the Scottish Budget on 15 December – an ‘SOS call’ to Save our Services.
It is a rallying call, telling communities everything they need to know about the impact of the Scottish Government’s forthcoming budget on our council services, and our communities in the coming year.
COSLA says the SOS call reflects the extremely precarious financial situation in which Councils in Scotland find themselves, during a particularly challenging period. This is as a consequence of real-term cuts to the core budgets of Scotland’s 32 Councils over recent years.
The call comes ahead of the Deputy First Minister outlining the Scottish Budget on December 15th but reflects the reality of what the government set out in its spending plans last May.
COSLA’s President Councillor Shona Morrison said: “There are many areas in which Local and Scottish Government work together for our communities and I fully appreciate that money is extremely tight – all Governments are having to cope with rising inflation and fuel costs
“However, with little room left to manoeuver, the Scottish Government’s spending plans as they stand will see Council services either significantly reduced, cut or stopped altogether. 70% of Local Government’s budget is spent on staffing, so it is inevitable that current spending plans will lead to job losses. The very serious impact of this scenario is that the critical work council staff do on prevention and early intervention will reduce significantly.
COSLA’s Vice President Councillor Steven Heddle said: “In May, the ‘flat cash’ plans looked difficult for us. Today, with prices increasing across the board, including energy costs, and inflation sitting at almost 10% and at risk of rising still further, Local Government is now on extremely dangerous ground.
“Make no mistake, what we will now face is Councils struggling to deliver even the basic, essential services that communities rely on. To put this into perspective, the estimated £1bn gap for councils in 23/24 is the equivalent of the entire budget for early learning and childcare across Scotland or 17,500 teachers. A funding gap of this magnitude will have an impact on all our communities, with the most vulnerable who rely on these services suffering the worst consequences.”
COSLA’s Resources Spokesperson Councillor Katie Hagmann concluded: “We are at a crisis point like never before – the impact for communities is serious and needs to be reconsidered.
“The financial impacts for other parts of the public sector are also serious. When councils can’t focus spend on prevention, for example on preventing ill-health, services like the NHS will end up spending significantly more money when issues become more serious.
“Directors of Finance across Scotland’s Councils are sufficiently concerned about the financial sustainability of councils that they have written to the Deputy First Minister outlining their concerns.
“This really is an SOS call from Scotland’s Councils –people in communities across Scotland will be pulled into further poverty and uncertainty without adequate funding for the vital services that support them”.
