New research from Local Government Information Unit (LGIU) Scotland reveals that 70% of all councils believe they will be unable to pass a balanced budget within the next five years without immediate changes.
The second annual State of Local Government Finance in Scotland, found councils are taking every measure available to balance their budgets including raising council tax, reducing expenditure and increasing fees and charges, sharing services and engaging in commercial activity. However, many councils believe this will still not be enough to prevent the risk of an unbalanced budget.
Nearly every respondent said they believe cuts to services will have a negative impact on quality of life in their council, and over 90% that cuts will increase the risks to vulnerable people.
The report found satisfaction with the Scottish Government is alarmingly poor across the sector. Not a single respondent said they were happy with the Scottish Government’s performance on delivering a sustainable funding system or considering local government in wider policy decisions.
Respondents representing 84% of Scottish councils, made up of council leaders, CEOs and CFOs said times are increasingly hard for local authorities, with ongoing pressure from the cost of living crisis and inflation adding new burdens on top of long-term challenges: demographic change, financing of Scottish Government priorities, and pressures with recruitment and retention of staff.
With councils’ confidence in the sustainability of council finances critically low, the sector is in favour of widespread reform, including multi-year financial settlements, ending ring-fencing, and reform of council tax.
Councils are optimistic about the role that local government, sufficiently funded and empowered, could have to advance the prevention agenda, tackle local and national shared priorities, deliver services and empower communities.
The report recommends an agreed national convention between Scottish Government and local government to cover procedures and actions that would then be needed to set a balanced budget; enshrining in legislation the principles of the Verity House Agreement, and committing to an annual review by Scottish Parliament covering the key principles.
Some of the medium to long-term recommendations include reconsidering a whole-system approach to funding wider public finances including a review of council tax, the funding formula and increasing the range of revenue-raising options available for councils.
Jonathan Carr-West, Chief Executive, LGIU Scotland, said: “This year’s results make for grim reading about the state of local government finances in Scotland. The message from our second annual State of Local Government Finance in Scotland builds on last year: we are nearing the point of no return. The report paints a picture of a system under continual and significant strain, with the scale of financial pressures increasing from 2023.
“Local government finances in Scotland are hanging by a thread. However, the thread has not yet broken. Today’s report delivers a stark warning that councils are in a precarious financial position and there is not much time until the sector starts to see potentially catastrophic consequences.
“Change is urgently needed. Councils will soon be unable to balance their budgets, meet their statutory duties, or provide for their communities. We need to change course now before it is too late.
“The challenge now is how do we move from the situation we are in now, to one where councils are able to deliver the transformative impact they are confident that they could deliver.
“Reform is necessary, empowerment will be essential, and trust between Scottish Government and local government – in a critically poor state – must be restored.”
The LGIU asked Scotland’s Council Leaders, Chief Executives and Chief Finance Officers about their experiences trying to run councils in the last financial year, and their views on how councils’ financial sustainability could be assured.
COSLA Resources Spokesperson, Councillor Katie Hagmann, commented:“The publication of today’s report by the LGIU highlights the sheer scale of the financial challenges facing our councils.
“The fact that 70% of councils in Scotland may be unable to balance budgets in the near future should serve as a warning to all. Additionally, it emphasises the need for the Scottish Government to provide Local Government with an increased funding settlement which is both fair and flexible in 2025/26.
“COSLA also welcomes the LGIU’s call for a whole system approach to Local Government finance.
“This echoes our asks in our ‘Invest Locally in Scotland’s Future’ budget lobbying campaign. Without a clear focus on prevention and upstream investment, along with local flexibility, our councils will be unable to tackle higher demand, in key areas such as homelessness prevention and social care.
“COSLA is calling for the Scottish Government to provide at least £14.5bn in revenue funding and £872m in capital funding in the 2025/26 Budget.
Meeting this demand would not make up for the cuts councils have faced and felt by our communities in recent years, however it would be a positive step forward in providing fair and flexible funding to meet the challenges outlined in the LGIU report.”
Scottish Government left with “no choice” following funding cut
Plans to means-test Winter Fuel Payment in England and Wales will see the Scottish Government’s funding cut by up to £160 million.
Social Justice Secretary Shirley-Anne Somerville has confirmed the Scottish Government therefore has ‘no alternative’ but to replicate the decision in Scotland and restrict payments to pensioners who receive eligible benefits.
Social Justice Secretary Shirley-Anne Somerville said: “Despite all efforts to review our financial position we have been left with no choice but to follow the UK Government and restrict payments to older people who receive relevant eligible benefits.
“This is a necessary decision when faced with such a deep cut to our funding and in the most challenging financial circumstances since devolution. The reduction we are facing amounts to as much as 90% of the cost of Scotland’s replacement benefit, the Pension Age Winter Heating Payment.
“Given the UK Government’s decision to restrict payments to those in receipt of means-tested benefits, such as Pension Credit, and the implications for the Scottish Government detailed above, I have urged the Secretary of State for Work and Pensions to undertake a benefits take-up campaign for Pension Credit and to move forward with plans for a social energy tariff.
“Both of these measures will provide some further protection to energy customers in greatest need.”
Deputy First Minister Kate Forbes commented:
The UK Government’s decision to means-test the Winter Fuel Payment in England and Wales will see our funding cut by up to £160 million.
The Scottish Government has been left with no choice but to replicate the decision in Scotland.
Age Scotland: Winter Fuel Payment decision ‘brutal’ for Scottish pensioners
Age Scotland is continuing to urge the UK government to reconsider plans to scrap the winter fuel payment for pensioners who do not receive pension credit.
The charity has responded to news that, following the UK Government’s plans to means-test the Winter Fuel Payment, the Scottish Government will have no alternative but to replicate the decision in Scotland.
Age Scotland’s Policy Director, Adam Stachura, said: “It’s infuriating that huge numbers of older people will miss out on the vital Winter Fuel Payment when it is devolved to Scotland.
“We recognise the financial challenge the Scottish Government would face to make up the shortfall to keep the payment universal, but we desperately hoped there could be a more effective delivery of this payment and that it could have looked more generous than the UK Government’s new, and meagre, approach.
“At minimum, a quarter of a million pensioners in Scotland on the lowest incomes or living in fuel poverty will no longer receive this vital financial support over the winter months, while hundreds of thousands more on modest incomes are going to struggle with their energy bills even more than normal as a result.
“This brutal decision by the UK Government was made too fast, cuts too deep and its impact will be severe. It’s important that they rethink this move, as it has a huge impact on the devolution of social security and the needs of Scottish pensioners who live in some of the coldest homes in the UK.”
Visit www.age.scot/SaveWFP to sign Age Scotland’s petition to save the Winter Fuel Payment.
Funding to support the NHS, reduce carbon emissions and help tackle poverty
Almost £50 billion was spent by the Scottish Government last year on public services to help tackle child poverty, reduce carbon emissions, support the NHS and secure pay deals, according to newly published official figures.
The Provisional Outturn, which compares actual spending with the funding commitments set out in the Budget, shows that the Scottish Government spent £49.3 billion in the 2023-24 financial year. There was £292 million remaining – representing 0.6% of the Scottish Government’s total budget – all of which has been carried over through the Scotland Reserve to be directed towards priority areas in 2024-25.
In 2023-24 the Scottish Government:
spent nearly £5.2 billion on social security benefits. This includes £429 million on Scottish Child Payment, alongside funding to introduce Carer Support Payment in pilot areas, ahead of full roll-out in 2024, and to widen eligibility for Best Start Foods
invested more than £19 billion in health and social care, supporting recovery and reform to secure sustainable public services, while delivering a pay uplift for NHS staff
provided nearly £220 million to the Heat in Buildings Programme to help deliver greener and more energy efficient homes
continued providing Just Transition Fund grant funding, including £16.8 million for projects in the North-east and Moray regions, in addition to £3 million to help vulnerable global communities address loss and damage brought on by climate change
invested almost £422 million on bus services and concessionary fares, providing up to 2.3 million people in Scotland with access to free bus travel.
Public Finance Minister Ivan McKee said: “These figures show once again how this government is prudently and competently managing the public finances while delivering funding for the things that matter to people across Scotland, not least the NHS and action to tackle child poverty.
“The Scottish Government has consistently balanced its budgets each and every year. This represented a significant challenge last year, as the continued impact of persistently high inflation, pressure on public sector pay, backlogs as a result of the Covid pandemic and the war in Ukraine combined to place pressure on the public finances.
“We are not allowed to overspend, so must leave ourselves with the headroom to manage any unexpected shocks or issues. The remaining funding has been allocated in full in 2024-25, allowing us to implement measures at the most optimal time rather than being constrained to a single financial year.”
Bank of Scotland data from customer spending habits in the food and drink sector during the week of the King’s Coronation 2nd – 8th May shows:
· A 10% increase in spending in Scottish firms including pubs, bars, cafés and restaurants compared with the previous week
· The Coronation generated bigger consumer spending levels in Scotland than the Queen’s Platinum Jubilee in 2022 (10% vs 3% respectively) despite the Coronation only being a three-day compared to the four-day Jubilee
· Across the UK biggest increase in business activity was seen by restaurants (12% increase) followed by supermarkets and grocery retailers (nine percent increase)
The Coronation Bank Holiday weekend led to a flurry of consumer spending in Scotland, helping to boost business activity.
Consumers in Scotland increased their spending more than any other UK nation or region as business reported a 10% rise in trading activity over the bank holiday compared to the previous week.
Data scientists at Bank of Scotland found the additional Bank Holiday for the King’s Coronation increased Scottish spending by a greater amount than the Queen’s Platinum Jubilee four-day-weekend last year which drove a 3% increase in purchases across firms.
Restaurants in the UK received the biggest boost in business activity, with customers spending 12% more than in previous weeks, followed by supermarkets and grocery retailers who saw a nine per cent increase.
Day by day analysis of the UK shows that the biggest increase in spending was restaurants on Sunday and Monday by 37% and 51% percent respectively.
Chris Lawrie, area director for Scotland at Bank of Scotland Commercial Banking:“It’s fantastic to see the boost the extra day’s bank holiday has given to businesses, many of which will be hoping for a similar surge in demand for the next bank holiday and into the summer.
“Managing cash flow and juggling busy periods can be challenging for firms, and for larger businesses leveraging tools such as invoice or asset-based lending can be useful to unlock capital when needed, enabling them to seize the opportunities that come their way.
“As well as wisely investing their hard-earned additional revenue into training and overall efficiency gains which will benefit the business in the long term.”
As the UK finally begins to emerge from the pandemic’s profound disruption to normal life, new patterns in consumer behaviour are taking shape.
Increases in consumer spending at the start of this year, coupled with the acceleration of GDP throughout 2021 to levels not seen since the second World War, suggests that Brits are set to re-live aspects of the post-war Roaring Twenties, characterised by a surging economy and mass consumerism.*
New data from Quotezone.co.uk highlights that business is booming in line with consumer spending as demand for commercial property insurance increased by 45% in the last six months of 2021. And just as the 1920s welcomed a new era of entrepreneurship and creativity, this boom has been largely led by smaller high street shops, businesses, salons, and pubs.
As highlighted by the British Retail Consortium (BRC), consumer demand in January has been concentrated on the high street as the public flock back to homeware shops, restaurants, and clothing stores.
Quotezone.co.uk’s data supports this, showing that the driving force is demand for retail outlets rather than office space, with demand for offices falling even lower over the last six months compared to 2020, falling by 83%.
Greg Wilson, Founder of Quotezone.co.uk, a leading financial comparison platform, comments: “As retail sales surge and the UK’s GDP finally gets back on track, we’re beginning to see positive trends emerge for post-pandemic Britain.
“It’s encouraging to see such strong retail sales even in light of rising living costs. The spike in consumer demand is hopefully a sign that we’re entering our century’s very own Roaring Twenties.
“It’s interesting that demand for office space has continued to drop dramatically, even though restrictions have been easing for several months, reflecting the continued popularity of working from home – showing that, like the 1920s, a major change in lifestyle is here to stay with a focus on the work-life balance.
“However, as the majority of covid restrictions are now lifted, we may start to see demand for office space increase for the first time in two years – with many firms keen to explore the hybrid work model.
“We champion increased consumer confidence and economic recovery, but consumers must remain vigilant. Many will face challenges in the coming months, particularly with rising energy and transport prices, so it is important to get value for money and find savings where possible.
“A good place to start is checking how competitive suppliers are by not auto-renewing, reviewing direct debits, ordering in bulk and looking to sell or repurpose existing household items that are no longer needed. Shopping around is key, comparison websites can help you compare policy details and prices all in one place so it’s easier to see what’s a fair price.”
Finance can be a difficult topic to tackle with young children, but teaching them to have a healthy relationship with money from a young age is important to lots of parents around the globe.
With this in mind, financial experts from money.co.uk have compiled a list of their top 10 tips for teaching your children about money.
1. Start with the basics of money and finance
How you introduce money to your children will partly depend on their age. A good place to start is getting children comfortable handling cash and coins. Explain to them how money is used to buy things and that it must be earned before it can be spent.
2. Speak openly about small financial decisions
Start getting your child involved with minor financial decisions, such as which brands and items to buy when shopping. This way your child is able to understand the decisions you make while also feeling in control of certain financial choices.
Older children could also help with budgeting while shopping if you ask them to keep a running total of the items you buy. Not only will this help their maths skills, but it can also help them to understand how small items can still add up in price and not everything is affordable on a budget.
3. Try simple games and toys with younger children
Creating easy monetary games such as counting pennies can help your child understand the value of different denominations of money. Try using a pile of 1p coins and asking your child to match the number of coins to the price of a higher value coin, such as 10p or 50p.
4. Set a good example with your own finances
There’s no two ways about it, children learn money habits from their parents. Showing them small activities such as checking the receipt after your shop or putting money into savings can start developing positive habits from a young age.
Encourage your child to ask questions without repercussion in this setting. While you might not necessarily have all the answers, opening up a dialogue is a healthy way for your child to learn more about finance.
5. Use pocket money as an incentive for small tasks
Using pocket money as an incentive to do chores around the house not only helps you, but it also helps your child learn more about the value of money and what it takes to earn it. Creating a simple plan with a set amount of money for different tasks, along with caps per week or month, is a great way to help your child start understanding where money comes from.
6. Use pocket money to teach children how to save
Alongside teaching children the relationship between work and money, household chores and pocket money is also a great opportunity to show children how to save. If your child has shown interest in a more expensive purchase, you could set them up with an old-fashioned piggy bank where they can ‘deposit’ their earnings or chart for them to fill out so they can track how much money they have.
7. Reward them by learning about interest
Paying small amounts of interest on the money your child has saved is a helpful way to encourage them to keep saving. Older children will be delighted to learn that the interest they earned last week can be used to earn more interest if they save until next week.
8. Use trips to the shop to learn about saving vs. spending
Another practical way to teach a child about the benefits of saving is by visiting shops. Allow them full control of their own money on the understanding that if they don’t have enough they won’t be able to borrow any more. The more they feel in control of their own finances, the more they will be able to make sensible decisions when it comes to spending or saving.
9. Use digital tools with older children
There are a whole range of online tools for teaching older children about online banking and using cards for payments. One of the leading products on the market is GoHenry, which is suitable for those aged six and up, costs £2.99 a month and allows parents to set strict spending limits, monitor what their kids are buying and where they are spending their money.
10. Teach older children about selling old toys for extra money
If you don’t want to give your child pocket money, teaching them about ways to earn money for themselves is a helpful alternative.
When they’re old enough, you could ask your child to go through their old toys, books and clothes and set aside which ones they’d like to sell.
You can then sell these on their behalf through online auction sites such as eBay or Facebook Marketplace. Not only is this a great way for your child to feel independent in earning their own money, it presents an opportunity to also discuss how to use the internet safely.
Salman Haqqi, personal finance expert from money.co.uk, speaks about why teaching children how to handle money from a young age is so beneficial.
“Creating an environment in which you are able to speak more openly with your children about your financial decisions is vital to engaging them from a young age on the value of money. Showing them how to make choices when shopping will set up good habits and understanding of managing money.
“It’s important to make sure your lessons are age-appropriate and that you continue to involve and teach your children about money as they grow. A healthy relationship with finances starts at a young age, and children learn most of their habits from their parents.”
First Minister lays out her Programme for Government 2021/22
Leading Scotland safely out of the pandemic, urgently confronting climate change, driving a green, fair economic recovery, and boosting opportunities for children and young people are among the core priorities in this year’s Programme for Government (PfG), published yesterday.Oh … and there’s a referendum in there, too …
The programme sets out plans for a record increase in frontline health spending, new legislation for a National Care Service, a system providing low-income families with free childcare before and after school and during holidays, and actions to drive forward Scotland’s national mission to end child poverty.
The programme also includes plans to help secure a just transition to net zero – creating opportunities for new, good and green jobs, making homes easier and greener to heat, and encouraging people to walk, wheel or cycle instead of driving.
Speaking in Parliament, the First Minister said: “This programme addresses the key challenges Scotland faces, and aims to shape a better future.
“It sets out how we will tackle the challenge of Covid, and rebuild from it. It outlines how we will address the deep-seated inequalities in our society. It shows how we will confront with urgency the climate emergency, in a way that captures maximum economic benefit. And it details the steps we will take to mitigate, as far as we can, the damaging consequences of Brexit while offering a better alternative.
“In the face of these challenges, our ambition must be bold. This programme sets out clear plans to lead Scotland out of the greatest health crisis in a century and transform our nation and the lives of those who live here.
“We will deliver a National Care Service; double the Scottish Child Payment; and invest in affordable, energy efficient homes and green travel. We will ensure that businesses have the support, and people have the skills, to succeed in the low carbon economy of the future. We will show global leadership in tackling the climate crisis. And we will offer people an informed choice on Scotland’s future.
“To that end, I can confirm that the Scottish Government will now restart work on the detailed prospectus that will guide the decision. The case for independence is a strong one and we will present it openly, frankly and with confidence and ambition.
“This programme addresses our current reality, but it also looks forward with confidence and ambition to a brighter future. It recognises that out of the many challenges we currently face, a better Scotland – as part of a better world – is waiting to be built.”
Building on the progress from the first 100 days of this government, with the co-operation agreement with the Scottish Green Party at its heart, the PfG sets the scene for the next five years.
Key commitments for over the course of this Parliament include:
increasing frontline health spending by 20%, leading to an increase of at least £2.5 billion by 2026-27
undertaking the biggest public service reform since the founding of the NHS – the creation of a National Care Service – with legislation brought forward by June next year
improving national wellbeing with increased direct mental health investment of at least 25%, with £120 million this year to support the recovery and transformation of services
investing £250 million to tackle the drugs deaths emergency over the next five years
expanding the Scottish Child Payment to under-16s by the end of next year and doubling it to £20 a week as soon as possible after that, with a £520 bridging payment given to every child in receipt of free school meals this year
investing a further £1 billion to tackle the poverty-related attainment gap and providing councils with funding to recruit 3,500 additional teachers and 500 classroom assistants
providing free childcare to low income families before and after school and during holidays, and expanding free early learning and childcare to one and two year olds
investing £100 million over the next three years to support frontline services for preventing violence against women and girls
providing £1.8 billion to make homes easier and greener to heat, as part of a commitment to decarbonise 1 million homes by 2030
ensuring that at least 10% of the total transport budget goes on active travel by 2024-25, helping more people to cycle, wheel or walk instead of drive
delivering a revolution in children’s rights, including across the justice system
supporting a just transition to a low-carbon economy for people and businesses, including a £500 million Just Transition Fund for the North East and Moray
investing an additional £500 million to support the new, good and green jobs of the future, including by helping people access training
delivering 110,000 affordable homes by 2032 and investing an additional £50 million to tackle homelessness and rough sleeping
taking forward the democratic mandate for a referendum on independence to be held within this Parliament and, if the Covid crisis is over, within the first half of this Parliament, while providing the people of Scotland with the information they need to make an informed choice on their future.
Commenting on yesterday’s Programme for Government announcement, Chris Birt, Associate Director for Scotland at the Joseph Rowntree Foundation said:“Alarm bells should already be ringing in both the Scottish Government and Parliament that we are currently set to miss our child poverty targets, with no clear plan on how to achieve them.
“The Programme for Government published today pushes that plan further down the road, both to the budget later in the year and next year’s Tackling Child Poverty Delivery Plan.
“Time is running out on the targets. Families on low incomes across Scotland are experiencing growing financial pressure and uncertainty . They will hope the commitment to double the child payment “sooner rather than later” happens very soon and that our national mission to end child poverty gathers urgency and scale.”
The STUC welcomed the Scottish Government’s Programme for Government, specifically highlighting the commitments from the First Minister to implement national bargaining in the care sector, additional funding for the health service, gender recognition reform and justice for Scotland’s miners wrongfully arrested in the 1980s.
STUC General Secretary, Roz Foyer said: “Reform of our care sector cannot come quick enough and the STUC will engage fully in this legislation, campaigning for a National Care Service based on sectoral collective bargaining and not for profit delivery.
“The commitment of the First Minister to National Bargaining is therefore very welcome. However, the £800 million additional funding announced over the course of the Parliament is less than a quarter of the expenditure which the Feeley Review said was necessary for the social care sector.
“Yet we still have concerns that the Programme of Government tries too hard be all things to all people. It is simply not credible to raise the levels of investment required to tackle climate change, reduce inequality and create jobs while at the same time boasting about the lowest business taxes in UK and freezing income tax rates for the duration of the Parliament.
“The same lack of ambition is reflected in today’s Scottish Government response to the report of the Just Transition Commission which leaves much to be desired on future job creation and ensuring the burden of climate change is not carried by workers and the less well off.
“Fighting discrimination and inequality is at the heart of trade unions, we know trans people are some of the most disadvantaged and discriminated people in Scotland and the gender recognition bill is therefore extremely welcome in enabling trans people to access their human rights.
“Finally, I welcome the proposed Miners’ Strike Pardon Bill. It has been all too clear for decades that the miners were the victims of a politically inspired political attack and that organs of the state, including the police, were used to repress their legitimate industrial action.
“This Bill will help provide some relief to the thousands of lives were wrecked by wrongful arrest and is a testament to years of campaigning by working class families who refused to give up.”
GMB Scotland Secretary Louise Gilmour said:“The need to tackle the crisis in care is accepted, but the challenge is to end years of exploitation by giving care workers substantial pay increases. That’s how we’ll confront the understaffing crisis and transform the sector.
“It’s why GMB is campaigning for £15 an hour minimum for care workers. The prospect of staff remaining mired in wages of just under or over £10 an hour isn’t credible.
“And there is a growing consensus supporting that view, including among Cabinet Secretaries as the Greens committed to a £15 minimum in their recent manifesto, so we need to make it happen.
“If we are prepared to be bold and deliver proper value for workers across the social care sector then there is a huge opportunity to be grasped, everyone will benefit and Scotland will be fairer for it.”
Joanne Smith, policy and public affairs manager for NSPCC Scotland, said: “Recovery and reform are very much needed as we move forward from the pandemic, and this year’s Programme for Government is the first step in this journey.
“For children in Scotland to have the best start in life, it is vital that all families can access holistic support, where and when they need it, and so we are heartened by the Scottish Government’s announcement of a Whole Family Wellbeing Fund.
“In line with the Promise’s recommendations we would like to see that national spending prioritises early, preventative support for families, therefore stripping out demand for crisis-led services.
“We are also greatly encouraged by the Scottish Government’s commitment to review and redesign the Children’s Hearing System. Through our work with very young children and families in Glasgow, we see the limitations of current justice processes in meeting the distinct needs of infants and their families.
“Given that around a third of children who come into care in Scotland are under the age of five, we need to ensure justice processes are better aligned with infants’ developmental timescales. We look forward to working alongside the Review team to ensure that the rights of infants are upheld throughout the process.”
Mary Glasgow Chief Executive of the charity Children 1st said: “Today’s Programme for Government has rightly prioritised the right of children and their families to know they can access the help and support they need whenever they need it.
“Children 1st have long called for a transformation in the support available to families, which must be based on learning from the – often difficult – experiences of children and their families when they have needed practical, emotional or financial help.
“The proposed £500m investment in a ‘Whole Family Wellbeing Fund’ is a hugely welcome step forward and we are committed to working alongside children and their families, and the Scottish Government, to turn this significant investment into practical action.”
Tracy Black, CBI Scotland Director, said:“With Glasgow hosting COP26 later this year, the Scottish Government is right to focus on its plans for a net zero economy. Yet given the need to cement Scotland’s economic recovery post-pandemic, businesses will feel there ought to have been a greater focus on boosting growth. While there were encouraging mentions of greater access to finance, the devil will be in the detail.
“Firms are already decarbonising their operations, and, by working alongside government, can help urgently transform net zero ambitions into action. Reforming the planning and business rates systems – enabling much needed in investment in low carbon infrastructure – would help achieve ambitious climate targets.
“The First Minister is also right to highlight that COVID hasn’t gone away. Scottish firms have worked tirelessly throughout the crisis to keep staff and customers safe. Businesses are not calling for a rushed return to the workplace, though employers will rightly be speaking with their employees about a gradual return in line with the latest guidance.
“As the economy reopens, skills shortages remain a key concern, so employers will be frustrated not to hear more about plans for upskilling and retraining.
“Business investment is absolutely vital to Scotland’s economic recovery, and the government should do everything in its power to attract – not repel – investment and the very best talent. Ultimately, by working more closely with business to create sustainable economic growth, ministers will be able to achieve their goals of improving people’s living standards and public services.”
More than £1.8 billion of extra funding has been allocated to tackling the impact of coronavirus (COVID-19) in Scotland.
It covers areas including health, transport and business support, accounting for all but £330 million of the latest consequentials generated by UK Government spending. The remainder will be used to meet further urgent demands relating to both COVID-19 and Brexit up to the end of March 2021.
The funding is detailed in a letter from Finance Secretary Kate Forbes to the Scottish Parliament’s Finance and Constitution Committee.
Ms Forbes said: “From the outset, I have ensured that the money we receive is distributed as quickly as possible to where it is needed most. Our decisions have provided vital additional resources to our NHS, schools and other public services, they have kept our transport system running and provided much needed financial support for businesses impacted by the pandemic.
“To provide full transparency, I detailed earlier allocations in the summer and autumn budget revisions. This latest round will deliver measures such as the COVID-19 vaccination programme, local business support packages and free school meals over the holidays.
“The UK Treasury has indicated that this funding covers the period up to March 2021, so I have allocated £330 million as a contingency to ensure we are in a position to provide further support to health and businesses, including for issues arising from Brexit, as it is required over the coming months.
“Our limited borrowing powers mean we do not have flexibility to increase spending to meet demand and therefore must manage our expenditure – much of which is demand led so cannot be accurately calculated in advance – within the consequentials provided.”
The latest allocations include:
around £600 million for health and social care, wider public health initiatives and welfare support. This includes the COVID-19 vaccination programme, test and trace and the £500 bonus for health and social care workers.
support for business and the wider economy totalling £570 million, including funding for the strategic framework, local business support packages, the newly self-employed hardship fund and local authority discretionary business funding
an estimated £139 million of previously announced funding for government, bringing the overall support package to councils to more than £1 billion
around £500 million to support transport services and cover pandemic-related income shortfalls within organisations such as Police Scotland, the Scottish Funding Council and the Scottish Courts and Tribunals Service
The latest COVID-19 consequentials bring the total received by the Scottish Government to £8.2 billion.
A further update on COVID-19 spending will be provided through the Spring Budget Revision in the New Year.
A copy of Ms Forbes’ letter to the Finance and Constitution Committee Convener Bruce Crawford is below:
Dear Bruce,
I am writing to update the Finance and Constitution Committee on usage and allocations to date of consequential funding received during 2020-21 as a result of the Covid-19 outbreak.
We have drawn down and allocated this funding over the course of the year in response to what has been an exceptional and dynamic set of circumstances. I have updated Parliament on several occasions and, although a further update will be provided through the Spring Budget Revision in the New Year, I thought it would be helpful to provide further information in advance of that.
Around £6 billion of consequentials were allocated in the unprecedented Summer Budget Revision and as part of the Autumn Budget Revisions. Since then, consequentials provided have been increased to £8.2 billion.
I can confirm that thus far, further allocations have been provided as follows:
Around £600 million has been provided to health and social care, wider public health initiatives and welfare support. This funding supports the public health response to Covid including: vaccinations and test and trace; the £500 non-consolidated payment for health and social care staff; and the Winter Plan for Social Protection, which helps people pay for food, heating, warm clothing and shelter as well as free school meals over the school holidays and the self-isolation support grant.
Support for business and the wider economy of £570 million, including grants via the Strategic Framework, funding for local support packages, the newly self-employed hardship fund, digital support, Local Authority Discretionary Business Funding and remaining allocations from the £97 million support for culture and heritage.
Previously announced support for Local Government, relating to the estimated £90 million Lost Income Scheme as well as £49 million of additional funding confirmed to councils in September. Added to additional funding already committed, this brings the value of the overall support package to councils to more than £1 billion.
Around £500 million of funding to support continued provision of transport and funding for income shortfalls within our partner bodies including Police Scotland, the Scottish Funding Council, Registers of Scotland and the Scottish Courts and Tribunals Service in order to ensure that they can continue to deliver vital services, as well as mitigating shortfalls in devolved tax as a direct result of Covid-19.
Due to the nature of the Covid-19 outbreak, the potential asks for further demand led spend with regards strategic framework support for business in Scotland and additional demands on health, and the requirement that the funding provided to date will cover all costs until the end of March 2021, I have allocated £330 million of funding in order to support these asks. This is consistent with the terms of the funding guarantee provided by HM Treasury to the devolved administrations, which specified the funding was to cover the period until March 2021. This contingency is also required in order to support any additional funding requirements as a result of the end of the EU transition period.
The Scottish Government’s limited borrowing powers means we do not have flexibility to increase spending and therefore must manage demand-led expenditure risks within the consequentials provided.
The figures above remain a snapshot of a dynamic funding position. I will formally advise of final allocations as part of Spring Budget Revision, the last formal opportunity in the financial year to transfer budgets.
KATE FORBES
https://twitter.com/i/status/1337006754421501952
Businesses across Scotland will benefit from a new £185 million package of targeted coronavirus support.
The announcement follows discussions with business groups and sees a wide range of sectors benefiting, from taxi drivers and arts venues to travel agents and hospitality.
In addition, there will be additional one-off payments to hospitality businesses in January to help them deal with the traditional post-Christmas dip in demand. These will be of £2,000 or £3,000, depending on rateable value.
The package was announced by Finance Secretary Kate Forbes, who also said she had written to the Treasury calling for Scotland to receive its share of rates relief reimbursed by supermarkets “to ensure this is spent on those areas hardest hit as part of Scotland’s recovery from COVID-19”.
Ms Forbes said: “Today I am pleased to confirm an allocation of £185 million for new and additional business support in the new year. We have listened to businesses and this assistance will be provided on a sector-by-sector basis, targeted at those who need it most.
“We are developing grant schemes for hospitality, for the events sector, live music and cultural venues, for the arts, indoor football centres and for the food and drink sector, including £1.8 million for brewers.
“We will give £1.5 million to travelling show people ineligible for other support, while a new £19 million fund, plus a one-off grant, will help taxi drivers.
“I can also announce that further support of £60 million will be provided to the tourism sector, details of which will be developed in consultation with the industry.
“I am listening to the needs of business and we will continue to review and refine our COVID-19 support offer within the available resources.”
Specific support detailed in Wednesday’s announcement includes:
£15 million for the wedding sector and its supply chain, including photographers
one-off grants totalling £15 million for mobile close contact services, such as hairdressers
a £19 million fund and one-off grants for taxi drivers
£5 million for travel agents
almost £6 million for coach companies and tour operators
£1.5 million for visitor attractions.
More detail on the package will be announced in the coming days and businesses can expect to apply for all the new grant schemes in January.
