Jack Fawcett, Senior Reporter, has the latest on what we can expect to be announced and considered in Thursday’s Scottish Budget.
The 2021 Budget could be one of the most consequential in recent years. The SNP, bolstered by recent polls showing majority support for Scottish independence, are hoping to capitalise on the ongoing struggles facing the UK Government as it tackles the ongoing pandemic. The party will likely present itself as both more compassionate and more competent than its UK counterparts, but it cannot rely solely on dissatisfaction to win big at the forthcoming election. The 2020 Budget was a more standard affair, free of the shackles of the pandemic, with proposals of free bus travel for under-19s and expanded broadband rollout taking centre-stage. Now, with COVID-19, Brexit and a shrinking economy, the Scottish Government is expected to take action to support businesses across the country.
The key challenge is the ongoing pandemic, and in response, Kate Forbes has pledged to focus this week’s Budget on the economic recovery, with plans to provide targeted support for businesses and families across Scotland. The Scottish Government has been allocated an additional £1.3bn for 2021-22 on top of the 2020-21 Budget Bill, and a recent consultation on the Fiscal Framework has shown support for increased fiscal autonomy so increased spending across all sectors of the economy is expected. The cabinet secretary recently criticised the delay to the UK Government’s Budget until March which she claimed had created significant uncertainty around funding allocations. The Scottish Budget will be published as usual alongside fiscal forecasts from the Scottish Fiscal Commission, however, the value of these forecasts will be essential to understanding how the recovery from the pandemic will continue to unfold and whether Budget allocations are rightly assigned.
Housing & Benefits
Kate Forbes has already ruled out a public sector pay freeze following the UK Government’s decision to do so and has committed to a “fair and affordable” pay settlement. The recent decision by Rishi Sunak not to retain the £20 uplift in Universal Credit has been widely criticised across Scotland, and with the SNP leading calls to maintain payments, it is likely the Budget will focus on plugging the gap in support. Rising levels of homelessness and in-work poverty are expected to continue throughout the next fiscal year, and the Scottish Government is under increased pressure from Citizens Advice Scotland and others to increase support and protections for tenants.
Skills & The Economy
Falling GDP, rising unemployment and struggling businesses remain key issues for the Scottish Government as we move into the new year. The resultant skills crisis and widening inequality gap pre-date the pandemic, but it has served to exacerbate these issues and bring them into sharp relief. CBI Scotland has called on Kate Forbes to prioritise skills, business support and sustainability in the Budget, with a clear focus on skills investment in those areas of the economy most in need. The SNP was under-fire last week for a potential £30bn underspend on its digital skills fund since 2017, so close attention in this area will be required for the Budget to succeed. Indeed, an equitable recovery would seek to address the acute needs of the rural economy, particularly the pandemic’s disruptive impact across tourism and hospitality.
The SNP has recently announced its 11-point roadmap for a second Scottish independence referendum which it says will take place if a pro-independence majority is elected at the forthcoming election. As expected, this position has been widely criticised by Unionist parties in Scotland, with Boris Johnson repeating his position to deny a second referendum from Westminster. The Conservatives in Scotland have called for a focus on “the national interest”, whilst Labour and the Greens have urged the government to prioritise support for those most vulnerable including young and working class people. Kate Forbes will have to tread carefully on Thursday, to ensure the people of Scotland are protected from ongoing hardships whilst proving the government fiscally responsible and independent.
Local authorities across Scotland have been stretched further than ever before by the pandemic, with health, care and housing costs being key pain points. The Accounts Commission published its financial overview report for 2019-20 yesterday which found that despite the £800m increase in council income and a £500m increase in Scottish Government funding, local government has seen its largest reduction in funding in over seven years. Added to those pressures, the pandemic is expected to impact local government budgets by a further £767m, meaning despite the hard work being undertaken at a local level, public services may be underfunded. With calls from COSLA to provide substantial increases to the local government settlement in tomorrow’s Budget, all eyes will be on whether the Scottish Government chooses to prioritise greater devolution of spending.