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Tough Times’ as Robison Delivers Her First Draft Scottish Budget

Publication: Orkney News

Orkney reacts to the draft Scottish Budget from Deputy First Minister and Finance Secretary Shona Robison

The Scottish Parliament
The Scottish Parliament

The Scottish Government has published its Draft Budget for 2024 – 25 with “funding targeted towards public services and protecting the most vulnerable”.

Presenting her first Budget to the Scottish Parliament, Deputy First Minister and Finance Secretary Shona Robison said that difficult decisions had to be made.

“A Budget setting out, in tough times, to protect people, sustain public services, support a growing, sustainable economy, and address the climate and nature emergencies, ” Shona Robison told MSPs

“Our block grant funding for this budget, which is derived from the UK Government’s spending decisions, has fallen by 1.2 per cent in real terms since 2022-23. Our capital spending power is due to contract by almost 10 per cent in real terms over five years.”

What is in the Scottish Budget and what has been the reaction to it?

The 2024-25 Scottish Budget includes:

  • £6.3 billion for social security benefits, which will all be increased in line with inflation. £1.1 billion more than the funding received from the UK Government for devolved benefits in 2024-25
  • £13.2 billion for frontline NHS boards, with additional investment of more than half a billion – an uplift of over 4%
  • more than £14 billion for local government, including £144 million to enable local authorities to freeze Council Tax rates at their current levels
  • more than £1.5 billion for policing to support frontline services and key priorities such as body-worn cameras
  • almost £400 million to support the fire service
  • £200 million to help tackle the poverty-related attainment gap
  • almost £390 million to protect teacher numbers and fund the teacher pay deal
  • up to £1.5 million to cancel school meal debt
  • almost £2.5 billion for public transport to provide viable alternatives to car use
  • increased investment of £220 million in active travel to promote walking, wheeling and cycling

Scottish Income Tax Policy Proposals 2024-25

A new Advanced rate will be added at a rate of 45p applying to income over £75,000. These changes are proposed to take effect from the start of the tax year on 6 April 2024 when there will be six bands in the Scottish Income Tax system.

BandIncome RangeRate
Starter rate£12,571 – £14,876*19%
Basic rate£14,877 – £26,56120%
Intermediate rate£26,562 – £43,66221%
Higher rate£43,663 – £75,00042%
Advanced rate£75,001 – £125,14045%
Top rateOver £125,140**48%

Scottish Income Tax Policy Proposals 2024-25

On the changes to Income Tax, The Fraser of Allander Institute has stated that ” the implications for the overall budget are relatively modest: the addition of the 45% Advanced band raises £74m, and the extra penny on the Top rate raises £8m.”

Island Hospitality Rates Relief

Highlands and Islands SNP MSP Emma Roddick has welcomed the announcement that hospitality businesses in the islands will receive 100% rates relief on their businesses next year because of the “unique challenges” faced in island communities up to a cap of £110,000.

Emma Roddick standing in Tankerness House Gardens

Emma Roddick said:

“Scottish hospitality is rightly known across the world and our hospitality businesses are vital in painting a positive, welcoming picture of Scotland. This is especially so in our Island communities where our hospitality businesses often play an oversized role in ensuring that those visiting are welcome.

“I know that many such businesses are currently struggling with the impacts of the cost-of-living crisis, Brexit, and other pressures, including the lingering impacts of the pandemic on customer behaviour. 

“Our hospitality businesses are of course not only there for tourists and those visiting our island communities. They are often at the very heart of our communities and are a key part of our social fabric, providing a place for folk to come together and share their lives which can help to tackle loneliness and isolation, and for music and culture to be heard and shared.”

What does the Scottish Budget mean for ferry fares?

Although the Budget announced funding for public transport and to encourage active travel this did not extend to our island ferries. For four years fares for Orkney and Shetland have been frozen. This will now change and fares on Northlink are set to increase by nearly 9%.

In response to a question raised by Shetland LibDem MSP Beatrice Wishart about the fares price hike, Shona Robison said;

“There is absolutely no doubt that difficult decisions are having to be made because the money to fund every part of the Scottish budget to the extent that we would want to is simply not there, so we have had to prioritise front-line public services such as our NHS, our council services and our education system. Those are the decisions that we have had to take.”

Commenting, Orkney Constituency LibDem MSP Liam McArthur said:

“This is a significant cost increase coming during a time of squeezed household finances and embattled public services. Islanders rely on these routes to see family and friends, to travel for work, to attend medical appointments – the very definition of lifeline routes.

“The Scottish Government should be doing everything they can to ensure journeys remain affordable. Instead, it has signed off on major price hikes and snuck out the news in the hope no-one would notice. Once again, this Scottish Government shows a clear disregard for the needs of islanders and our island communities.”

Local Authority Financing

Jonathan Carr-West, Chief Executive, LGIU Scotland, an independent, local authority membership organisation supporting officers and councillors across England, Wales, Scotland, Ireland and Australia commented that the Scottish Government had broken its promises to Local Authorities. LGIU claim that one in four of Scottish Councils will be unable to balance their own books next year and that this budget offered them no reassurances.

Johnathan Carr- West continued:

“Before the budget, every council told us they were planning cuts to services, 97% that they were planning to increase charges, and 89% that they would have to spend their reserves. The funding announced in the settlement will not alleviate the need for these biting budget measures.

“The council tax freeze this year will not help residents affected by councils’ inevitable spending cuts and it will not help residents next year, when councils’ spending power is reduced further because their council tax base can’t increase in line with the amount they need. “

He said that the Budget broke The Verity House Agreement and that the Scottish Government had ring fenced much of the funding for their own priorities. The Scottish Government maintain that the Budget delivers record funding of almost £13.9 billion to local authorities and state: “Through our partnership with Local Government under the Verity House Agreement, we will work with COSLA to empower Councils through a new fiscal framework which also increases discretion to determine and set fees and charges locally.”

Johnathan Carr-West concluded:

“The funding settlement is not enough for councils to provide the services that millions of people across Scotland rely on. More than that though, it demonstrates that annual funding settlements of this type are not the right way to fund councils or to empower councils to tackle their long-term challenges. Councils should be given more powers over how they raise and spend their own money. This means ring-fencing and directed spending need to be reduced, as agreed at Verity House, and councils need to be free to set their own council tax.”

Orkney Islands Council has launched a survey for islanders on the priorities of the council’s budget which it says “is facing unprecedented funding challenges due to increasing costs, a reduction in funding from central Government and increasing needs from our community who are becoming older and are facing financial challenges of their own.”

Although the individual funding package for OIC has not yet been announced, under consideration are charges for community care alarms and day care, services which the Council does not currently charge for. The survey will run until January 31 2024 and can be accessed here

Council Leader James Stockan said:

“As a council we are committed to supporting local people and communities and ensuring that our resources are used as effectively as possible to deliver on our priorities

“However, we may no longer have the funding available to provide all the same services we have provided in previous years. We understand that this comes at a time when residents and businesses are also facing huge pressure from inflationary increases and high fuel costs.”

Supporting Older People

Independent Age, a national charity providing support for older people facing financial hardship, has welcomed the support in the Budget older people.

 Joanna Elson CBE, Chief Executive at Independent Age said:

“The news that all devolved social security payments, including the Winter Heating Payment, have been uprated by inflation and that the fund for Discretionary Housing Payment has been increased will be a welcome relief to those struggling financially in later life.  

“However, these measures do not go far enough for the 150,000 older people now living in poverty in Scotland, a figure that has risen by a quarter in the last decade alone, now affecting 1 in 7. Today they really needed the Scottish Government to announce a clear, long-term strategy with legally binding targets and ambitions action to tackle pensioner poverty and reverse this frightening trend. “

Independent Age were disappointed that there was no funding made available for an Older People’s Commissioner but added:

“While we welcome the measures announced today that will improve life for older people on low incomes, the Scottish Government need to go further and faster to address rising pensioner poverty in Scotland. Both a long-term solution to financial hardship in later life and an end to older people feeling ignored by those in power is needed. The time is now for Scotland to have a pensioner poverty strategy and an Older People’s Commissioner.” 

The Draft Scottish Budget 2024-2025 will now be considered by Scotland’s MSPs and amendments may be made to it before it is finalised and put before the Scottish Parliament where it will either be accepted or rejected.