Scotland politics

Scottish budget: What do you need to know?

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The Scottish government has set out its tax and spending plans for the year ahead. How big is the Scottish budget, where does the money come from, and where is it likely to go?

How big is the Scottish budget?

Last year, the Scottish government had just under £34bn to spend - £28.6bn for day-to-day expenditure on public services, and £5.1bn for investment in infrastructure.

The funding partly comes from the block grant - a share of the UK-wide budget as calculated via the Barnett Formula - and, increasingly, from tax revenues raised in Scotland.

Image copyright Scottish Parliament Information Centre

There is always debate over the true scale of the budget, and whether it has gone up or down.

Frankly there are enough numbers here for all sides to pick and choose figures that support their arguments - so the Conservatives can accurately state that the block grant has gone up a bit in recent years, while the SNP can correctly counter that it was higher in 2010.

This year, the Tories insist there will be an extra £1.1bn coming to Scotland - although the exact numbers have not yet been confirmed.

Where is the money going to be spent?

The biggest chunk of the budget goes on health - totalling 41% of the total spend in 2019-20, or £14bn. With Scotland's population getting older and demand on services increasing, this is only going to increase.

The next largest portfolio is local government, which gets more than a quarter of the budget. Much of this money is given directly to councils to be spent on local services like schools.

Every year there are calls for better funding for local authorities, which have been particularly squeezed recently.

Education, transport and justice also take up hefty chunks of spending, with funding for the likes of the police likely to be maintained if not increased.

One growing area of the budget is social security, with Holyrood taking on new responsibilities for delivering benefits - MSPs will be in charge of an extra £3bn of them this year.

And the Scottish government has pledged to put environmental issues at the heart of all of its plans as a reaction to the "climate emergency".

What about raising funds?

Since 2018, Scotland has had a separate system of income tax rates and bands to the rest of the UK.

This added two extra tax rates - one just below the basic rate, providing a break for low earners, and just one above it, to squeeze a little more from those who earn above the median wage.

Meanwhile, the higher and top rates of tax are both a percentage point higher than elsewhere in the UK, in what the finance secretary terms a "progressive" move to bolster local services.

Scottish tax bands

BandRateThreshold
Starter rate19%£12,500-£14,549
Basic rate20%£14,550-£24,944
Intermediate rate21%£24,945-£43,430
Higher rate41%£43,431-£150,000
Top rate46%Over £150,000
Source: Scottish government

The government is unlikely to change this five-band structure, seeing it as being set for the parliamentary term.

It might be tempted to tinker with the thresholds - the point at which the various rates kick in - but given the ongoing uncertainty around the UK government's plans he may simply shift them up in line with inflation.

Does it matter that the UK budget isn't until March?

Scotland's finance secretary normally waits for Chancellor Sajid Javid to set out his budget before drawing up his own plans.

But this year the Westminster budget will not be set until 11 March, which is too late to confirm funding levels for Scottish councils and get tax plans in place.

Finance Secretary Derek Mackay wasn't at all happy about it, but had to prepare his budget with estimates and the advance information he could glean from talks with the Treasury.

Image copyright PA Media
Image caption Public Finance Minister Kate Forbes unveiled the budget proposals

The plans he drew up were announced in parliament by Public Finance Minister Kate Forbes after Mr Mackay resigned on Thursday morning over messages he had sent to a 16-year-old boy.

Precisely how much money is available is directly affected by spending levels south of the border, as well as forecasts of tax revenues from the Office for Budget Responsibility.

For now the Scottish government is having to make an educated guess, using figures from last year's Spending Review combined with spending pledges made by the Conservatives during the election campaign.

The two income tax systems are also closely interlinked, with the tax-free allowance and National Insurance Contributions still set at Westminster.

This means it's trickier for to make changes to taxes in Scotland if there is no certainty of what Mr Javid has planned - there is already a gulf between the income tax regimes, but there is little appetite to widen it drastically.

Will the budget bill pass?

Announcing spending plans is just the beginning of the work. The real task is getting them through parliament.

The SNP needs the support of opposition MSPs to pass a budget bill. So far this term those votes have come from the Greens, although other parties are available - when Alex Salmond ran a minority government from 2007, he paired up with the Tories each year.

The government will aim to have a deal done by the first full debate of the bill, on 27 February - and with the final vote the following Thursday, there is limited time to negotiate.

This will increase the pressure on both sides, with opposition parties already drawing up their lists of demands - and the government warning that failing to back its plans would endanger public services.

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