Scotland Finance

Scottish Government Budget 2022-23

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Image by bluebudgie from Pixabay

In yesterday’s budget statement for Scotland, Finance Secretary Ms Forbes emphasised the need to learn from the pandemic and to promote collaboration across society. Indeed, this budget was one born from collaboration as it is the first budget agreed and published by the SNP-Green coalition government in Holyrood.

This budget centres around delivering three key priorities:

  • tackling inequalities;
  • securing a just transition to Net Zero;
  • and investing in economic and public service recovery

Ms Forbes called this budget ‘a budget of choices’, emphasising the hard decisions she has had to make in light of the cut back in Covid relief funding from the UK government. As a result of a tight settlement and despite ongoing challenges posed by the pandemic, day to day funding is significantly less than previous budgets published during the pandemic.

Brexit was highlighted in the Finance Secretary’s statement as she noted that the long-term impact of Brexit on the economy will potentially be worse than that caused by COVID-19. In fact Ms Forbes noted in her statement that the scale of the negative impact of Brexit is likely to be three times worse in Scotland than it is in London.

Despite these challenges, she stated this budget ‘lays the groundwork for a fair and green recovery from the pandemic, and invests in the infrastructure and industries of the future’.

Highlights for local authorities

  • Overall funding package of almost £12.5bn, stating this is a real terms increase of over 4.5%. In addition, there is money intended for local authorities in many different budget headings. The full detail of the budget requires more analysis to see if that statement is indeed true given the pressures facing public services
  • Minimum wage will be raised by 48p to £10.50/hour for social care staff
  • The council tax freeze will end, a flagship SNP policy alongside the concordat with local government. This means that, for the first time since SNP came into power in 2007, local authorities will have complete flexibility to set the rate they want as the limit on council tax rises has been removed.
  • The delivery of the Adult Disability Payment will start in 2022-23 with an injection of £1.95bn.
  • From April 2022 the Scottish Child Payment will double to £20 for families in poverty with children under six and it will be extended to under 16s by the end of 2022.
  • The budget announces funding for buildings, transport and industry including the first £20m of a 10-year £500m Just Transition Fund for the North East and Moray, £414m for energy efficiency, and low carbon and renewable heat and £150m for infrastructure to make walking, wheeling and cycling safer.
  • The budget also promises £23.5m for a Green Jobs Fund which is aimed at helping businesses create green employment through investment.
  • Free bus travel for young people.
  • The expansion of free school lunches for all children in P1-P5.
  • £145.5m for local authorities to ensure the sustained employment of additional teachers and classroom assistants recruited during the pandemic.
  • A citizens assembly on local government funding including council tax.
  • Legislation on a workplace parking levy and a visitor levy.
  • Collaboration with local government to develop a fiscal framework for local government.
  • Landfill tax will increase from April 1, 2022.
  • £200m for Scottish Attainment Challenge Fund in education.

NHS and social care

In total, the budget provides funding of £18bn for health and social care including a record £12.9bn for health boards.

Within this funding package there is included £1.2bn for mental health services.

There will be over £1.6bn invested in social care and integration. Notably, there will be £846.6m transferred from health and social care to local authorities to invest in health and social care. This is an interesting move, how this overall figure will be allocated by individual council is not yet available.

Comment

These are initial reflections from the announcement. LGIU will provide an in-depth analysis as public services await the full detail of the proposals and we will report on the budget as it progresses through parliament. It will be critical to understand how the health and social care monies will be allocated to councils alongside how public services will have to report on and assume governance responsibility for that funding against delivery of services.

To follow this announcement we also await the detailed settlement for each council and we intend to report on that detail when it is announced.

Of course, giving councils the ability to raise unlimited amounts of council tax in the run up to a local election is passing difficult choices to local representatives, some of whom will not be standing in May 2022 local elections. A point that will be felt keenly in town halls across Scotland. Ms Forbes stated “I expect councils to take full account of local needs”  and LGIU fully expects a long commentary over the next few months as local government begins fully understand the implications of this budget and how that funding can be best used meet the needs and demands of their communities. LGIU will be reporting on that journey.

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