It ensures that our health and public services have the resources they need to continue tackling Covid – including new challenges posed by the Omicron variant – while moving us beyond the pandemic towards a more prosperous, fairer and greener Scotland.
It sets out progressive spending for one year but also paves the way for a resource spending review in May 2022, which will detail the Scottish government’s longer term funding plans and how we will deliver key commitments such as the establishment of a National Care Service and ending our contribution to climate change.
However, commitments to invest in our public services have to take into account the importance of a thriving, prospering economy. Scotland’s businesses are critical to our future success as a nation. Without the business community, we cannot meet our wider objectives.
A long-term approach is vital if we are to deliver our ambitions and capitalise on the opportunities the next decade could bring – but we must also act now. This Budget lays the groundwork for much of the investment envisaged by our strategic commitments – tackling inequalities, securing a just transition to net zero and investing in economic and public service recovery.
Amongst the most pressing issues currently facing businesses are labour market shortages. Lifelong training and equipping people with the skills required to meet these pressures are vital if businesses are to thrive and no person, or region, is left behind. That is why the Budget allocates almost £124.6 million for employability and training, an increase of £68.3 million from last year.
Digital technology has the potential to make Scotland more productive. The pandemic has emphasised how central to our lives digital technologies have become, and so we are providing £192 million to improve connectivity and boost the digital economy – £48 million more than this year – including specific help for small and medium-sized businesses.
These measures provide a platform for our ten-year National Strategy for Economic Transformation, which will be published shortly and set out how we will support business activity, entrepreneurship and innovation.
Reflecting the integral role our enterprise agencies play in supporting business and attracting inward investment, the Budget increases their total funding to £370 million in 2021-22, while VisitScotland sees its core budget return to pre-Covid levels, a reflection of the crucial work it is doing to promote Scotland and support the tourism sector.
As people, businesses and communities continue to feel the aftermath of the pandemic, we recognise the need for ongoing stability and certainty for taxpayers. Our progressive approach to taxation underpins spending priorities, such as the doubling of the Scottish Child Payment, and protects public services while continuing to ensure that most people pay less than the equivalent taxpayer in England, Wales or Northern Ireland.
The Budget maintains our generous non-domestic rates relief package, which will save ratepayers more than £800 million and help businesses get back on their feet. This includes the small business bonus scheme, which takes over 111,000 properties out of rates altogether and is the most generous relief of its type in the UK.
Last year, we offered 100 per cent rates relief to retail, hospitality and leisure businesses. Whereas equivalent businesses in England started paying rates last July, in Scotland they are cushioned for the full year. We will continue to offer the lowest non-domestic rates poundage in the UK, as well as ongoing rates relief for the retail, hospitality and leisure sectors at 50 per cent for the first three months of 2022-23, capped at £27,500 per ratepayer.
On public sector pay, the Budget provides a minimum inflationary rise for employees earning up to £25,000 and introduces a public sector wage floor of £10.50 per hour, including for all social care workers from April 2022.
The Budget also funds improvements in education, with £145.5 million for the sustained employment of additional teachers and classroom assistants and a further £200 million to tackle the poverty-related attainment gap.
There is £1.6 billion for social care and integration and £12.9 billion for health boards, including the first increase towards ensuring frontline funding rises by at least £2.5 billion by 2026-27.
Local authorities are key partners of government and acknowledge the important role they continue to play in our pandemic recovery. They will receive an overall funding package of almost £12.5 billion in 2022/23, a real terms increase of 4.5 per cent.
No budget can ever deliver what everyone wants, that is clear. But this one required particularly hard choices.
While the recent UK Autumn Budget and Spending Review announced what was described as a significant increase in Scotland’s block grant, the reality is a cut in day-to-day funding for each year of the spending review compared to 2021-22.
After all this year’s Covid-19 funding is stripped out, next year’s resource funding from the UK government is actually being reduced by 7.1 per cent in real terms. Without the ability to borrow on any scale, and with a legal requirement to balance our budget, we have had to dig deep, diverting resources where necessary.
Scotland continues to face long-term economic challenges which have been hugely exacerbated as a result of being taken out of the European Union against our will. Brexit, and the fact that most macroeconomic policy tools remain reserved to the UK government, will continue to hamper our ability to take the policy choices we need to maximise our potential as a nation – choices we would be able to make as an independent country.
Despite these challenges, the Budget addresses the immediate pressures and begins to deliver on the government’s long-term priorities. As a result, the path towards Scotland’s economic transition, meeting the climate challenge and ending child poverty is clearer and more defined.
Kate Forbes is SNP MSP for Skye, Lochaber and Badenoch and Secretary for Finance and the Economy