Scottish Budget 2021-22

Vuelio’s Ingrid Marin writes about the highlights of the Scottish Budget, which aims to rebuild a fairer, stronger and greener economy.

As the Scottish Budget itself observes, this year’s publication ‘is like none before it, and is informed by the experiences and impacts of the past twelve months.’

The Budget has been developed against the backdrop of the clear and significant threat still posed by the virus, but also the hope for better days ahead, with Cabinet Secretary for Finance Kate Forbes claiming: ‘this is a Budget to provide help in the immediate term, but also to rebuild a fairer, stronger and greener economy’.

READ THE FULL SCOTTISH BUDGET SUMMARY HERE

The Scottish Fiscal Commission forecasts published with the Budget suggest that GDP will fall by 5.2% in the first quarter of 2021, but the vaccine rollout will allow a return to growth in 2021-22, though GDP is not expected to return to pre-pandemic levels until the start of 2024.

These forecasts have assumed that the Coronavirus Job Retention Scheme will end in April and will not be replaced, acting as a driver for the forecast that unemployment will reach 7.6% in the second quarter of 2021. The Scottish Budget also notes the impact of Brexit on the Scottish economy; Scottish GDP could be 6% lower by 2030, compared to full membership of the EU.

In the immediate term, health must come first and lowering transmission rates remains the Scottish Government’s priority. The Budget supports the safe and sustainable recovery of the NHS, with record funding in excess of £16bn – an increase of over £800m in core Health and Sport funding. Acknowledging the impact Covid-19 has had on a significant number of people’s mental health, overall spending on mental health will be in excess of £1.1bn.

The Budget’s tax choices recognise the impact the pandemic is having on people, households and businesses. For example, in recognition of the unique pressures created by the pandemic on household incomes, the settlement includes an additional £90m to compensate councils who choose to freeze their council tax at 2020-21 levels.

The Scottish Government also announced that the 100% non-domestic rates relief for Retail, Hospitality, Leisure and Aviation sectors will be extended for at least three months. Should the UK Government bring forward an extension to their equivalent RHL relief that generates consequential funding, the Scottish Government will match the extension period as part of a tailored package of business support measures.

The Budget also helps people and households by securing £3.5bn for social security and welfare payments, including £68m for the ‘game changing’ Scottish Child Payment, which once fully rolled out will help lift an estimated 30,000 children out of poverty.

Seeing the first signs of hope and optimism for a better future, with the approval and roll-out of vaccinations and looking ahead to the COP26 summit, being hosted in Glasgow in November 2021, the Budget sets out a five year green economic recovery plan. The Scottish Government plans to spend £2bn on low carbon investment across the next five years, starting with £165m in 2021-22 towards large scale green infrastructure projects.

Similarly, over the next Parliament, the Scottish Government will deliver a new £100m Green Jobs Fund. This will invest £50m through enterprise agencies to help businesses which provide sustainable and/or low carbon products and services to develop, grow and create jobs. A further £50m will support businesses and supply chains to take advantage of public and private investment in low carbon infrastructure, and the transition to a low carbon economy, boosting green employment. In 2021-22, £14m will be allocated from the Green Jobs Fund.

The Scottish Government will provide £2.7bn across the Education and Skills budget. To ensure that the workforce can take advantage of the new and emerging employment opportunities as part of a green economic recovery, the Scottish Government will be providing support for individuals to retrain and upskill. In particular, it has developed the Climate Emergency Skills Action Plan and is planning to establish a Green Jobs Workforce Academy.

While this is an ambitious Budget to both protect and renew Scotland, Forbes highlighted that it also comes with significant fiscal uncertainty. She said: ‘In the absence of a UK Budget, much of the information we need to plan with certainty is missing. We must persevere with a Budget based on a partial