Scottish ministers have promised record spending on cutting climate emissions and on housing improvements, in a budget that also put heavy emphasis on tackling poverty and low pay.
Kate Forbes, the finance secretary, said the Scottish government would invest £2bn in low-carbon spending and record sums in childhood poverty measures, adult disability, free school meals, and free bus travel for all young people. There was also a record £18bn for the health service and social care.
Forbes said: “Today’s budget is a budget of choices, and we have chosen to tackle child poverty, to invest in the transition and to boost economic prosperity.”
She promised that Scotland’s public sector workers would receive a minimum hourly rate of £10.50, above the national living wage, but opposition parties accused her of short-changing social care workers.
Labour and the Liberal Democrats said the devolved government had a record amount of Treasury funding for next year, taking its budget for day-to-day spending to £40bn, yet had increased minimum pay for social care workers by only 48p an hour.
Daniel Johnson, for Scottish Labour, said this was “an insult” and far below the rises to £12 and then £15 an hour that his party was proposing.
Alex Cole-Hamilton, the Scottish Lib Dem leader, said the increase was “derisory” and mirrored a real-terms cut in local government funding.
Forbes accused both parties of promising to spend money that was not available. She said Labour’s £15-an-hour target would cost £3bn a year and add £1,000 a year to Scottish income tax bills.
She said the draft budget, which has yet to be finalised by MSPs, delivered on a wide range of pledges, including partly offsetting UK government cuts to universal credit by providing £20 a week to all families in poverty with school-age children. It provides for moving to universal access to free school meals at primary school, and has nearly £2bn for adult disability payments and £544m for free preschool childcare.
Forbes said that overall the government’s budget had fallen in cash terms, in part because Brexit and the Covid crisis had hit income tax receipts.
While Scotland’s economy is now expected to recover to pre-pandemic levels next spring – far sooner than previously forecast – she said the negative impacts of Brexit were three times greater in Scotland than in London.
The Scottish Fiscal Commission (SFC), an independent body similar to the Office of Budget Responsibility in London, said Scotland’s economy would underperform compared with the rest of the UK, and this would lower Holyrood’s forecast income tax receipts next year by £190m.
The commission said Scottish income tax receipts would continue to grow more slowly in Scotland than in the UK as a whole. Even so, Forbes opted not to increase any income tax rates in Scotland, which are higher for higher earners than in the rest of the UK. She said the starter and basic rate bands would rise in line with inflation, but the threshold would be frozen for higher and top-rate bands.
The SFC said freezing the higher rate threshold would increase tax income for the Scottish government by £106m because pay rises would bring more well-paid employees into that tax band. Its data also showed that much better economic performance this year had led to Scottish income tax receipts being £764m higher than expected in 2021, adding to Forbes’s spending options.
