Scottish Budget 2024: What to Expect
The Scottish Government’s highly anticipated Budget announcement is set for Wednesday, 4th December 2024, where Finance Secretary Shona Robison will present plans for taxation, public spending, and welfare. Delivered in Holyrood, this Budget lays the groundwork for how Scotland will allocate its financial resources in the coming fiscal year.
What is the Scottish Budget?
The Scottish Budget outlines how the government plans to raise revenue and distribute funds for services under its control, such as healthcare, education, and public safety, for the financial year beginning 1st April 2025.
Key decisions include:
- Adjustments to income tax rates and bands.
- Allocations for local councils and national infrastructure projects.
- Policies on welfare benefits and new taxation initiatives.
The proposals will be encapsulated in a Budget Bill, which MSPs will debate and have the opportunity to amend. The final vote, expected in February 2025, will determine whether the Budget is enacted.
Financial Challenges in Focus
Despite assurances of increased funding, the Scottish Government has warned of tough financial choices ahead. First Minister John Swinney has called it one of the most challenging fiscal climates since the Scottish Parliament’s re-establishment in 1999.
-Funding Increase: Scotland will receive a £47.7bn block grant from the UK government for 2025-26, a rise of £3.4bn compared to last year.
-Mounting Costs: Inflation and public sector wage increases have already stretched resources, with emergency spending adjustments of £500m required earlier this year.
The government remains cautious about relying on UK funding commitments, particularly regarding compensation for National Insurance increases, which could significantly impact public sector wage costs.
Key Policies and Potential Changes
Income Tax Adjustments
Scotland’s income tax system, distinct from the rest of the UK, divides taxpayers into six brackets. While no major overhaul is expected, fiscal drag - where inflation outpaces adjustments to tax bands - could lead to higher tax burdens for many.
Council Tax
The current year’s council tax freeze, funded by a £200m package, has been praised by homeowners but criticised by local councils struggling with budget shortfalls. Ministers have hinted that another freeze could be considered, though it remains contentious.
Winter Fuel Payments
Cuts to universal winter fuel payments earlier this year left 900,000 Scottish pensioners without support. Although means-tested payments replaced the previous scheme, the government faces pressure to restore universal coverage, especially with the increase in block grant funding.
Business Rates
Businesses in Scotland are urging the government to match the property tax relief offered in England. Replicating this policy would cost £220m, far exceeding the additional funding allocated via the Barnett Formula.
Will the Budget Gain Approval?
With 62 MSPs, the SNP falls three votes short of a Holyrood majority. Although expelled MSP John Mason is expected to support the Budget, the government must secure cooperation from other parties or independents.
If a tie arises during voting, Presiding Officer Alison Johnstone will cast the deciding vote. Early votes typically favor continued debate, but a final deadlock could see the Budget rejected entirely. In such a scenario, the government might face the prospect of an early election to resolve the stalemate.
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