Budget stage 1

Scotland’s NHS, the economy, public sector workers and the low paid will benefit from the Scottish budget, Finance Secretary Derek Mackay said today as he confirmed he had reached an agreement that will see the financial plan passed at all stages by the Scottish Parliament.

The budget takes steps to mitigate UK Government cuts, increases funding for the NHS by £400 million, invests in the expansion of early learning and childcare, delivers on our commitments to broadband, supports the building of 50,000 new homes, backs small businesses and innovation and provides essential funding for our frontline police and fire services.

The Finance Secretary also confirmed he will extend the Scottish Government’s commitments on public sector pay to ensure all public sector employees earning up to £36,500 receive a minimum 3% pay increase - meaning 75% of public sector workers, including NHS staff, will benefit from an inflationary pay rise.

As part of an agreement with the Scottish Green Party, the budget will now include a real terms increase in revenue investment for local authorities with local services benefitting from an additional £159.5 million of resource funding, and following discussions with Shetland and Orkney Island Councils, funding of £10.5 million will be made available to support inter-island ferry services in 2018-19 - with talks continuing on a long term solution.

Investment in Low Carbon infrastructure – which is already increasing from 21% of planned infrastructure investment in 2017-18 to 29% in 2018-19 – will continue to increase in each year of the parliament, with additional support made available this year for home energy efficiency, the exploration of new local rail services and the delivery of marine protected areas.

In addition, Mr Mackay confirmed that, following publication of the Scottish Government’s tax proposals in December, he would take steps to remove an anomaly that meant some higher rate tax payers saw their bills fall while others on slightly lower incomes saw a rise, due in part to changes in the personal allowance. 

As a result, while 70% of taxpayers will continue to pay less next year than they currently do, 55% will pay less than they would elsewhere in the UK. All those earning above the new Higher Rate Threshold of £43,430, a 1% increase on the 2017-18 threshold, will see a modest increase in income tax. This distinct income tax policy will raise around £55 million and support an additional £420 million of investment in the Scottish budget.

Confirming the changes during the Stage 1 of the budget debate, Mr Mackay said:

“As a parliament of minorities, we must work across the chamber to find compromise and consensus in order to give support, sustainability and stimulus to our economy and to our public services.

“This budget invests record amounts in our NHS, supports our efforts to improve attainment in our schools, invests in our economy with support for infrastructure, for broadband and for innovation, and supports our ambitions to tackle climate change.

“We are lifting the pay cap with a real terms increase in pay for the majority of public sector workers and we are supporting local services with a real terms increase for day to day spending and for long term investment, with an additional £170 million going into local services, on top of the £10.5 billion already proposed.

“Our changes to tax ensure Scotland has a progressive tax system - with 70% of taxpayers paying less next year than they do currently and 55% paying less than they would across the rest of the UK - while businesses benefit from support for investment.

“The changes I have announced ensure that people in Scotland will benefit from the best deal for taxpayers in the whole of the UK.”

Background

The updated income tax proposals: Fact Sheet 

The Draft Budget proposals have now been updated to reflect a 1% increase in the Higher Rate threshold:

	Budget Bill 2018-19
	Income Bands	Rate
Starter Rate	£11,850* - £13,850	19%
Basic Rate	Over £13,851 - £24,000	20%
Intermediate Rate	Over £24,001 - £43,430	21%
Higher rate	Over £43,431 - £150,000*	41%
Top Rate	Above £150,000 **	46%

* Assumes individuals receive the standard UK Personal Allowance.

** Those earning more than £100,000 will see their Personal Allowance reduced by £1 for every £2 earned over £100,000

ADDITIONAL LOCAL GOVERNMENT FUNDING ALLOCATIONS

 

Local Authority		2018-19 Shares of GAE plus SINA	2017-18 Additional Funding	2018-19 Additional Funding	Total General Revenue Grant		Support for Ferries (Specific Grant)	Total Additional
		%	£m	£m			£m	£m
Aberdeen City		3.51	1.211	4.388	5.599		0.000	5.599
Aberdeenshire		4.86	1.676	6.071	7.747		0.000	7.747
Angus		2.18	0.751	2.723	3.474		0.000	3.474
Argyll & Bute		1.81	0.624	2.260	2.884		0.000	2.884
Clackmannanshire		0.94	0.325	1.177	1.502		0.000	1.502
Dumfries & Galloway		2.99	1.031	3.736	4.767		0.000	4.767
Dundee City		2.78	0.961	3.481	4.442		0.000	4.442
East Ayrshire		2.26	0.780	2.825	3.605		0.000	3.605
East Dunbartonshire		2.07	0.715	2.591	3.306		0.000	3.306
East Lothian		1.90	0.654	2.369	3.023		0.000	3.023
East Renfrewshire		1.97	0.681	2.468	3.149		0.000	3.149
Edinburgh, City of		7.77	2.682	9.717	12.399		0.000	12.399
Eilean Siar		0.76	0.262	0.948	1.210		0.000	1.210
Falkirk		2.91	1.004	3.637	4.641		0.000	4.641
Fife		6.83	2.357	8.540	10.897		0.000	10.897
Glasgow City		11.07	3.818	13.833	17.651		0.000	17.651
Highland		4.71	1.626	5.890	7.516		0.000	7.516
Inverclyde		1.52	0.523	1.897	2.420		0.000	2.420
Midlothian		1.65	0.569	2.061	2.630		0.000	2.630
Moray		1.73	0.595	2.157	2.752		0.000	2.752
North Ayrshire		2.68	0.925	3.353	4.278		0.000	4.278
North Lanarkshire		6.38	2.202	7.978	10.180		0.000	10.180
Orkney		0.71	0.245	0.889	1.134		5.500	6.634
Perth & Kinross		2.73	0.942	3.412	4.354		0.000	4.354
Renfrewshire		3.28	1.132	4.101	5.233		0.000	5.233
Scottish Borders		2.22	0.767	2.780	3.547		0.000	3.547
Shetland		0.80	0.275	0.995	1.270		5.000	6.270
South Ayrshire		2.11	0.728	2.638	3.366		0.000	3.366
South Lanarkshire		5.95	2.053	7.440	9.493		0.000	9.493
Stirling		1.77	0.609	2.208	2.817		0.000	2.817
West Dunbartonshire		1.77	0.610	2.208	2.818		0.000	2.818
West Lothian		3.38	1.167	4.229	5.396		0.000	5.396
Scotland		100.00	34.500	125.000	159.500		10.500	170.000