Call for release of £21bn UK COVID-19 reserves

Finance Secretary Kate Forbes is urging the UK Government to release £21.3 billion of reserves to help tackle the impact of coronavirus (COVID-19).

She has written to the Chancellor asking that the Scottish Government be given its share of the funds now. This would total around £1.7 billion if the whole amount was allocated to devolved spending areas.

The COVID-19 reserve was announced as part of the UK Spending Review in November and is intended for allocation in 2021-2022. The Scottish Government requires a guarantee of how much it will receive in order to effectively plan and allocate funds.

Ms Forbes said: “We welcome the £8.6 billion received so far in COVID-19 consequentials. Virtually all of this has already been allocated and is being spent supporting our businesses, NHS, public services and the rollout of vaccines.

“However, demand continues to outstrip the resources available and our inability to borrow on the financial markets, or even use unspent capital funding to address immediate needs, leaves us reliant on the UK Government.

“The new strain of the virus and subsequent tightening of restrictions mean that further funding is required now. I urge the UK Government to release our share of these reserves so we can provide the maximum support to businesses and the health service during this critical period.

“The Chancellor must also provide urgent clarity on the UK Shared Prosperity Fund – which is intended to replace EU structural funds – and the Levelling Up Fund ahead of the Scottish Budget on 28 January to allow us to plan effectively.”

Background.

A copy of the letter from the Finance Secretary is below.  

Dear Rishi,

I am writing to seek further certainty of funding streams due to the continued impact of the Covid-19 pandemic and in advance of the Scottish Government’s 2021-22 Budget to allow for effective planning and allocation of funds.

Whilst we of course welcome the £8.6 billion of consequentials provided to date, the new strain of Covid and subsequent tightening of restrictions mean that further funding is required now, to provide certainty to the end of this financial year and into 2021-22.

I note that an allowance for further Covid funding was set out in the UK Spending Review, with £21.3 billion held in reserve awaiting allocation in 2021-22. If this was allocated against devolved spending areas, it would result in additional funding of around £1.7 billion for Scotland. It is imperative that this funding is released now so that plans can be made to mitigate the impact of the virus as far as possible on our health service, business and the wider economy.

In addition, the UK Spending Review set out broad funding for the Shared Prosperity Fund and the Levelling Up Fund. It is vital that clarity on these schemes and the share of funding for Scotland is set out in advance of the Scottish Budget on 28 January for planning purposes. Our focus is on delivering the maximum possible support for business and wellbeing through this critical period.

KATE FORBES